YES: Covering more people saves money in the long run, improves health.
By Timothy Sweeney
Leading congressional health insurance reform proposals include expanding Medicaid, which could not only bring coverage to nearly 1 million low-income, uninsured Georgians, but would provide at least 90 percent of the funding to do so.
Despite the obvious and significant benefits to the state’s economy and its citizens, Gov. Perdue, Lt. Gov. Cagle and others opposed to reform are arguing that Georgia cannot afford its share of the proposed Medicaid expansion in either the House or Senate proposal.
They claim that expanding Medicaid will cost Georgia more than $2 billion over six or seven years, but they rarely mention the billions in new federal funds that would flow to Georgia’s economy during this time.
But their calculations are misleading. The cost on a yearly basis of expanding Medicaid for hundreds of thousands of uninsured citizens with little access to coverage is not only affordable, but is a bargain for Georgia.
The Georgia government’s own estimate of the House proposal forecasts $93 million in additional state costs the first year (2013). This equates to an increase of less than 5 percent of Georgia’s existing Medicaid budget and less than 1 percent of the overall state budget.
In addition, these state costs would be accompanied by hundreds of millions in new federal funds flowing into Georgia each and every year, contributing to the state’s health care sector and local economies.
Over time, these costs would increase as the state’s economy and population grows. As more people enroll, and as medical costs increase with inflation, the Georgia government estimates that costs could reach $500 million a year by 2019. However, this number must be put into perspective as well. Relative to the overall state budget a decade from now, these costs will remain a small percentage and surely will be manageable.
Although Georgians across the income spectrum have seen their access to employer-sponsored coverage decline in recent years, low-income families have been most affected.
A mere one-quarter of Georgians in families with incomes below twice the poverty level ($36,600 for a family of three) have employer coverage, compared with 76.6 percent for families with income above this threshold.
As a result, low-income individuals and families in Georgia are far more likely to be uninsured (35.9 percent) than their higher income counterparts (10.9 percent). In total, nearly 1.7 million nonelderly Georgians (nearly one in five) lacked health insurance in 2007-2008.
Those opposed to expanding health insurance coverage should also consider the likely effects on Georgia’s uninsured children and adults if they remain uninsured. Uninsured people have less access to timely medical care, worse health outcomes and are more likely to die prematurely than their insured counterparts.
There is plenty of time for Georgia’s leaders to ensure the state has adequate funds to pay what the federal government does not so that we reduce our high number of uninsured citizens. Both proposals give states several years to comply with the new Medicaid eligibility standards, and both provide full federal funding for the first two to three years of implementation.
Our elected leaders should be tackling Georgians’ growing needs, not posturing against national reform. Georgia’s uninsured rate is 10th in the nation, approximately one in seven people lived in poverty in 2008, and our job loss rate is fifth in the nation. Vulnerable groups are hit hardest during recessions, and low-income workers are losing employer-sponsored health insurance faster than others.
Rather than using misleading multiyear figures to argue that the state cannot afford to expand Medicaid coverage to its struggling citizens, Georgia’s leaders should realize that we cannot afford to lose out on this incredible opportunity to insure its neediest citizens and bring hundreds of millions of dollars into the state’s economy annually.
Timothy Sweeney is the senior health care analyst for the nonpartisan, independent think tank, the Georgia Budget & Policy Institute.
NO: Expansion puts state’s budget under federal control, costs too much.
By Benita Dodd
Like kudzu, Medicaid spending has invaded Georgia and is overtaking all other areas of state spending.
But that’s just one reason that congressional legislation to use Medicaid to expand health coverage to uninsured Americans is bad for Georgia’s government, taxpayers and uninsured.
Medicaid, a federal program administered by the states, is available in Georgia to those who earn up to 100 percent of the federal poverty level, or FPL.
U.S. House legislation would expand Medicaid starting in 2013 to individuals and families with incomes at or below 150 percent of the FPL. Senate legislation would expand eligibility to 133 percent of the FPL starting in 2014.
Now, of every Medicaid dollar spent in Georgia, money from the federal government accounts for 64 cents and state funds accounts for 36 cents. In 2008, Georgia’s total Medicaid spending was about $6.5 billion, or 16.9 percent of the budget.
The new legislation would make the state responsible for just 10 percent of the cost of the expanded program, so proponents see the expansion as “economic stimulus” and a bargain because the money “comes from the feds.”
That parochial view ignores the source of the federal funds — the wallets of Americans.
Current estimates are that the expansion would require Georgia to find another $2.6 billion over five years. The more people that enroll, the more state money Georgia must spend to receive federal funds.
Expanded Medicaid eligibility and expanded federal mandates will increase state spending.
And states must balance their budget; they may not run a deficit.
Can you say tax increase?
Not only would the expansion slowly strangle the state fiscally, crowding out other needs, it would make a huge portion of Georgia’s budget subject to federal largesse and control.
The House legislation includes more than a dozen provisions that turn what now are state options into federal requirements. What happens if, once the expansion is in place, the federal government changes the funding formula and cuts funding?
The expansion will increase prices for individuals, too. Cost-shifting by public programs such as Medicare and Medicare already hikes the typical family’s premium for private coverage by $1,512 a year, according to the actuarial firm Milliman. That hidden tax hides the true cost of these government programs.
Medicaid underpayments to health care providers, meanwhile, become a disincentive to treat such patients.
According to the Georgia Hospital Association, for every dollar Georgia hospitals spend treating Medicaid inpatients, the state pays them about 84 cents.
Meanwhile, Medicaid recipients use the (costly) emergency room more frequently than patients with private insurance — 82 per 100 recipients for Medicaid vs. 21 per 100 for private insurance.
Whether because of recipients’ ignorance, apathy or a shortage of available physicians — 40 percent of the nation’s physicians refuse to accept Medicaid patients — the problem is likely to grow as enrollment increases and there is no accompanying increase in providers.
Another study found that uninsured patients were more likely to pay their bills than Medicaid recipients: In fact, 35 percent of charges for uninsured visits were paid in 2004, compared with 33 percent for Medicaid visits.
If the question is how to expand health coverage to more uninsured, the answer is not Medicaid. The Heritage Foundation finds that states could actually save $1 trillion over 10 years by opting out of Medicaid.
For Georgia, continuing the program with state-only dollars would save the state $2.2 billion from 2013-2019, Heritage estimates.
Offering income-based premium assistance to obtain affordable insurance in a competitive market is far more effective and efficient in providing coverage, choice and quality of care to uninsured Georgians.
Benita Dodd is vice president of the Georgia Public Policy Foundation, a state-based free-market think tank.
