Letters to the Editor

A lot hinges on Medicaid

The Republican health bill repealing the ACA (Obamacare), the AHCA, was never voted on and died a noisy death with barely any support.

How did Medicaid figure into the American Care Act (ACA) repeal debate? Medicaid is a federal program that was created along with Medicare in 1965 and is not a part of the ACA. Medicare is the program for those over 65 and with certain disabilities and Medicaid was conceived for poor people’s medical bills.

Medicaid has since surpassed Medicare in the number of people it provides coverage for, now one in five Americans. It also pays the bills for 2/3 of all patients in nursing homes. Medicaid in California is called Medi-Cal.

Medicaid has gone through three expansions, during the Reagan, Clinton, and Obama administrations. The AHCA bill sought to roll back this latest expansion which added 11 million (about 5 million in California for a total of about 12 million and now 45% of all Madera County residents) adults to the rolls. Not all states chose to expand. The Republican governors and Congressmen objecting the loudest to the bill were ones from states that chose to expand and stand to lose the federal funding for expansion.

To give you an idea of the size of Medicaid. In California there are about 1 million people signed up through Covered California. Most of these enrollees receive coverage through a private insurer (Anthem, Kaiser etc.) and receive a subsidy through a tax credit to reduce their premium. Over 12 million Californians are covered through Medi-Cal with little or no cost sharing. Overall the cost of California’s program is in excess of $90 billion and is mostly borne by the federal government. Medicaid is where the money is, projected at $800 billion.

So what now? The ACA still needs fixing. It is not in a death spiral, that is a bit premature. After first indicating they were ready to move on to other priorities and let the ACA blow up, both the administration and Paul Ryan are now saying they can move on to other things and still address healthcare.

They also have the ability to deal Obamacare a death blow. The IRS already stopped enforcing the individual mandate. Congress and the executive branch are in a lawsuit initiated in the Obama administration that Congress over the right of the administration to pay subsidies.

The initial decision was in favor of Congress and the Obama administration appealed. The Trump administration could choose to drop the appeal and subsidies to insurance carriers could cease. The next court date is in May. The threat itself is giving carriers pause when they must decide whether to participate in the 2018 annual enrollment. Without the mandate and subsidies, enrollment will certainly decline immediately.

Anthem, the largest carrier in California is expressing apprehension over the uncertainty. Were Anthem to leave the individual market it could force a real death spiral.

The president seems to be reaching out to Democrats which is likely the only way to get anything done at this point from the administration’s standpoint. In the end you will see a hybrid of the ACA and AHCA. Something keeping guaranteed issue, some essential benefits and subsidies along with carriers selling across state lines. Also up for Medicaid reform, a work rule with less restrictive block grants to the states.

Anything bipartisan will be a victory for the ACA as it becomes established policy by both parties. As we get farther away from the Obama era, the name Obamacare and the negative connotation will fade and the right to health insurance will have been established. It will be revisited from periodically but the right will be established. Once established, entitlements are hard to take away.

This may spur something unexpected here. The legislature is currently considering a bill calling for a California single-payer system with the state the insurer. This has been discussed and passed two times previously and vetoed by Governor Schwarzenegger. Governor Brown is similarly disinclined to sign.

A major stumbling block is how to pay for it and the restrictions on Medicaid funds. Under present Medicaid rules the funds are restricted in their use. Those funds can only be used for Medicaid enrollees and separating that population from the overall population is a roadblock to a true single-payer system. It would require one plan for Medicaid enrollees and another for everyone else.

Relaxing that restriction opens the way for those funds to be spread among the entire population under one single-payer system. A payroll tax split between employers and employees presumably could help fund the difference.

It will not go anywhere in the current legislative cycle but would a Governor Newsom from San Francisco likely support such a plan? San Francisco has a form of single payer. We may be on a slow but steady march to a single-payer system.

It could build momentum in states like California, Colorado where a measure was defeated in November, and New York where a similar measure as California’s is being discussed in their legislature, before it does so nationally. A lot hinges on Medicaid.

Douglas Macaulay is the principal of Macaulay Insurance Agency in Oakhurst, has been dealing with health care insurance for companies and individuals for 33 years.