“Alternative” Plan to Medicaid Expansion?

“ALTERNATIVE” TO GOVERNMENT SPENDING PLAN TURNS OUT TO BE LESS AMBITIOUS GOVERNMENT SPENDING PLAN. IS THERE A PLAN C?

Yesterday the House Republican Caucus met with reporters about a plan to pass an “alternative” to Obamacare’s Medicaid expansion by means of the state budget. Rather than making the plan available to the public and media in a clear form, caucus members first relayed it verbally to members of the news media, then made it available to members of the committee on the very day it was to be voted on (see pages 8-10 of the proposal here.)

Since the “plan” is actually just part of the state budget, there was no real debate on it. In any case, the budget passed the committee unanimously.

The plan’s general idea is to bring health care costs down by various forms of government expenditure. The three principal means are these: First, the state would pay hospitals $35 million to direct low-income patients with non-emergency needs away from emergency rooms and to federally funded clinics. Second, the plan would direct $10 million to the clinics to pay for the consequent increased costs. And third, $20 million ($14 million of which is federal money) would pay rural hospitals 100 percent of the costs of covering uncompensated care for low-income patients.

(The plan includes other, smaller provisions, such as $3 million allotment to help repay student loans of doctors who take jobs in underprivileged communities; $8 million to expand a tele-medicine program at MUSC; and $7 million to help disabled persons pay for residential care.)

We foresee three general problems with this proposal.

(1) The plan’s proponents say it will cost “no new state money” by using $62 million allocated last year to the Department of Health and Human Services. Leave aside the question of why a state agency – a state agency that ordinarily claims to be in dire need of more funding – has 62 million unused dollars lying around. The bigger consideration is that this proposal involves a recurring expense. Presumably DHHS will not always have an extra $62 million on hand. What then? This alone doesn’t mean it’s a terrible plan, but the fact that its proponents are trying to sell it with such an obviously disingenuous claim is troubling.

(2) The 100 percent reimbursement for rural hospitals to pay for uncompensated care will not encourage healthy behavior; it will do the opposite – and so increase costs in the long run. If people know their hospital bills will be paid in full, what reason do they have to make healthier choices? Further, if the costs are already paid, what reason will rural hospitals have to try and dissuade patients from using hospital care (including emergency care) for medically insignificant reasons?

Finally, (3) this “alternative” plan seeks to address high health care costs in the same way Obamacare does, only with much less money. The essential problem with the Affordable Care Act is that it does nothing to address the basic causes of skyrocketing costs, and this plan is a small version of the same mistaken approach. There are a number of policy changes that could lower those costs of health care and health insurance in the short and long term – for everyone, including low-income patients. The most important of those would be to abolish the state’s many coverage mandates: these tend to limit choices and drive up health insurance prices for everyone. (Read other policy recommendations here.) Yet the House GOP proposal does nothing even to consider these kinds of changes; it simply appropriates money to a variety of programs and entities – as if there has ever been an instance of government appropriations leading to sustained lower costs in any sector of any economy.

The desire to appear to be “doing something” is understandable. But instead of burdening the taxpayer with more recurring obligations – the total cost of the plan for the first year, including federal and state money, is somewhere around $83 million – lawmakers should concentrate on unburdening the state’s health care market.