Obamacare Coverage Gap Points to Need for Medicaid Reform

As Obamacare cheerleaders continue their victory lap after last month’s exchange deadline, many are now turning their attention to states that have not yet expanded Medicaid.

The Orlando Weekly published an article this week tracing the ordeal of Charlene Dill, a Florida woman who died without health insurance because she fell into Obamacare’s so-called “coverage gap” — earning too little to enroll in Medicaid but too much to qualify for exchange subsidies.

The article condemned Florida Republicans for failing to expand Medicaid as offered under Obamacare. However, a closer look at the broken program surprisingly suggests that the Sunshine State — and the 24 others that haven’t expanded the program so far — may have made the more humane decision.

A draft copy of the 21-page of a Health and Human Services Department form proposed for use to apply for low-cost insurance from Medicaid or the Children's Health Insurance Program is photographed in Washington, Tuesday March 12, 2013. The government s application for health insurance, which uninsured people will use to get taxpayer subsidized coverage starting next year. Applying could get complicated, with multiple questions about income, household composition, employer coverage and even race and ethnicity. Credit: AP
A draft copy of the 21-page of a Health and Human Services Department form proposed for use to apply for low-cost insurance from Medicaid or the Children’s Health Insurance Program is photographed in Washington, Tuesday March 12, 2013. The government s application for health insurance, which uninsured people will use to get taxpayer subsidized coverage starting next year. Applying could get complicated, with multiple questions about income, household composition, employer coverage and even race and ethnicity. Credit: AP

As originally enacted in 2010, Obamacare would have effectively forced states to expand Medicaid eligibility to citizen earning less than 138 percent of the federal poverty line by retracting all federal funds for the program if they chose not to. Considering that Medicaid comprises about a quarter of each state’s total expenditures on average, the Supreme Court ruled in 2012 that the federal government made an unconstitutional offer the states couldn’t refuse.

Consequently, states now must decide whether or not to expand the program without the federal threat. Those that choose not to thereby create a coverage gap for their residents earning less than 100 percent of the federal poverty line since the law originally imagined they would be enrolled in Medicaid.

While expanding Medicaid may seem like a simple solution, it’s surprisingly uncertain that those who fall in the gap would actually receive better health care on the program than remaining completely uninsured.

Study after study shows that Medicaid patients have worse health outcomes than those with no insurance at all. One University of Virginia study concluded that Medicaid cancer patients are 13 percent more likely to die than those without insurance. Another University of Pennsylvania study also concluded that Medicaid patients undergoing colon surgery were 57 percent more likely to die than those with private insurance.

MIAMI, FL - SEPTEMBER 20: Leonor Cervantes (L) and other protesters gather in the office of Florida State Rep. Manny Diaz as they protest his stance against the expansion of healthcare coverage on September 20, 2013 in Miami, Florida. As the protest took place, the Republican led House in Washington, D.C. by a 230-189 tally passed a short-term government spending plan that would eliminate all funding for 'Obamacare.' The Florida State government is also working against the Affordable Care Act by refusing to set up its own health care exchanges and they also have highlighted  concerns about the navigators, federally funded workers who will help enroll people in health plans. Credit: Getty Images
 

Credit: Getty Images

Many Medicaid defenders dismiss the growing body of evidence of the program’s perils, attributing the program’s poor health outcomes to its enrollees’ low socioeconomic status. While correlation is certainly not causation, one natural experiment in Oregon proves beyond a doubt that Medicaid makes no difference in improving a patient’s health.

In 2008, the Beaver State obtained funds for 10,000 additional low-income residents to enroll in its Medicaid program. Since more than 90,000 Oregonians applied for the opportunity, the state was left with no choice but to select enrollees by random lottery, thereby creating a natural experiment to track whether the program improved its patients’ health outcomes.

The shocking results, published last May in the New England Journal of Medicine, found that “Medicaid coverage generated no significant improvements in measured physical health outcomes” compared to those not selected for the program.

While it’s tragic that some people who fall in Obamacare’s coverage gap like Charlene Dill have died without insurance, it’s doubtful that Medicaid in its current state would improve their situation.

These poor outcomes likely arise because of the programs’ low reimbursement rate. Doctors receive only pennies on the dollar from the government for treating Medicaid patients compared to patients with private insurance. In some states like Rhode Island, it’s as little as 29 cents for every dollar. This is precisely why nearly one-third of doctors will not take new Medicaid patients according to a Health Affairs study, leaving enrollees with little choice but to settle for subpar health care.

Photo Credit: Manuel Balce Ceneta/AP
Photo Credit: Manuel Balce Ceneta/AP

These stark facts are, of course, no excuse for states to sit idly by while thousands of their citizens remain in the coverage gap.

Some elected officials like Utah Gov. Gary Herbert are instead calling for the federal government to block grant Medicaid funding so their states can reform the broken program while expanding coverage to those who fall in the gap. Although a federal reform would have more wide-sweeping effects, Congress is unlikely to pick up such a massive undertaking anytime soon. Instead, state-led reforms like block grants seem like the only hope for patients in the gap to receive quality medical care in the near future.

Casey Given is an editor and political commentator at Young Voices, a startup aimed at promoting Millennials’ voice in the media.

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