States Still Floating Unwise Proposals to Opt Out of Medicaid – Say Ahhh! A Children’s Health Policy Blog

It seems odd that such an unwise idea as opting out of
Medicaid would even make it to the level of serious public debate.  As long as states keep
floating such irresponsible proposals, we’ll keep blogging about why it’s such
a bad idea.  This week, we bring
you a blog post from  Edwin Parks of the Center on Budget and Policy Priorities titled “Opting Out of Medicaid Not Just Unthinkable but
Unwise and Unnecessary.”

Edwin writes that opting out of Medicaid would be a
terrible idea because:

  • Most Medicaid beneficiaries — including those who cost
    the most to cover — actually can’t be shifted into the exchanges because they
    won’t be eligible for the federal tax credits.
    Only people with incomes between
    100 and 400 percent of the poverty line will qualify for the credits, which
    means no poor Medicaid beneficiaries (except for some legal immigrants) will
    qualify.  For example, poor people with disabilities, who have the highest
    medical needs of any Medicaid beneficiaries and incur the most costs, won’t be
    eligible for the federal tax credits. Similarly, anyone who is eligible for
    Medicare won’t be eligible for the federal tax credits, so the millions of
    seniors whose incomes are low enough to qualify them for supplemental Medicaid
    benefits (like nursing home and other long-term care services) as well as
    Medicare won’t qualify.  This group alone represents 35 percent of all
    Medicaid costs.
  • The loss of federal Medicaid funds would likely force
    states to slash their remaining health programs.
    Under current law, the federal
    government picks up 57 percent of the cost of a state’s Medicaid program, on
    average.  Since states will be unable to shift most of their Medicaid
    beneficiaries — and very few of the higher-cost people who constitute the bulk
    of current spending — into the exchanges, they’d have to somehow make up for
    the loss of these federal funds. Unless states were willing to as much as
    triple their current contributions to the cost of health care, they would have
    to severely curtail their health care spending.  Many would likely end up
    eliminating publicly funded coverage for large numbers of low-income children,
    pregnant women, parents, people with disabilities, and seniors.  Most of
    these people could well end up uninsured.?For the people who remained eligible
    for publicly funded coverage, states might scale back benefits.  Possible
    reductions include benefits that are important to people with disabilities and
    children with special health care needs, such as mental health care and therapy
    services, which Medicaid covers but private insurance typically doesn’t.
     States might also increase cost-sharing charges, which means fewer people
    would receive needed health care. And although states have already sharply
    reduced their reimbursement rates for Medicaid providers (such as doctors and
    hospitals) to help close their budget deficits, they would have to further
    lower their rates — at the same time that providers would face rising costs for
    uncompensated care costs as the ranks of the uninsured swell.
  • The federal
    government will pick up nearly all the costs of the Medicaid expansion.
    that the health reform law’s Medicaid expansion will impose unaffordable
    burdens on states ignore the fact that the federal government will cover
    virtually all of the cost — 96 percent of the cost over the next ten
    years,according the Congressional Budget Office.  The expansion will add
    just 1.25 percent to what states were already projected to spend on Medicaid
    over that period in the absence of health reform.

Well said Edwin.  I hope this ill-conceived idea will fade away as quickly as it appeared as it is distracting states from efforts to deliver the benefits of the Affordable Care Act to their residents as soon as possible. 

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