Medicaid growth bodes ill for W.Va. taxpayers

I hope that everyone had a wonderful holiday season and that your New Year has gotten off to a great start. This is the last in a series of three columns inspired by the Legislative Summit in December. The summit produced two priority lists and the issue of unfunded mandates — after considerable discussion — wound up on the secondary list, albeit reluctantly. When it comes to unfunded mandates, one that comes to my mind is the issue of expanding Medicaid.

The expansion of Medicaid is part of the federal legislation called the Patient Protection and Affordable Care Act or PPACA (aka Obamacare). The stated goal of PPACA is to extend coverage to those who currently do not have health insurance. It does this through a two-pronged approach; forcing some people to buy health insurance while expanding Medicaid to cover others. In its landmark decision on PPACA, the Supreme Court ruled that the federal government could not force states to implement the Medicaid expansion mandate. Therefore, it is up to each individual state to decide.

Medicaid is an entitlement program meant to help low-income families pay for health care. As of now, 61 percent of funding comes from the federal government and 39 percent from the states. According to the Kaiser Family Foundation, in 2010, West Virginia spent more than $2.5 billion on Medicaid benefits. PPACA lowers the bar for eligibility to 133 percent of the poverty level as defined by the federal government – or $14,856 for an individual. According to the West Virginia Center on Budget and Policy, there are currently more than 400,000 people in our state already receiving Medicaid benefits, nearly 22 percent of the population. The expansion of Medicaid as provided for in the PPACA could cause a spike in participation, which should send a cold chill up the spine of every taxpayer.

PPACA provides for the federal government to fund 100 percent of the cost of the expanded program from its initiation in 2014 until 2017, but after that the state is responsible for 10 percent of the cost by the year 2020. And after that? For a state “opting in,” this is the equivalent of a retailer selling an item with terms of no money down, don’t pay a penny for three years – sticker shock comes later. Furthermore, the federal government will not pick up the tab for the administrative costs and West Virginia has already decided that it can’t afford the cost of setting up and running the PPACA exchanges. That being the case, can we afford the additional administrative costs of administering the expansion of Medicaid?

Then there is the issue of quality of care. Reimbursement rates are significantly below that of private insurers. True to the law of unintended consequences there are attendant market distortions. Many doctors are already opting out of Medicaid (and Medicare) because of the reimbursement rate and the paperwork. The Association of American Medical Colleges already predicts a national shortage of physicians of 62,900 by 2015. and that shortage is expected to double by 2025. As this projected shortage grows, it is likely that there will be fewer doctors who will participate in Medicaid. Medicaid patients could get hit the hardest – making the program counter-productive.

Lastly, as the fiscal cliff approaches, it would be prudent to question the ability of the federal government to continue to fund entitlement programs at the same levels it has in the past. It should be obvious that deficits in excess of a trillion dollars annually are not sustainable. At some point, it is conceivable that the states could be left holding the bag.

These issues should be carefully considered by our representatives in Charleston. It is a fiscal time bomb that could have dire consequences. The Supreme Court has decided that the states do not have to accept the mandate. I understand that well-meaning people would be tempted to take advantage of what looks like a tantalizing no money down proposition and worry about the consequences later. However, roads paved with good intentions don’t always go where we want them to.

— Elliot Simon writes from Harpers Ferry.

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