Gov. Nathan Deal is facing a $40 billion dilemma.
The federal health care law would inject that gigantic sum into Georgia’s health care economy over 10 years by adding more than 650,000 low-income Georgians to the Medicaid program.
Deal, a strong opponent of the law, is wary of the proposition. The state projects that Georgia’s share of the law’s $40 billion cost for a fully expanded Medicaid program would reach $4.5 billion over a decade, a sum the governor fears would break a state budget already stretched by health costs.
From a political perspective, Deal could safely turn down the expansion since the law is wildly unpopular among Republicans. In fact, Republican governors in at least five states have already announced they will do just that.
“Medicaid is a failed program,” said Texas Gov. Rick Perry. “To expand this program is not unlike adding a thousand people to the Titanic.”
Signing onto the expansion, however, would unleash a flood of federal dollars. The feds would cover $36 billion of the new costs to Georgia’s Medicaid program over 10 years, according to the state’s estimates.
Viewing the Medicaid expansion from a business perspective makes it harder to reject, some economists argue, especially at a time when Georgia’s economy needs every boost it can get.
The federal dollars would cycle through the state’s economy and have an overall economic impact of $72 billion between 2014 and 2023, said Jeff Humphreys, director of the University of Georgia’s Selig Center for Economic Growth. That computes to $16 in impact from federal dollars for every $1 from state coffers, Humphreys projected.
“That’s a really sweet deal,” Humphreys said. “No business would ever pass up a deal like that.”
The deal’s details
The Medicaid expansion is a cornerstone of the federal health care law. Without it, the law’s goal of extending health care coverage to most Americans will remain out of reach.
In Georgia, where about one in five residents doesn’t have insurance, the law would significantly reduce the number of people who can’t pay for health care. It would also cut down on the money Georgia hospitals lose caring for sick people who have no health insurance and no money to pay the bill.
Deal has not announced a decision, saying he wants more information and will wait until after the November elections to make a final decision. But he’s said for months that he’s worried about what the expansion would cost Georgia, especially over the long haul.
What makes the offer attractive is the federal government’s promise to cover most of the costs of the expansion: 100 percent in the first three years and at least 90 percent thereafter.
Humphreys said he’s no fan of the Patient Protection and Affordable Care Act. “I’m very much against it,” said Humphreys, who believes the law takes the wrong approach to solving the problem. But he conceded that kind of money is hard to turn down.
The economic impact of the health care dollars would primarily benefit doctors, hospitals and others who provide health care, Humphreys said. But the rest of the economy would get a leg up too, as doctors, nurses, orderlies and ambulance drivers spend their paychecks on housing and living expenses.
“In the end I think very few states will not sign on to the program,” Humphreys said. “But many states may wait until late in the game to sign on, hoping for an even better deal.”
Bill Custer, a health care expert at Georgia State University, agreed that states will find the deal hard to pass up.
Georgia would get a larger share of the federal money set aside for the expansion than other states because it is a low-income state with a hefty population of people without insurance.
“If you are just doing a return on investment, given the present state of the law today, it doesn’t make any sense for any state to turn this down — especially Georgia,” Custer said.
‘Dire financial problem’
Not everyone is convinced.
Dr. Brenda Fitzgerald, commissioner of the Georgia Department of Public Health, said in a radio interview that Georgia should not expand Medicaid.
“I think that it will be a dire financial problem for Georgia,” she told WABE.
Fitzgerald’s staff said she was not available for an interview with The Atlanta Journal-Constitution.
The state’s Medicaid program is already facing a $300 million shortfall in the current fiscal year. Filling that gap now appears unlikely, since the governor recently asked the Department of Community Health to find $170 million in new budget cuts over the next two years.
While a handful of states have vocally rejected the Medicaid expansion, David Cook, who oversees Medicaid as chief of Georgia’s Department of Community Health, said Georgia is carefully weighing its options. “It’s an issue that is very complicated,” Cook said. “The whole health care environment is extremely complex, and one that deserves some careful consideration and a deliberate approach.”
Douglas Holtz-Eakin, president of the American Action Forum, a Washington-based think tank and a former director of the Congressional Budget Office, said states should be cautious about buying into the Medicaid expansion.
“It doesn’t strike me as a no-brainer,” Holtz-Eakin said.
Holtz-Eakin said the federal government’s budget problems, which are heavily driven by health care costs, may make it difficult for Washington to sustain the gigantic tab for the Medicaid expansion over many years.
The way opponents see it, the U.S. with its $16 trillion debt, simply can’t afford the Medicaid expansion, said Matt Salo, executive director of the National Association of Medicaid Directors, who predicts that the first thing Congress will tackle in January is federal deficit reduction.
“Anybody who thinks that Medicaid and this super-enhanced match is not going to be on the table for rethinking and cuts is quite frankly pretty naïve,” he said. “You can plan your budget on big big bucks coming, but that’s probably going to get reduced at some point. By how much, you don’t know.”
Georgia’s Medicaid program covers about 1.7 million people today — primarily children, pregnant women and disabled adults. The expansion would add hundreds of thousands of poor adults, most of whom are uninsured today. The law calls for anyone under 65 with an income up to 133 percent of the federal poverty line to be eligible for Medicaid starting in 2014.
Expanding Medicaid carries a high price, but so does not expanding Medicaid.
Custer, of Georgia State, estimates that if the state opts not to expand Medicaid, Georgia’s hospitals and clinics will have to provide about $36 billion in uncompensated care over 10 years to those who would have gotten coverage under the expansion. Custer said that care would primarily be expensive services doled out in emergency rooms.
Custer’s research and other studies have found that health care providers pass on about half the cost of uncompensated care in the form of higher bills, which lead to higher insurance premiums. The other half is covered by federal, state and local taxpayers.
‘Exhausted everything’
Sheila Adcock, director of the Gwinnett Community Clinic, sees people every week who have lost everything.
Their jobs, insurance and savings are gone. Banks are threatening foreclosure.
“These people have exhausted everything,” said Adcock, who runs the free clinic in Snellville. “People may still have a nice handbag or a nice car, but maybe that’s all they have left.”
They can’t find jobs. Suddenly, they can no longer afford the medications needed to keep their diabetes, high blood pressure and other chronic diseases in check. Adcock recalled one woman in her early 50s who had uncontrolled high blood pressure but felt she couldn’t afford the medicine. She had a massive stroke and is now paralyzed on one side.
“You cannot leave your medicine. You have to find that [money],” Adcock said. “Borrow it from somebody. Beg it from somebody.”
A respiratory therapist by training, Adcock says working at the clinic is the hardest work she’s ever done. But there are moments of great reward.
Last December, a woman who had lost her job and benefits visited to thank them for catching her breast cancer early.
“We didn’t save her that day,” Adcock said. “But several years down the road, she could have lost her life.”
Still, she isn’t sure expanding Medicaid is the answer.
Programs shouldn’t be expanded unless there’s a way to pay for it, she said. Even if Georgia does expand Medicaid, some people will have coverage but won’t have access to care, Adcock said. There’s already a shortage of doctors, and some don’t take Medicaid patients because the program pays less than the actual cost of care.
“If you have a choice, why are you going to take something you lose money on?” she said of doctors. ”You can’t stay in business if you’re losing money.”
Sandra Reed, president of the Medical Association of Georgia, said recently she worries that the state will cut Medicaid payments to doctors if it goes forward with the expansion and then finds it can’t afford it.
“I’m skeptical of how this is going to play out,” Reed said.
Bigger than sum of costs
Some say the argument is much bigger than the immediate dollars and cents.
Access to health insurance results in healthier people, said Ken Thorpe, a health care policy expert at Emory University. Cancer is detected earlier. Potentially disabling chronic diseases, such as diabetes, are kept in check.
A recent study by the Harvard School of Public Health compared mortality rates in states that have voluntarily expanded their Medicaid programs during the past 10 years with the rates in neighboring states that haven’t. The researchers concluded that deaths declined by 6.1 percent in the states that offered expanded coverage.
Healthier people are more productive people, said Pierluigi Mancini, head of CETPA, a substance abuse and mental illness treatment center in Atlanta.
They take fewer sick days. They contribute taxes. Thousands of single adults suffering from mental illness and substance abuse — and usually other physical problems, too — could gain insurance coverage if the state expands Medicaid.
If people get sober or are in recovery from a mental illness, it not only helps to take the pressure off the health care system but also off law enforcement, jails, juvenile courts and other programs, Mancini said.
“I don’t think people truly understand the huge benefits,” he said. “These problems are not going to go away.”
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