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Moody’s: Refusing Medicaid Expansion Will ‘Put Pressure’ On State And Hospital Credit Ratings

Investor services and credit rating agency Moody’s has some news for GOP governors hesitant to expand their state Medicaid programs under Obamacare: either hospitals in states refusing the expansion, or the states themselves, will feel pressure on their credit ratings due to higher uncompensated care costs and cash-strapped budgets.

In a press release regarding a new Moody’s report on Medicaid expansion, the agency explains that refusing the expansion would by necessity force one of these institutions or the other to lose out — since the resulting increase in the ranks of uninsured, low-income Americans would put fiscal strains on safety net hospitals or the state at large. As Nicole Johnson, a Senior Vice President at Moody’s, explained, “States that opt out of Medicaid expansion will have to choose whether to compensate for the shortfalls with their own funds or leave hospitals to absorb the costs, which will increase rating pressure on the hospitals. States that choose to fund uncompensated care costs themselves could face budgetary strain.”

As the press release notes, refusing to expand Medicaid would significantly increase uncompensated care costs for hospitals that cater to low-income Americans because Obamacare institutes deep cuts to reimbursements made to these “disproportionate share hospitals,” or DSHs. This is because lawmakers originally expected the expansion to be mandatory for all states, thus lowering the need for DSH payments — but the Supreme Court ruled that provision to be optional, instead.

Moody’s has consistently argued that Obamacare is a good deal for hospitals and states. In fact, before the Supreme Court had issued its ruling on Obamacare, Moody’s released a statement saying that “the best possible outcome from the Supreme Court would be a full confirmation of the law” because that would be “credit neutral.” They also warned that possible hits to credit ratings would not just be limited to safety net hospitals, because, “With fewer people covered by healthcare insurance, for-profit hospitals will face increased bad-debt exposure and reduced reimbursement rates.”

Now, in their latest report, the agency asserts that the negative effects of refusing to expand Medicaid “will be greatest in states that opt out of Medicaid expansion, but have a relatively high proportion of uninsured residents.” That describes many states led by GOP governors, who have recently been coming to embrace the expansion after intense lobbying by advocates for the poor and hospital associations that are concerned about these very uncompensated care costs. But many of these GOP governors face an uphill battle against members of their own party when it comes to expanding Medicaid.

Health

GOP Governors Refusing To Expand Medicaid Could Cost Their States’ Employers More Than $1 Billion

The Republican governors who are refusing to accept Obamacare’s optional expansion of the Medicaid program typically cite financial concerns; despite all evidence to the contrary, GOP leaders claim that accepting federal funds to extend health coverage to additional low-income American will end up being too costly for their states. According to a new study, however, they have it backwards. Continuing to resist health reform could be significantly financially riskier than simply agreeing to expand Medicaid.

Each governor resisting Medicaid expansion could end up costing the employers in their state over $1 billion dollars, a new Jackson Hewitt Tax Service report finds. That’s because, since the health reform law seeks to ensure that everyone has access to insurance, Obamacare holds businesses with more than 50 employees responsible for making sure their workers have adequate benefits. Employers won’t be penalized for failing to offer health care to their low-wage workers if those employees can access public insurance through Medicaid — but if states don’t expand their Medicaid pools, the workers who have no other way to get health care could end up costing their employers:

A clause in the 2010 health-care overhaul penalizes some employers when their workers aren’t able to obtain affordable medical coverage through the company. Employers can avoid those fees if their workers qualify for Medicaid as part of an expansion that as many as 22 states have rejected, according to a report today by Jackson Hewitt Tax Service Inc.

Without Medicaid, a “shared responsibility” payment of as much as $3,000 may be triggered for each employee who can’t get insurance through their company. In Texas, the largest state to refuse to increase Medicaid, employers may be liable for as much as $448 million in fines, the study found. In Florida, where the legislature has refused an expansion supported by Governor Rick Scott, employers may pay as much as $219 million. [...]

Of course, this won’t come as welcome news to many of the companies that have so far gotten away with denying their workers health benefits. Employers are decrying Obamacare’s “shared responsibility” provision for potentially raising their costs, threatening to slash their workers’ hours, freeze hiring and lay off staff, or raise the prices for their products.

But the health law is simply trying to work within an employer-based insurance system that hasn’t historically been able to ensure that poor Americans can access the benefits they need. If low-wage workers can’t qualify for public insurance programs because their governors won’t expand Medicaid’s eligibility levels, then they will need to be able to get health care from their employers. And if their bosses won’t provide it, they’ll have to turn to the subsidized insurance on Obamacare’s health exchanges — triggering the employer fine.

Even aside from Medicaid expansion’s potential to help alleviate the “shared responsibility” fee, several reports have projected that the states choosing to expand their Medicaid programs will actually save money by doing so. The financial benefits are largely thanks to the increased federal funding that will free up states’ funds for other purposes, but also because of the reduced strain of providing fewer health services for the uninsured once more people are covered.

Health

GOP Opposition to Obamacare Continues To Crumble: Maine Governor Considers Medicaid Expansion

In a sign of the GOP’s weakening knee-jerk opposition to Obamacare, Maine Governor Paul LePage may be the latest Republican who agrees to cooperate with health reform to extend coverage to 55,000 of his state’s uninsured residents. On Monday, LePage signaled for the first time he may expand Medicaid under the health care law.

According to the Portland Press Herald:

LePage signaled Monday that he’s open to participating in the federal health care law’s Medicaid expansion program, but will seek the “best deal for Mainers.” [...] Adrienne Bennett, LePage’s spokeswoman, said Monday that the administration will initiate discussions with the federal government over a Medicaid expansion. She said the governor will seek assurances that Maine is “getting a return on investment.”

Remember, LePage is the same vocal Obamacare critic who blasted the health law just a few months ago, saying, “Maine will not be complicit in the degradation of our nation’s premier health care system.” And the governor has historically favored contracting, not expanding, Maine’s Medicaid program. Thousands of Maine residents already lost their health coverage earlier this month because LePage dropped nearly 15,000 low-income residents from the Medicaid rolls — and he would have kicked more than twice that number off of the program if the Obama Administration hadn’t stopped him.

If LePage agrees to extend Medicaid coverage, he would join a surprising coalition of GOP governors in states like Arizona, New Mexico, and Nevada.

Health

Why Mississippi’s GOP Governor’s Risky Bet On Medicaid Expansion Could Come Back To Haunt Him

Mississippi, one of the poorest states in the nation, is grappling with what to do about its Medicaid program. A deeply red state where the GOP controls both state houses and the governor’s mansion, Mississippi lawmakers are highly skeptical of Obamacare’s optional Medicaid expansion. So, in a last-ditch effort to protect the state’s low-income residents — as well as the fiscal security of the safety net hospitals that serve them — Democrats in the state senate sent Gov. Phil Bryant (R) a letter expressing their wish to introduce legislation that would automatically trigger a Medicaid expansion if Mississippi’s disproportionate share hospitals (DSHs) buckle under the weight of the payment cuts contained in Obamacare. Unfortunately, Bryant’s initial response to the proposal suggests he doesn’t fully understand the dire consequences awaiting his state’s safety net hospitals without an expansion of Medicaid.

For some context: as part of Obamacare’s efforts to make a dent in government health expenditures, the law contained some pretty deep cuts to so-called “DSH payments” — federal reimbursements to safety net hospitals that cater mostly to the poor and uninsured. Such hospitals need these reimbursements since their patients usually can’t afford the full cost of their care, and the DSH payments help make up for their resulting high uncompensated care costs. But Obamacare cuts these payments in half by the year 2019. The reason? When lawmakers first passed the reform law, they were working under the assumption that its Medicaid expansion would be mandatory, and that an influx of newly-insured Americans on Medicaid would reduce the federal government’s need to dole out DSH payments.

Of course, the Supreme Court ultimately rendered the Medicaid expansion optional and left it to states’ individual discretion. That threw a pretty big wrench into the Obama Administration’s plans, and is a large part of the reason the Administration has been begging states to grow their Medicaid pools; it’s also a large part of the reason that GOP governors in highly uninsured states like Arizona and Florida have embraced expansion, giving into pressure from hospital associations warning that they can’t afford to keep treating poor and uninsured Americans in the face of DSH payment cuts. But Bryant is betting that the federal government won’t actually follow through on the DSH cuts because they would violate the Supreme Court’s ruling that states cannot be “punished” for not expanding Medicaid:

“Without disproportionate share payments, many rural hospitals and hospitals that treat a disproportionate share of uninsured Mississippians will close,” Sen. David Blount, D-Jackson, said during a news conference that two dozen Democrats had in the Capitol rotunda. “People will lose jobs and people will lose access to health care, particularly in our rural communities.”

Bryant said in an interview a short time later he doesn’t believe the federal government will eliminate disproportionate share payments.

“We believe that they would be in violation of the United States Supreme Court decision, which said you can’t punish a state for not expanding Medicaid. And they certainly would be punishing us by doing that. So, I don’t think that ought to be a trigger,” Bryant told reporters in an office next to the House chamber, where he’d been having closed-door meetings with Republican lawmakers.

Read more

Health

Virginia Republican: It Can Be Better To Be Uninsured Than On Medicaid

Lt. Governor candidate Pete Snyder (R-VA)

Lt. Governor candidate Pete Snyder (R-VA)

Wealthy investor and Republican candidate for Virginia Lt. Governor Pete Snyder released a new campaign ad Wednesday criticizing bipartisan efforts to expand Medicaid under Obamacare. In the ad he suggests that poor Virginians might actually be better off uninsured than covered by the Medicaid program.

Snyder cites a study by “Jim DeMint and the conservative Heritage Foundation” to claim the expansion would cost Virginia “more than $900 million over the next eight eight years alone” — a figure that even Gov. Bob McDonnell’s (R) administration disputes. He then warns:

It gets worse. Along with the unprecedented spending, President Obama’s “free money” will force more and more Virginians into Medicaid, a costly program that we all know desperately needs reform. Cause get this: In some cases it hurts the very people it’s meant to help. In fact, a University of Virginia study showed in some cases it’s actually better to be uninsured than to be on Medicaid.

The ad offers no citation for this claim, but attributes the text “increased risk of adjusted mortality” to the University in general.

Watch the video:

In a guest post on the conservative Virginia blog Bearing Drift, Snyder identifies the study in question: a 2010 report by UVA doctors and others. (Snyder also elevates the suspect $902 million price tag claim to “$902 billion,” in an apparent typo in that post.)

That study merely found that — by a difference within the margin of error — Medicaid patients had a fractionally higher in-hospital mortality rate after major surgery than uninsured Americans did between 2003 and 2007. Even with Snyder’s heavy caveats, this does not match his claim. Given that those without insurance during that period were often young and healthy people — and were, by definition, wealthier than those who qualified for Medicaid coverage — it is to be expected that the poorest Americans might have slightly worse medical outcomes.

Moreover, those on Medicaid get good medical care. It provides cost-efficient coverage for lower-income patients who “face elevated health risks” and offers a broad range of services, “including preventive care and special services needed by those with disabilities or other chronic conditions” — at levels “comparable to access provided under private health insurance and far better than access available to the uninsured.” In fact, a study by the Government Accountability Office showed Medicaid beneficiaries were just as happy with their health care as those with private insurance.

Snyder, who claims in the ad to be an “entrepreneur” and “not a career politician,” has been a longtime political operative, working as a Fox News contributor and as senior political director for Republican pollster Frank Luntz, a key leader in the Republican opposition strategy during the Obamacare debate.

Health

Rick Perry: Since The Feds Can’t Keep Immigrants In Prison, They Can’t Be Trusted To Fund Medicaid

During an appearance on Greta Van Sustern’s Fox News program Tuesday evening, Texas Gov. Rick Perry (R) reiterated his well-known opposition to all things Obamacare, particularly the reform law’s optional expansion of the public Medicaid program for low-income Americans.

But while defending Texas’ rejection of the expansion, Perry turned to a rather odd argument to justify his decision — claiming that the Obama Homeland Security Department’s release of thousands of nonviolent immigrants from detention centers somehow proves that the federal government cannot be trusted to fund states’ Medicaid expansions:

VAN SUSTEREN: All right, now, let me turn the question to you. You mentioned Medicaid expansion, and you had said, I think as long ago as July, that you were not going to accept the offer to expand Medicaid, which is the federal government pays for. Governor Rick Scott of Florida has changed his mind. Governor Chris Christie — I don’t know if he changed his mind, but accepting that Medicaid. What do you say to — why do you think those two governors are doing it? What’s — and why aren’t you?

PERRY: Well, we looked at this rather intently. The legislature just over the course of the last 24 hours in Texas and the Republican caucus overwhelmingly support the position of not expanding Medicaid. It is a broken system. We have asked the federal government for years to allow us the flexibility to be able to put these programs into place, but the fact is, it’s a broken system. It’s going to cost trillions of dollars to implement this program. But Texans are not going to be blackmailed into expanding a program that then the federal government is telling us they’re going to give us all this free money. Greta, they can’t keep criminals in jail today, much less be able to have extra money to pass out to these states. So the idea that money is going to be available for expanded Medicaid is a pipe dream.

Even aside from the fact that Perry’s argument constitutes a total non sequitur, his portrayal of DHS’s actions is also highly misleading. Earlier this week, DHS Secretary Janet Napolitano — flanked by two former Republican DHS secretaries — explained that the vast majority of the releases were a result of routine movement in detention facilities and unrelated to any government-induced fiscal policy, and that the best method of ensuring border security would be for Congress to pass comprehensive immigration reform.

Perry also repeats a common right-wing talking point that the federal government’s promise to provide the funding for states’ Medicaid expansions is too good to be true, and that the Obama Administration will eventually be forced to go back on its word. But the historical data shows that Perry is dead wrong. The federal government has honored its obligations to funding state Medicaid programs with remarkable consistency, even as the public insurance system has enrolled millions of additional Americans since its inception. The only exception to this occurred between 2009 and 2012, since the stimulus package passed in response to the 2008 global financial crisis “included a deliberate and temporary boost to Medicaid funding to help states buffer against the recession” and “was never meant to be a permanent increase to Medicaid federal match rates” — unlike Obamacare, which is intended to be exactly that.

Health

GOP Governor Begs Her Party To Expand Medicaid: ‘The Human Cost Of This Tragedy Can’t Be Calculated’

Jan Brewer (R), Arizona’s combative GOP governor, stunned political observers and health care reform advocates when she became the third Republican governor to endorse Obamacare’s expansion of the public Medicaid program. That decision is great news for Arizona’s poor and uninsured, as well as for the state’s budget. But it’s been met with fierce resistance from state lawmakers in Brewer’s own party, setting up an unusual showdown between Brewer, hospitals, doctors, and reform advocates on one side, and Republican state lawmakers — who Brewer must still persuade to pass legislation accepting the Medicaid expansion — on the other.

That’s why on Wednesday morning, flanked by Arizona public health officials on the steps of the state Capitol, Brewer begged reticent GOP lawmakers — many of whom showed up in black to protest Brewer’s decision — to look past politics and understand the human and financial toll that failing to pass the expansion would instill on Arizonanas. “The human cost of this tragedy can’t be calculated,” Brewer said. “Remember, there is no Plan B.” Brewer estimated that 50,000 low-income Arizonans would lose health coverage without the expansion.

Study after study has shown that expanding Medicaid is the right move for states’ budget, the poor, and the uninsured, especially considering that the federal government will fully finance states’ Medicaid expansions for the first three years. Republican governors, faced with the reality that Obamacare is here to stay, have finally been inching away from their knee-jerk opposition to the Medicaid expansion after intense lobbying from hospitals and advocacy groups.

But skeptics — particularly GOP lawmakers in Republican-led states open to the expansion — are wary of increasing their Medicaid pools, warning that the federal government may renege on its promise to provide the lion’s share of funding for the expansion. GOP governors will need these lawmakers’ support to actually expand Medicaid, and as Brewer’s example demonstrates, that could make for some intra-party conflict in the eight GOP-led states whose leaders have embraced the expansion.

Health

Now That Jeb Bush May Run For President, He Won’t Publicly Admit He Opposes Medicaid Expansion

Former Florida Gov. Jeb Bush (R) appeared on MSNBC’s The Daily Rundown on Tuesday morning to discuss, among other things, a potential presidential run in 2016. And his future political aspirations are already forcing him to choose his words carefully. Even though Bush is an ardent opponent of Obamacare’s Medicaid expansion in private, he wouldn’t go on the record to oppose Gov. Rick Scott’s (R-FL) recent decision to extend health coverage to an estimated 1.3 million low-income Floridians.

Obamacare’s state-level Medicaid expansion is popular with the public, and an increasing number of GOP leaders — including Florida’s — are finally awakening to the reality that accepting federal funds to expand Medicaid is the right move for their constituents as well as for their state budgets. That shift is forcing anti-Obamacare politicians like Bush to mask their opposition to expansion. When host Chuck Todd asked Bush whether he agreed with Scott’s new position on Medicaid expansion, the former governor claimed he’s been too “busy” to form an opinion on the subject:

TODD: Did you think it was the right decision? Would you have made that call?

BUSH: Anytime you have a chance to advocate reform, you should. So Medicaid needs to be reformed. If you’re going to expand it by 50 percent, it sure better be a dramatically different system. And in Florida, there’s a waiver that has been approved that could be that reform — that expands on the reforms that I had a chance to advocate when I was governor. So if the focus is on making Medicaid work for people and that it won’t create this out year costs that people anticipate, that somehow the reform will yield a better result, then okay. Then give him credit. But I haven’t heard that yet –

TODD: You’re not there yet.

BUSH: I guess I’ve been busy, I haven’t been watching the specifics of it. If that’s the case, kudos to the governor. If it isn’t, then he’s put the state in a precarious position three or four years out.

It’s likely not a politically smart move for Florida’s former governor to publicly come out in opposition to extending health coverage to low-income residents in his state, which has one of the highest uninsurance rates in the nation. As of two weeks ago, however, Bush had made up his mind enough to privately pressure Florida lawmakers to oppose expanding Medicaid — urging them to stand in direct opposition to Rick Scott and come up with an alternative to expansion. Those efforts may have paid off. The state’s GOP-controlled House of Representatives voted to reject Medicaid expansion on Monday, effectively stalling reform.

Bush demurred on his personal position on Scott’s decision, but he did indicate his support for Florida’s Medicaid waiver — which is essentially a proposal to shift the program’s beneficiaries toward private managed care. If Bush does begin paying more attention to the specifics of health policy, he may be interested to learn that Florida’s push to privatize the public program would likely be even more expensive than accepting Obamacare’s traditional expansion, since Medicaid is currently much cheaper than private insurance.

The GOP’s potential presidential candidates are split on the issue of Medicaid expansion. New Jersey Gov. Chris Christie agreed to expand Medicaid just last week — a position that may have landed him in hot water with the conservative establishment — but Louisiana Gov. Bobby Jindal remains opposed it, and Wisconsin Gov. Scott Walker has rejected Obamacare’s Medicaid expansion in favor of a risky proposal that may end up providing his state’s poor residents with a lower quality of coverage.

Update

CNN reports that Jeb Bush is cautiously expressing “doubts” about Florida’s Medicaid expansion. “I have doubts because I think if three years from now, as I understand it, three or four years from now, the deal is that the fed match goes from 95 back to what it is now, which is about 55 in Florida,” Bush said.

Health

Washington Wants To Deny Health Benefits To Formerly Undocumented Immigrants — But Americans Don’t

With Congress engaged in a contentious fight over how to overhaul the nation’s broken immigration system, lawmakers from both parties — including President Obama — see eye-to-eye on at least one aspect of the debate: previously undocumented immigrants who achieve provisional legal or deferred action status should not be eligible for government health care benefits or insurance subsidies.

But according to the Kaiser Family Foundation’s (KFF) February tracking poll, Washington is out of touch with a strong majority of Americans, who believe that such immigrants should be able to access care with the help of government resources:

The survey finds that even Republicans are relatively split on providing Medicaid benefits to low-income immigrants with provisional legal status. KFF’s report goes on to underscore the largely-ignored reality that even lawfully present immigrants — including those who were never undocumented, and particularly those with low incomes — have to jump through hoops in order to gain coverage. KFF conducted a more thorough analysis on this exact issue earlier this month in order to highlight the discrepancies between naturalized citizens’ and low-income immigrants’ access to services:

The long waiting periods that low-income immigrants must endure in order to get Medicaid coverage are particularly troubling given the fact that poorer immigrants likely cannot afford private insurance on the individual market and usually work for employers that do not provide their workers with health coverage. That perfect storm of coverage gaps perpetuates a system in which poor immigrants are forced to pursue care at underground, cash-only local clinics with little public oversight, such as Los Angeles’ ubiquitous neighborhood “bodega clinicas.”

Eliminating these barriers to health coverage by eliminating the Medicaid waiting period for low-income legal immigrants and allowing DREAMers and other immigrants who achieve provisional legal status — assuming comprehensive immigration reform passes, that is — to access Medicaid and Obamacare’s insurance subsidies would actually strengthen America’s health care system, as more people would be able to afford their care and receive cost-saving preventative services. Such reform policies are clearly supported by the factual evidence — and also, as it turns out, by the American people.

Health

Pennsylvania Republicans Pressure Their Governor To Accept Obamacare’s Medicaid Expansion

Now that the Republican governors in Ohio and New Jersey have both announced their support for expanding their states’ Medicaid programs under Obamacare — joining Democratic-led New York and Maryland — Pennsylvania is surrounded. Gov. Tom Corbett (R) has resisted cooperating with this Obamacare provision so far. But now, members of his own party are beginning to pressure him to change his mind and join his neighbors:

Now the heat is coming from some of Corbett’s fellow Republicans in the state legislature.

State Rep. Gene DiGirolamo (R., Bucks) said Wednesday that he supported Medicaid expansion because it would provide health insurance for an estimated 700,000 Pennsylvanians, many in low-wage jobs.

“We should do everything possible to get this done for the state of Pennsylvania,” DiGirolamo, chairman of the Human Services Committee, said Wednesday. “Most of the people we are talking about are in the workforce making $10 to $12 an hour and have no health care.”

At the same time, a top Senate Republican said he had tasked his staff with examining Medicaid expansion costs and benefits in advance of budget negotiations in the spring. Appropriations Committee Chairman Jake Corman (R., Centre) said that the Senate GOP caucus might take a position of its own on Medicaid expansion — he did not elaborate — and that the issue could figure into the budget process.

Partisan resistance to Obamacare is finally beginning to wane, as eight Republican leaders have now conceded that resisting health reform on a state level might not be worth the political statement. The GOP leaders who have agreed to carry out this provision of the health reform law have all acknowledged that it will make financial sense for their state budgets — since the federal government will finance the full cost of expansion for the first several years — as well as help ensure that thousands of low-income Americans receive the care they need.

And the pressure may be getting to Corbett. On Thursday, the day after Christie announced he supports Medicaid expansion in New Jersey, the Pennsylvania governor agreed to meet with HHS Secretary Kathleen Sebelius to “discuss questions” about his options for expanding the Keystone State’s Medicaid program under Obamacare.

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