As you may have heard, Healthcare.gov, the online insurance marketplace established under Obamacare, is having some trouble. The Washington Post reported Monday that tests conducted days before the site went live foreshadowed its current paralysis, while contractors predict it will be weeks before they can fully repair the system. As many as 5 million lines of code may have to be rewritten.
These are significant issues: without a functional web portal, people in more than half the states won’t be able to sign up for insurance. Why the site is such a mess is certainly an interesting story. But the sudden media swarm from the right and the left seems out of proportion, since practical and political repercussions will be minimal unless the site’s troubles fully wreck the rollout, which won’t be clear for several weeks.
The persistence of ideologically driven challenges to the healthcare law at the state level is more likely to keep millions uninsured. Healthcare.gov’s problems—and their solutions—are technical, not political. They may reflect unreadiness and even incompetence, but not cruelty and dishonesty.
Resistance to the expansion of Medicaid falls into that second category. Two-thirds of low-income blacks and single mothers, along with more than half of uninsured, low-wage workers, are likely to remain uninsured because they live in one of the states that have declined to expand the program.
Conservative groups like Americans for Prosperity, flush with cash from the billionaire Koch brothers, are running an aggressive ground game against expansion in undecided states including Virginia, Louisiana, Michigan and Pennsylvania. They are punishing supportive Republican lawmakers with radio spots and mailers, and by contacting their constituents directly via phone or at their doors. The Koch-backed National Center for Policy Analysis sent a witness to testify against expansion at a hearing in Virginia this week, where Obamacare is a major point in the gubernatorial race.
The decision these undecided states make about Medicaid could shift the calculus in other Republican-controlled states, even those that have already decided not to expand the program. Already there are signs that conservative governors are re-evaluating their positions, compelled by financial incentives.
On Monday, Ohio became the fourth GOP-controlled state to expand the Medicaid program. In a direct rebuttal of his fellow Republicans in the state legislature, governor John Kasich asked a state board that oversees adjustments in the budget to accept $2.5 billion in new Medicaid funds. The board voted to do so, extending eligibility to 275,000 adults. The conservative Buckeye Institute and the 1851 Center for Constitutional Law immediately declared that they would challenge the board’s jurisdiction in court.
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Kasich’s push for the expansion does not represent a shift in his feeling for Obamacare, which he opposes. Rather, it reflects recognition of the economic benefits expected to result from accepting billions of federal dollars: it’s expected to save Ohio $404 million over two years. The Ohio Chamber of Commerce supported Kasich’s move, as did hospitals and clinics throughout the state.
Kasich’s decision may encourage other conservative governors to expand their Medicaid programs eventually, particularly if Kasich survives his re-election campaign next year. But a more likely trend has been set by Arkansas, which put forward an alternative model for low-income, uninsured adults through which federal money would subsidize the purchase of private plans on the state’s new insurance exchange, rather than go directly to the Medicaid program. Iowa is waiting for approval of a similar model, and Maine’s governor, who vetoed state legislators’ approval of the expansion, indicated that he will consider an alternative approach.
Certain measures in the Arkansas and Iowa plans could help reduce healthcare costs—for example, by encouraging preventive care and penalizing unnecessary visits to emergency rooms. But it costs the government more to subsidize beneficiaries on the exchange than to pay their bills through Medicaid, and it isn’t clear who would pick up the extra expense. And while Medicaid strictly limits deductibles and co-pays, many private plans offered through the insurance exchanges are expected to require significant cost-sharing.
In Pennsylvania, Republican Governor Tom Corbett has proposed a complete overhaul of the state’s Medicaid program in exchange for accepting federal funds to subsidize the purchase of private insurance for low-income residents. An analysis by the state’s Independent Fiscal Office concluded that these expansion funds would add a net $255 million a year to Pennsylvania’s budget, while a Rand Corporation study said expansion would add more than $3 billion to the state’s economy each year, along with 35,000 jobs. At the same time, Corbett wants to raise Medicaid recipients’ monthly co-pay, reduce the services covered by the program, and institute a work requirement.
Clearly these alternative plans aren’t perfect, but little about healthcare reform is. What’s significant is the slow-growing recognition in some red states that refusing to extend insurance coverage to poor Americans out of ideological spite simply doesn’t add up.
In contrast to the clear fiscal and ethical reasons for expansion, the arguments against it are seriously flawed. Citing data indicating that Medicare patients tend to be sicker than the uninsured, opponents claim that no health insurance at all is better than enrolling in the program. That’s an unsubstantiated conclusion, as Paul Krugman explains: “Sick people are likely to have low incomes; more generally, low-income Americans who qualify for Medicaid just tend in general to have poor health.” Many of those who forego insurance are young, therefore more likely to be healthy.
A functioning Healthcare.gov is critical to the healthcare law’s success, but the Medicaid expansion is its heart: about half of those gaining insurance through Obamacare were expected to be new Medicaid recipients, many of whom live below the poverty line but above the eligibility threshold set by their home state. Unlike the federal exchange, the Medicaid website is working, and enrollment is strong. That makes an interesting case for a simpler system for everyone else. Single-payer, anyone?
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