Lipstick and pigs: Medicaid reform and expansion

By Aaron Rice
October 21, 2019

Over the past year, a steady stream of op-eds have appeared in the Daily Leader and other media outlets promoting either Medicaid expansion or something called Medicaid reform.

These terms are not being accurately used, creating a false dichotomy for the uninformed reader. In order to have a balanced dialogue about both Medicaid expansion and Medicaid “reform,” we should begin by defining what is meant by both.

Medicaid is a joint federal-state health insurance program mostly controlled by the federal government. Most important, federal law determines the baseline for eligibility. States, however, are somewhat free to add additional coverage populations and services. The Affordable Care Act (“Obamacare”) attempted to force every state to expand Medicaid coverage to include able-bodied childless adults earning up to 138 percent of the federal poverty level.

The Supreme Court nullified this expansion as unconstitutionally coercive in a 2012 decision, NFIB v. Sebelius. Thereafter, states were free to decide for themselves whether to expand Medicaid to able-bodied childless adults. To date, 14 states, including Mississippi, have declined to expand Medicaid.

When policymakers debate “Medicaid expansion,” they are properly considering whether to expand Medicaid to able-bodied childless adults earning up to 138 percent of the federal poverty level. For some reason, the ACA deemed this population as most worthy of coverage, offering a 90 percent funding match. No other population is eligible for this match – not children, not the disabled, not the elderly.

Medicaid “reform” is a little bit harder to define. Some on the Left want to “reform” and “expand” Medicaid by creating a “Medicaid for All” program. Some on the Right would “reform” Medicaid by eliminating it altogether. In all fairness, neither the complete expansion nor the complete contraction of a program is a “reform.” In common parlance, a “re-form” implies the preservation of the form of the existing thing, even if that thing undergoes an extensive overhaul.

Seen in this light, it is clear that – contrary to a recent op-ed, “A conservative vote for Jim Hood” – allowing Mississippi hospitals to act as another managed care provider is not a reform. This is not to comment one way or another on whether the “Mississippi True” plan is sound or not.

It is simply to let people know that adding another managed care provider to the Medicaid insurance marketplace is a lot like adding another fast food provider to Brookhaven’s current offerings. Whether its McDonald’s or Burger King or Taco Bell, they pretty much all do the same thing and aren’t going to bring about a “reform” of anyone’s eating habits.

The second usage of the phrase “Medicaid reform” refers to a plan promoted by the hospitals called Mississippi Cares, which includes the hospital-run managed care plan. This plan would be based on a program signed into law by Mike Pence when he was governor of Indiana.

Over the past few years, the “[insert state] Cares” plan has made the rounds in Republican states. Another recent op-ed – “Medicaid reform needed in Mississippi” – tells us that what Tate Reeves calls Medicaid “expansion” is actually what the hospital association calls Medicaid “reform.”

In fact, the Healthy Indiana Plan (HIP 2.0) is both an expansion and a reform, albeit a very mild reform. Five years in, HIP 2.0 is showing the limits of what states can accomplish by tinkering around the edges of Medicaid. To begin with, Indiana’s Medicaid work requirement is being challenged in court, as are similar requirements in other states. Second, the copays are quite low, albeit higher than traditional Medicaid.

For these and other reasons, the plan is not paying for itself. In 2014, Pence’s office explicitly promised that “HIP 2.0 will not raise taxes and will be fully funded through Indiana’s existing cigarette tax revenue and Hospital Assessment Fee program, in addition to federal Medicaid funding.”

Yet, in 2019, Indiana increased taxes on several fronts in order to help pay for higher than anticipated Medicaid costs. Indiana lawmakers also came very close to tripling the cigarette tax because, as the Indiana Hospital Association now readily admits, “The hospitals’ share [of HIP 2.0] is increasing at an unsustainable rate, and increasing the cigarette tax can help provide necessary relief to hospitals.”

Perhaps worst of all, Indiana’s health care costs for employer-based insurance plans are so high that out-of-state companies have adopted the mantra of “ABI: Anywhere But Indiana.” As a January 2019 report demonstrates, not even millions in profits from Medicaid expansion is preventing hospitals from shifting costs to consumers with private insurance.

Indiana’s experience with Medicaid expansion is the same as every other state’s: expensive and of arguable value for anyone but the hospitals. There is no reason to expect different results for Mississippi, even if expansion is cloaked in a veneer of “reform.”

This column appeared in the Daily Leader on October 20, 2019.


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