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Wednesday, January 23, 2013

How Republicans learned to stop worrying and love the healthcare exchange

Posted by on Wed, Jan 23, 2013 at 7:53 PM

John Burris image
  • Rep. John Burris was vocally skeptical of expansion benefits

Republican lawmakers pushed a pair of new arguments against Medicaid expansion over the last two days in the House and Senate Public Health, Welfare and Labor committees. In the House Committee, which met yesterday, Committee Chairman John Burris (R-Harrison) complained that insufficient attention has been paid to possible financial gains for hospitals from newly insured folks on the healthcare exchange. Meanwhile, in the Senate committee this morning, Sen. Jonathan Dismang focused on the possible advantages of a subset of the Medicaid expansion population buying subsidized health insurance on the exchange. Both were strident and sharply critical in their questioning of the speakers, Surgeon General Joe Thompson and UAMS Chancellor Daniel Rahn (each testified before both the House and Senate committees).

As we noted, Dismang didn’t mention his idea of the state further subsidizing folks between 100 and 138 percent of the federal poverty level (FPL) to buy insurance on the exchange, on top of federal subsidies. But he’s clearly focused on that 100-138 group.

Dismang hectored Thompson, repeatedly asking, “Do you believe that the folks from 100 to 138 percent should be allowed to utilize tax credits that are currently offered in the Affordable Care Act?” He demanded a “yes or no” but Thompson declined, saying that it was not a yes-or-no question.

The source of the dispute: if we expand Medicaid, the 100-138 group will be covered by Medicaid; if we don't expand Medicaid, they'll be eligible for subsidies on the exchange (thus, not a "yes or no" question for Thompson, who supports full expansion, but would support the 100-138 group getting subsidies if we don't expand).

The wrinkle in the law that's causing this tiff is an overlap in coverage between 100 and 138 that was meant to mitigate against the possibility of people getting lost in the system if they transition between income levels. So while the exchange offers subsidies to buy health insurance for anyone between 100 and 400 percent of the FPL, it does not offer those subsidies to anyone already covered by Medicaid (since, well, they're already covered). The assumption was that the group between 0 and 138 would be covered by expansion, but now that states can opt out, that's no sure thing.

In an odd turn, Dismang is casting himself as defender of low-income folks between that 100 and 138 line. He thinks they should be able to buy government-subsidized insurance on the exchange. And he's correct that if they were Medicaid-eligible, they would not get subsidies on the exchange. From the meeting today:

Currently, without full expansion, the folks from 100-138 . . . have available to them some generous subsides so they can take ownership of their own healthcare...If we expand Medicaid fully, to 138, those subsidies go away because they would have [Medicaid]...I want us to make a decision on what we want: Do we want these folks to have the right to buy their own private health insurance… I believe that the average Arkansan wants that. I think they would rather have the option to have a subsidy, and get their own private healthcare, than they would for the state to force those individuals to have the Medicaid expansion.

Dismang also noted that reimbursements to hospitals would be higher from private insurers than from Medicaid, so hospitals could potentially get more profit out of the 100-138 group if they’re on the exchange.

Leave aside the assertion that very low-income folks who currently do not have health insurance (100-138 is around $11,000 to $15,000 for an individual) would prefer to pay around $25 a month for private health insurance than get public health insurance for free. And leave aside the fact that, as Thompson pointed out, the feds have said that expansion is all or nothing, so as it stands, you’d be abandoning folks below 100 FPL just to get the 100-138 folks on the exchange instead of Medicaid. The really wild part is that Dismang, who strongly opposed Obamacare, is talking about a RIGHT to GOVERNMENT-SUBSIDIZED health insurance. You can see him get a little squeamish on this point in an interview with Roby Brock this afternoon.

Whatever works, the opposition soldiers on.

Similar note from Burris yesterday, who implied that hospitals would get such big profits from folks on the exchange that concerns about losing out on the expansion population might be overblown. He complained that the various studies haven't looked at the impact of the exchange alone.

That's not much of an argument against expansion, but Burris does have a point that it would be helpful to know the breakdown between the impact of the exchange and the impact of expansion. The RAND report includes both in its economic stimulus estimate but didn’t distinguish between them. Likewise, the DHS study doesn’t include an estimate on what savings would occur from the 100-138 group being on the exchange even if we don’t expand Medicaid. Both are working on updates that would provide answers to these complicated but important questions (sadly it does not, as Burris said, “take a week to snap out a study”).

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