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Wednesday, July 30, 2014

Obamacare, Medicaid Expansion, And The Politics of Poverty

This is a guest post by Capital Good Fund intern Stephanie Johnson

The Patient Protection and Affordable Care Act, commonly referred to as Obamacare, is the Obama administration's signature piece of legislation. Passed in 2010, it is a complete overhaul of the United States’ healthcare system, with the ultimate goal of providing health insurance to the vast majority of Americans. The impetus for the ACA was the fact that for years health care costs had been exceeding the rate of inflation, to the point that by 2009 national health care spending exceeded $2.5 trillion, or ~17% of Gross Domestic Product[1]

Image Credit: Mark Fischer
 Ever since the debate over health insurance reform began, the issue has been deeply polarizing and partisan, resulting in a number of legal challenges, of which many have ended up in U.S. Supreme Court. A source of particular controversy was the federal mandate to raise the Medicaid eligibility bar to all individuals living at up to 138% of the federal poverty line. In effect expanding Medicaid coverage from $15,730 to $21,707.40 for a family of two, for instance, this move captures a majority of the uninsured population in the United States.  Many states sued the federal government, claiming that the mandate impinged on their sovereignty, even though the federal government would cover 100% of the costs through 2016, and between 93% and 95% of expansion costs thereafter[2].  Unfortunately, in June of 2012 the Supreme Court ruled in the National Federation of Independent Business V. Sebelius that the states had the right to choose whether to or not to participate in Medicaid expansion.
As of mid-2014, 26 states and the District of Columbia had agreed to expand their Medicaid programs. Four states are still considering expansion. Of the 20 states that are not expanding, all have Republican governors or heavily Republican-run state legislatures.  Given the numerous benefits to the states and the minimal, if not nonexistent costs, the choice between expanding and not expanding has largely become a political one. As a result, the states that are most ideologically opposed to expanding their Medicaid programs are seeing high health care costs and large populations that remain uninsured.

In Rhode Island, the Medicaid expansion has been implemented quite efficiently. Public insurance has seen a huge influx of new members in 2014 and more people than ever are seeking preventive services and building relationships with primary care physicians rather than relying on the emergency room. While it is difficult to predict the long-term fiscal effects of fewer emergency visits on the health care system, it can be assumed that having a largely covered population will make Rhode Island families healthier than ever before. This is the key to understanding the political battle surrounding Medicaid expansion. Beneath the layers of intense argument and ideological divide are millions of people who have waited decades for steady health coverage. The entire country will be looking at states that have led the trend towards expansion before they decide what steps to take next. 

According to HealthSource RI and the RI Office of Health and Human Services, about 65,000 Rhode Islanders signed up for Medicaid between October 2013 and March 2014. This huge influx of individuals reflects the success of Medicaid expansion efforts in the Ocean State. While much data is still being compiled about the impact of the ACA on national health expenditures, projections from the Centers for Medicare and Medicaid Services indicate that rates of growth in health care are slowing (yes, expenses are still growing, just less quickly).  Health expenditures as a percentage of GDP should stagnate in the next few years. And in the long run, expanding access to preventive care for the poor and near-poor should do more than cut costs: it should also reduce levels of poverty, chronic absenteeism for children, and deaths from preventable diseases, among other benefits.

(Data and legislative information from Kaiser Family Foundation website)

[2] 90% of costs will be covered by the federal government after 2020

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