Taking Medicaid money is the best option

Lagniappe, Rob Holbert, Nov. 27, 2013

Even as we are busily taping Tide boxes and toilet paper together, or practicing screaming “War Damn Eagle!” at top volume in preparation for the coming battle of the titans, another heavyweight fight has been underway for several months, but attracting a fraction of the attention of our gridiron showdown.

I’m sure the subject of Medicaid expansion has about one percent of the sexiness of A.J.’s girlfriend eating a hamburger, but the long-term effects of our choices will far outlast a faded T-shirt or dirty hat commemorating whichever team wins this weekend. How the state approaches a Medicaid expansion worth $1.5 billion annually is important enough that it’s led to a public spat between Gov. Robert Bentley and Retirement Systems of Alabama head David Bronner.

This giant expansion of Medicaid comes along with the Affordable Healthcare Act — Obamacare to most of us. And it is no doubt an attempt to massively expand the reach of a federal program that takes care of many of the nation’s poor, while simultaneously serving as a frequent example of government programs that grow larger and more wasteful each year.

In this particular case, the feds are offering the states opportunities to vastly expand Medicaid with most of the costs being covered by Washington — especially in the first three years when Uncle Sam would handle 100 percent of the bill. Eventually the states would settle into paying 10 percent of the costs of the expansion, which is still a far better deal that we currently get. Right now we pay 31 percent, so it sounds pretty good, right?

That’s what Bronner thinks. He has been going after Bentley rather strongly over the past several months in his RSA newsletter, “Adviser” because the governor decided to turn down the money. The RSA chief’s language has been tough and he makes no bones about saying Bentley’s decision is nothing short of dumb.

For his part, Bentley points to the current problems with Medicaid in Alabama, which costs us about $600 million, and says he’s more interested in repairing those than expanding a dysfunctional program.

“Medicaid in Alabama for years has been a broken system, and our focus is on fixing the system – not expanding something that’s broken,” the governor’s spokesperson told me the other day.

Bentley recently signed Senate Bill 340, aimed at revamping the system, moving it from the current fee-for-service model to a managed care structure where Medicaid will enter into contracts with regional care organizations that will provide care at set costs. His people say the governor would rather focus on repairing what we have than expanding it to cover 350,000 more poor Alabamians who currently don’t have sufficient healthcare. He has also commissioned a Medicaid Pharmacy Study aimed at reducing costs there as well.

As his Director of Communications Jeremy King said, the governor doesn’t want to just “dump more money” on the problem, instead he wants to fix it.

Bronner, however, argues the expansion not only greatly expands coverage for the poor, it will serve as an economic engine that will produce tens of thousands of jobs across the state. Although he hasn’t been specific about what those jobs will be, pro-expansion essays on what would happen in Alabama claim the influx of $1.5 billion annually from the feds would lead to hospital improvements, more healthcare jobs, construction jobs and consumer spending. They stop just short of predicting the number of new Subway Sandwich shops we’ll get out of the deal.

Bronner has gone so far as saying the economic jolt to the state’s economy from Medicaid expansion would be far greater than the jet companies, boat builders and car manufacturers we’re constantly chasing. That might be a bit rosy, but it’s hard to argue that pouring $1.5 billion in federal money into the state’s economy each year wouldn’t have some positive effect. Healthcare is among the largest of businesses in Alabama’s biggest cities.

Both men make some points, but I’m not sure all the cards are on the table. The governor’s contention that he’s fixing our current system and therefore doesn’t want to deal with expansion doesn’t make much sense. I can’t think of many problems more money can’t help, especially if, as Bentley says, he’s already setting up the framework to make Alabama’s Medicaid run like a German train.

If so, then how is an extra $4.5 billion over the next three years going to hurt? Properly managed it would seem such a windfall could provide a far better healthcare system within the state while also being good for Bama’s bottom line.

Much of this probably has to do with the disaster of Obamacare itself. Close to half the states in the union are rejecting the “free” money coming from Medicaid expansion and I’d imagine most of that is a rejection of Obamacare, which has stumbled out of the gate like a drunk on a three-week bender, only with less coherence and chance of getting where it’s trying to go.

At the same time, however, because the AHA is the law of the land, there is more uncertainty than ever for most of us concerning health insurance. The president’s promises we could keep our plans and doctors were hollow campaign trail rhetoric, and in some ways that actually supports taking the expansion money. I’ve already read stories of people being forced onto the Medicaid rolls because of massive hikes in their insurance premiums.

The downside, of course, is expanding a federal program is hardly a recipe for the country’s financial wellbeing, and it’s hard to imagine how such giant increases in Medicaid spending can be afforded at a time when we’re running doomsday deficits.

Still, those uncovered poor are going somewhere to get treatment, and it’s likely to be emergency rooms where costs are phenomenally higher.

The idea that taking the Medicaid expansion is just getting back some of “our money” might ring truer in some other state, but Alabama is your lazy uncle Joe who’s always looking for a handout. We already get back far more from the Feds than we give. But it’s hardly likely that any money Bentley turns down will remain unspent in DC.

While I understand the governor’s reticence in supporting Obamacare, at this point it seems logical that if he indeed has a solid plan for repairing the state’s Medicaid plan as it currently exists, he could find a way to wisely use this huge influx of federal money to help more poor Alabamians while also helping the bottom line in Montgomery and even keeping it from being wasted in Washington.

Hold your nose and take the money, Governor.

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