Medicaid Defies Naysayers, Functions at 50

Let's not forget the economic benefits that Medicaid provides for rural America. The money paid to providers, however insufficient, is better than swallowing the cost whole with no reimbursement.

Much has been written of late to note the 50th anniversary of Medicare and Medicaid, and with good reason. Despite their many problems and budgetary pressures, these two programs are among the most successful pieces of legislation in the history of the United States. It would be fair to say that Medicare and Medicaid have improved, enriched and lengthened the lives of tens of millions of Americans.

For my purposes, I'll concentrate today on Medicaid, which critics hate, not because it doesn't work, but because it does. Yes, the reimbursements are too low. Yes, mandates such as the Two-Midnight Rule have no basis in reality. Yes, recovery audit contractors are like pit bulls that must be leashed and held financially accountable for over-zealous auditing. Yes, Medicaid strains state budgets. There is no shortage of complaints.

Nonetheless, the program and its many experiments and pilot projects in various states demonstrate that government can innovate and provide access to healthcare for the poor and the sick, a demographic that commercial health insurance companies (and some providers)  generally avoid because they're— so far— not profitable when you take on the risk.

What would we be like without Medicaid? Unfortunately, to some extent that's not just a rhetorical question. The 21 states that have declined to expand their Medicaid populations under the Patient Protection and Affordable Care Act provide a sad comparison to those states that have expanded their rolls. For example, a study this spring by the Kaiser Family Foundation found that if the 21 states that had not expanded Medicaid were to do so, then:

• The number of nonelderly people enrolled in Medicaid would increase by nearly 7 million, or 40%.
• 4.3 million fewer people would be uninsured.
• There would be $472 billion more federal Medicaid spending from 2015 to 2024.
• States would spend $38 billion more on Medicaid from 2015 to 2024.
• Savings on reduced uncompensated care would offset between 13% - 25% of that additional state spending.
• States would be able to realize other types of budgetary savings if they expanded Medicaid that are not included in this report.

The alleged reason why elected leaders in these states say won't expand their Medicaid populations is because they're afraid of an expensive entitlement program that they won't be able to afford. Yes, it is expensive, but doing nothing costs more both in terms of dollars and lives.

The Cost of Uncompensated Care
"Many of the states that have decided against Medicaid expansion are those who would gain the most," the KFF report noted. "This applies when examining the impact of expansion on the uninsured, increases in federal Medicaid funding, or reductions in uncompensated care."

"Reduced costs for uncompensated care are one of several sources of savings that would help to mitigate that increase in state costs," the study found. "Assuming that states only realize 25% to 50% of the reduction in their share of uncompensated care, those savings would offset 13%— 25% of the total increase in state Medicaid spending due to expansion. In addition, states could realize other types of budgetary savings and increases in revenue if they expanded Medicaid that are not included in this report."

Jodi Schmidt, a career rural hospital and Federally Qualified Health Center administrator from Kansas, and president of the National Rural Health Association, told Congress last week that Medicaid is particularly vital for rural America. Unfortunately, the majority of rural residents in this country live in states that are not expanding Medicaid. In fact, poor and rural states are least likely to expand Medicaid, even though their residents rely upon it the most.

Rural hospitals in these states continue to serve the uninsured, but reductions in disproportionate share payments and other Medicare and Medicaid reimbursement reductions have forced 55 rural hospitals to close since 2010, and 283 others are close to closing.

NRHA estimates that if those hospitals close, 700,000 rural patients will lose access to their local hospital; 50,000 jobs in rural America will be lost; and $10.6 billion in economic harm.

"After nearly 3 decades as a rural hospital, clinic and FQHC administrator, I have never been more concerned about the future. The rural safety net is unraveling," Schmidt told Congress. "I believe we must explore Medicaid Expansion through partnerships with organizations other than the state, working together to address the gap between traditional Medicaid and eligibility for the exchange," Schmidt says.

"Provider-based demonstration programs have proven successful, as the precursors to the Critical Access Hospital program, among others. If allowed the opportunity to create innovative new approaches to expanding Medicaid, I feel confident you will find willing providers."

Let's not forget the economic benefits that Medicaid provides for rural America. The money paid to providers – however insufficient – is better than swallowing the cost whole with no reimbursement. And the money paid to rural hospitals and other providers helps to pay for the salaries of employees. That money is in turned cycled through the community in the form of goods and services. If those hospitals close, those tiny economic engines seize up.

Of course, refusing to expand Medicaid was never about sound health policy or state budgets. It has always been about partisan politics, with a side dish of rigid ideology that insists that government can do nothing correctly and government doesn't create jobs.

People who actually deliver the care know better. They've seen what Medicaid can do, every day.