The Myth of Expansion and Wait Lists

Pence; Cruz; people waiting for services.

When you're trying to get your bill passed, it makes all the difference to make sure you have a "common sense" message that stresses that, without the bill, a certain horrible thing is bound to occur.

Such is the case for those leaders saying that Medicaid expansion funds are being spent at the expense of the people with disabilities on wait lists for Medicaid services.

"Obamacare has put far too many able-bodied adults on the Medicaid rolls, leaving many disabled and vulnerable Americans at the back of the line." said Vice President Mike Pence at the National Governor’s Association meeting, adding “It’s true, and it’s heartbreaking,” The same argument was made by Sen. Ted Cruz earlier this year.

As with many a faulty argument, its simplicity makes it sound valid. But if you know how Medicaid works, it's a lot like saying "red is a color, and blue is a color, so red is blue." (We wish!)

It’s true that there are Medicaid wait lists for people with disabilities.

And it's true that states have expanded Medicaid.

But there's no connection between funds spent to cover the new Medicaid expansion group and the wait lists experienced by people who were already previously eligible for Medicaid.

Wait lists exist for certain programs due to how those programs were initially constructed. In Illinois, Medicaid began covering services for adults with developmental disabilities in the late 1990s; children were covered in 2007. Both programs were created using Medicaid waivers which, by their very nature, allow states to limit enrollments based on a variety of factors – mostly they do it to keep costs down and better track program performance. Illinois’ waivers were created with wait lists in place years before the ACA became law.

The Kaiser Family Foundation did a comprehensive analysis of this very issue, looking at the impact of Medicaid expansion on state wait lists for home and community-based services. You know what they found? In 2015, the first year of expansion, more non-expansion states had increases in their wait lists than expansion states. And the rate of increase in wait lists was 2.5 times higher in non-expansion.

So, contrary to the "common sense" argument, the exact opposite is true: States that failed to expand their Medicaid programs saw less federal funding enter their state budgets, and thus had to bear a greater share of their Medicaid costs – leading to service reductions, cuts to provider payments, and limits on the types and amount of care provided and, yes, longer wait lists.

The threat to home and community-based services – and other Medicaid programs – is not Medicaid expansion. It is the proposed cuts to Medicaid that will undo all the health care gains, vital programs, and economic benefits brought about by 50 years of state-federal partnership in Medicaid, and enhanced by the Affordable Care Act.

The American Health Care Act Hurts

The American Health Care Act (2017) is a radical step back from progress made to provide health insurance for all Americans.  It breaks the federal government’s fundamental compact, where the federal government promised to pay its fair share in providing health coverage to the nation’s most vulnerable people. That includes the working poor, people with disabilities, older adults, and children.

The AHCA makes it harder to access health insurance

The Affordable Care Act provides support, through tax credits and subsidies, for millions of the working poor, Americans who earned too much for Medicaid but who cannot afford the premiums for individual insurance. The AHCA shatters that reality by promoting a system where financial assistance is slashed and fewer people will be able to afford coverage.

The AHCA moves financial assistance from the poor to the rich
The AHCA will punish the working poor. The current system of tax credits and subsidies will change radically. Tax credits based on income, and other factors, would become a flat amount based only on a person’s age. The Congressional Budget Office report details how a 21 year old living at 175% of the federal poverty level would see her current tax credit drop from $3,400 to $2,450. Cost-sharing subsidies to help pay out of pocket costs would  be eliminated, placing further burden on her and the millions living near the poverty line who need these critical supports to pay for health insurance.

The AHCA makes coverage more expensive for older adults

The AHCA is particularly hard on older Americans.  It allows insurance companies to charge seniors 67% more for their insurance premiums than what they would be charged today. The AHCA does this by giving insurance companies the right to charge seniors 5 times more for their coverage than they would for someone in their 20s. Even though the Republicans have proposed age rated tax credits to help seniors pay for their insurance, it won’t be nearly enough to help cover these increased costs.

Adding to these financial burdens, the AHCA also makes insurance more expensive if you have a gap in coverage. No matter how you look at it, the AHCA adds burdens to the working poor and older Americans instead of providing the support so many need.

The AHCA breaks the promise to provide care to the most vulnerable
The American Health Care Act breaks the federal government’s 50 year compact with the states in assisting in the cost of providing health coverage to low-income people, including children, pregnant women, people with disabilities and adults. Medicaid is the underpinning of the nation’s health care system; it is the safety net for 68 million Americans and financing the program has always been a shared responsibility between the federal government and states.

The AHCA siphons billions in federal dollars out of the Medicaid program, leaving states to pay up and make cuts

The CBO estimates that the AHCA would cut the federal government’s support for Medicaid by $880 billion, forcing states to accept a fixed funding formula for the Medicaid program.  This will leave states responsible for a larger percentage of their Medicaid costs. Since states must balance their budgets annually, reductions in federal funding will lead to state cuts in eligibility, benefits or payment rates.

The AHCA also allow doesn’t grow this set amount at a rate equal to Medicaid growth rates, which means states will have less money each year as expenses increase and funding doesn’t keep up.

The AHCA is a bad deal for Illinois, where Medicaid dollars are already stretched

Medicaid finance reform is happening at a time when Medicaid covers 1 of every 5 births, and 1 in 4 lives in Illinois. Medicaid spends nearly 30% of its total expenditures on services and supports that help people live independently in their communities. Illinois has been seeking a waiver from the federal government to bring in more dollars for much needed behavioral health services and supports. Illinois already has some of the lowest payment rates in the country.

Changing the Medicaid funding formula would dramatically impact Illinois’ ability to maintain current Medicaid funded services and supports which the state has already deemed inadequately funded. Further cuts to federal funding for the state would devastate an already ailing health delivery system.

Illinois can’t afford the AHCA

The AHCA hinders access to health insurance, curtails financial assistance to the most vulnerable, raises costs for older adults, and leaves our state in an even worse fiscal situation. Illinois residents can’t afford it. Our state can’t afford it.

We urge the Illinois Congressional delegation, and Governor Rauner to aggressively push back on the AHCA.

Related reading

• Analysis from Sen. Durbin's office: TrumpCare: Less for More
• Vox: The Republican plan to slash Medicaid, explained
• Washington Post: Sleeper issue of Medicaid’s future could prove health-care plans’ stumbling block
• Congressional Budget Office: report
• House Ways & Means Committee: Section by section summary
• Commerce & Energy Committee: Section by section summary