Wednesday, April 7, 2010

Insurance revisions steal Obama-care show

This article appeared in the April 6, 2010 edition of the Springfield Business Journal.

This article appeared in the April 6, 2010 edition of the Springfield Business Journal.

The much-debated health care reform legislation is now law. Despite all the rhetoric, name calling and brick throwing, the act does very little to reform health care.

The law focuses on health insurance reform, and it is not the end game; it is little more than the end of the beginning. As the post-enactment dust begins to settle, certain hot-button topics will fade: government-run health care, Medicare cuts and abortion. Those issues were overhyped to alarm constituencies preprogrammed to react.

Two issues will dominate as the fight shifts from the U.S. Congress to the states: the mandate to purchase health insurance and the cost of expanding Medicaid.

The insurance mandate

Some states threaten legislation to block the mandate, and others threaten litigation.

Do not count on state laws and lawsuits accomplishing much more than giving talking heads ammunition (though people with no knowledge of constitutional law will begin making confident statements about the true meaning of the interstate commerce clause).

There also will be a proliferation of claims that the mandate was actually a Republican invention.

If the goal is to protect the health insurance industry, a “universal” mandate to purchase private insurance is certainly preferable to “universal” governmental insurance such as Medicare for all.

Insurance companies already are funding millions into an Enroll America campaign. The battle over the mandate will fade.

The Medicaid expansion

It does not have talking-head appeal, but it will be the real battleground as to the future of health insurance.

The act requires states to expand Medicaid to cover households earning less than $30,000.

The expansion is paid by the federal government, but the subsidy eventually drops to 90 percent. The federal subsidy only covers the “expansion” of Medicaid, but money is fungible and so are Medicaid “covered lives.”

Questions linger. How soon before the lines become blurred between existing and expanded funds and covered persons? What happens when a state cuts benefits or eligibility in its existing program while expanding its program with federal funds under the new law?

The feds will regulate the expansion, but states will prove extremely inventive in leveraging federal dollars.

For years, the federal government has attempted to rein in states which impose a “tax” on providers to increase matching funds from the federal program, but every year more states climb on the provider tax gravy train. Imagine the clever ways states will transform “existing” into “expanded.” How soon before federal regulations merge the two?

Medicaid varies not merely in eligibility criteria but also in services covered. Relocating recipients will lose certain services covered in their old states. Does the new law give rise to a federal mandate to cover a certain menu of services under Medicaid?

Medicaid also varies in what states pay for the same service. The new law requires Medicaid programs to pay primary care physicians Medicare rates.

How soon before federal regulations require Medicaid to cover the same services and pay the same as Medicare?

The new law subsidizes the mandated purchase of health insurance for households earning less than 400 percent of the federal poverty level, which is approximately $88,000. Depending on each state’s eligibility standards for Medicaid and the Children’s Health Insurance Program, the insurance subsidy could cost more than existing programs.

How soon before federal regulations transform the subsidy into coverage provided directly under Medicaid – with a sliding scale determining individual premium payment responsibility?

Pressure now exists to evolve Medicaid into a federally funded doppelganger of Medicare for persons in households under 400 percent of the federal poverty level. Everyone else would be covered under private insurance until they attain Medicare eligibility.

Paul Taylor is CEO and chief legal counsel of Springfield-based Ozarks Community Hospital. He can be reached at healthcare@OCHonline.com.


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