Medicaid expansion: dollar waster or moral imperative?

Episcopal Bishop Rob Wright joined with approximately 75 protesters, including several Atlanta clergy members, in a Medicaid expansion rally outside the Governor's Mansion on W. Paces Ferry Road Monday, April 7, 2014. Protesters were calling on Gov. Nathan Deal to expand Medicaid services in the state. KENT D. JOHNSON / KDJOHNSON@AJC.COM

Episcopal Bishop Rob Wright joined with approximately 75 protesters, including several Atlanta clergy members, in a Medicaid expansion rally outside the Governor's Mansion on W. Paces Ferry Road Monday, April 7, 2014. Protesters were calling on Gov. Nathan Deal to expand Medicaid services in the state. KENT D. JOHNSON / KDJOHNSON@AJC.COM

Medicaid 101

Medicaid provides health coverage to more than 65 million low-income Americans. The federal government established the program in 1965, but each state oversees and operates it in slightly different ways.

Some basics on Georgia’s program:

Who it covers: More than 1.7 million low-income children, pregnant women, the elderly and disabled

What it costs: About $8.5 billion annually; state contributes roughly $2.8 billion and feds pay the rest*

So what is this Medicaid expansion all about?

Medicaid expansion is a critical element of the Affordable Care Act’s aim of extending health coverage to millions of uninsured Americans. The federal government promised to cover the full cost of expansion for three years. After that its share would steadily drop to 90 percent but never lower than that.

But the Supreme Court has said states can’t be forced to expand, and 19 of them, including Georgia, have opted out.

Expansion would add an estimated 650,000 low-income Georgians to the Medicaid rolls. Most are adults without children, a group that currently isn’t eligible for the program. It would cost the state an estimated $2.5 billion but bring in $33 billion in federal funding over a decade.

Source: Kaiser Family Foundation/staff research

* The program does have minimal copays and other out-of-pocket costs for beneficiaries in some cases.


Even if Georgia doesn’t expand Medicaid, the state is already on the hook for certain new expenses related to the Affordable Care Act. The Department of Community Health, for example, estimates Obamacare will cost the state an estimated $128 million in new Medicaid expenses in fiscal 2014 and 2015 alone. Advocates of expansion say the billions in new federal funding would easily offset that; without expansion, however, Georgia taxpayers continue to carry the burden.

By the numbers: Medicaid expansion in Georgia

Experts say the Medicaid expansion may cost the state $2.5 billion, but it would also bring a host of benefits to Georgians. Here are just a few.

* $1.8 billion in new sales, income and other tax revenue

* 70,000 new jobs created

* 10 percent increase in insurance premiums for Georgia consumers if state doesn’t expand

* $726 million in state and local government funds to care for the uninsured saved

* $8.2 billion in annual economic impact generated

Source: Georgia State University; Georgia Budget & Policy Institute; Kaiser Family Foundation

Billions of new dollars funneling into Georgia’s lagging economy. Tens of thousands of new jobs. Rural hospitals staving off financial ruin.

The benefits of expanding Medicaid under the Affordable Care Act are many, well-documented and, experts say, would touch nearly every Georgian.

That is, if you believe two things: First, that the federal government will deliver on the more than $30 billion it promises to give Georgia over 10 years if it opts to expand. Second, that it’s good policy to make a big and expensive entitlement program for the poor even bigger and more expensive.

Many in Georgia passionately reject both those premises. And many passionately embrace them. Indeed, supporters of expansion often view the issue as a question of morality.

Gov. Nathan Deal has remained unflinching in his refusal to expand a program that he says is already broken and unsustainable. But the outcry of community leaders, consumer advocates and others demanding that Georgia expand has only grown louder. Dozens of protesters have been arrested at the state Capitol in recent months, and about a hundred rallied in the rain outside the Governor’s Mansion last week.

“The plight of the uninsured is just a blight on the state,” said Dr. Thomas Bornemann, who heads the Carter Center’s Mental Health Program and supports expansion. “I think we are probably in an era of social Darwinism that is chilling. That sense of community and community fabric — it worries me that it’s unraveling.”

Deal has long opposed Obamcare, but the governor recently provided The Atlanta Journal-Constitution his most detailed comments yet on why he believes Medicaid expansion, a key component of the health law, is a gamble Georgia can’t afford to take.

His first argument, however, is still cost. Deal says it would cost $2.5 billion over 10 years to extend Medicaid coverage to nearly 650,000 low-income Georgians who are currently uninsured. The governor says this price is too steep, arguing that expansion would drain away dollars desperately needed to restore school funding in the wake of the Great Recession.

“Building upward economic mobility for families and businesses across our state does not start with the government taking more money out of their hands and the economy as a whole,” Deal said in a statement to the AJC.

But health care experts who have researched the costs and benefits to states see expansion not as a gamble but as the only intelligent choice.

Not only would Medicaid expansion pump money into the broader economy, they say. It would also foster a healthier population in general, a more dependable workforce and a more robust health care industry — all keys to attracting new companies to the state.

“It’s clearly going to cost the state taxpayers more — both higher premiums and higher taxes — if we don’t expand Medicaid,” said Bill Custer, a professor at Georgia State University and one of the state’s top health care finance experts.

So is Medicaid expansion right or wrong for Georgia?

Finding the answer depends on separating the cold facts from the fervent beliefs that have become inextricably tangled in the caustic political battle over Obamacare.

‘We can expect costs to explode’

The Affordable Care Act is already costing Georgia.

Even without expansion, the governor's office estimates new Medicaid and PeachCare for Kids requirements will cost $2 billion more over the next decade. Medicaid already covers about 1.7 million low-income children, pregnant women, the elderly and disabled.

The federal government has pledged to cover at least 90 percent of the cost of expansion. Deal questions, however, whether a government already trillions of dollars in debt can be trusted to deliver on that promise.

“We can expect costs to explode in decades to come,” he said. “When the federal share goes down — and it will — the states will be stuck and there will be tough choices.”

Expansion advocates say the federal government has supported Medicaid for nearly five decades, and they see no reason that will suddenly stop. Plus, the flood of $33 billion over a decade would far surpass any initial costs of expanding Medicaid, they argue.

“Our economy is still not thriving, and we’re turning down a massive amount of federal dollars,” said Sen. Nan Orrock, D-Atlanta, who supports expansion. “It puts Georgia’s state leadership in the category of backwards.”

The infusion would generate nearly $1.8 billion new sales, income and other tax revenues alone, said Tim Sweeney, a health care policy expert with the nonprofit Georgia Budget & Policy Institute, a left-leaning think tank that supports expansion of Medicaid. When factoring in that new income, Sweeney says the expansion would cost about $350 million over a decade, far less than Deal’s estimates.

Expansion would also create an estimated 70,000 jobs and more than $8 billion in new economic impact each year, an analysis by Custer of Georgia State has shown.

‘Significant dollars coming from individuals’

While foregoing Medicaid expansion may save the state $2.5 billion, the cost of caring for thousands of uninsured people will hit Georgians’ wallets harder than ever.

Not expanding could increase insurance premiums for consumers by up to 10 percent, Custer said. That’s because of the half a million or so people who would have been covered by expansion, some will end up in the private market, and those who do will tend to be sicker and more costly to treat than the average person, he said. That leads to higher insurance premiums for everyone.

Hospitals must continue caring for — and losing money on — the uninsured, which will force the hospitals to raise prices overall to compensate; that, in turn, will increase insurance premiums, experts say. Paying for the care of the uninusured is already expensive: on average, it costs a family of three making the median income in Georgia an extra $1,200 in insurance premiums each year.

“It affects the private health insurance market in ways that a lot of people wouldn’t even think of,” Custer said. “Those are significant dollars coming from individuals.”

Expansion would also save an estimated $726 million in uncompensated care costs currently borne by Georgia taxpayers, according to a study by the nonprofit Kaiser Family Foundation.

‘This is going to force more hospitals to close’

For many hospitals, Medicaid expansion is about survival.

The Affordable Care Act cuts in half an $11 billion federal program that helps hospitals make up for the money they lose on free care for the poor. That’s an enormous hit for many hospitals, but the expansion of Medicaid was supposed to offset it.

Without a new source of funding, up to 15 small community hospitals across rural Georgia are in danger of closing, according to the Georgia Alliance of Community Hospitals.

“By not expanding, we’re telling them we’re not going to let you get federal money for patients you are forced to treat for free,” said Sen. Chuck Hufstetler, R-Rome. “I’m very concerned this stance is going to force more hospitals to close.”

Hufstetler doesn’t like the Affordable Care Act and actively opposed it.

But he knows what’s at stake if expansion doesn’t happen — thousands of jobs and critical access to care for thousands more Georgians.

Hospitals are the biggest employer in many communities and also pay some of the best salaries, said Monty Veazey, president of the community hospital group.

“They are the economic generator for that community,” Veazey said. “You lose that workforce, it has a devastating impact.”

Deal: ‘I hope the president will step up’

Two of Georgia’s groups representing health care providers — the Medical Association of Georgia and Georgia Hospital Association — both support expansion in some form.

Republican governors across the country, including Gov. Jan Brewer of Arizona, have moved forward with expansion because they saw a way to benefit their states, Hufstetler said. He hopes Georgia’s leaders will still consider expansion as an option.

“This is a complex issue, and I think both parties are guilty of looking at just the political aspects of it and not at the scientific data and saying what we can do to provide health care for our citizens,” Hufstetler said.

Deal said he recognizes the critical need for community hospitals to remain open and is monitoring the situation. Last month, he announced changes to rules for rural hospitals that allow those in danger of closing or have shut down within the past year to offer fewer services.

The state, however, has no comprehensive plan to make up for the millions of dollars in federal payments to hospitals that will begin to shrink starting next year.

“I hope the president and Congress will step up to the plate to remedy the problem they created,” Deal said. “These resources save lives and maintain our communities.”

So far, however, neither the president nor Congress — nor the state — are stepping up.

A decision not to create jobs

Rejecting expansion isn’t just about hospitals.

It’s also about jobs and economic development, the health of workers and Georgia’s ability to compete with other states.

Expansion would create thousands of jobs across the state, more than half of those in the medical field, said Custer with Georgia State. That means higher-paying jobs like physicians and dentists.

It’s simply a good return on investment, he said.

This isn’t a choice just to resist Obamacare, said Bruce Siegel, president of America’s Essential Hospitals, a national group that represents public hospitals. It’s a decision not to create jobs or invest in health care.

“They are going to have a workforce that is sicker. They will have a workforce that is much more insecure because they are one illness away from bankruptcy,” Siegel said of states that don’t expand.

Obamacare supporters argue that Georgia taxpayers are helping to pay for Medicaid expansion in other states without seeing any benefits within their state’s borders.

But expansion opponents say the federal dollars that would supposedly fuel all of this economic growth aren’t guaranteed and certainly aren’t “free.” Georgia taxpayers still foot the bill, they argue. And the feds’ money comes with too many restrictions.

Deal and other Republican leaders have asked the White House to give them their share of federal Medicaid dollars in lump sums called block grants. The states would receive less money but would have greater flexibility to run Medicaid as they see fit. The Obama administration has steadfastly opposed block grant.

“Washington wants to mandate to Georgia how we spend our dollars,” Deal said. “In Georgia, we know a lot more about how to balance a budget than Washington does.”

‘We can do better for our folks’

The majority of Georgians believe Deal and most of their state legislators are wrong about Medicaid expansion.

AJC polling during the past 16 months has consistently shown that more than half of Georgians think parts or all of the Affordable Care Act should be repealed. But an even larger majority — six in 10 — favor Medicaid expansion.

Fulton County Chairman John Eaves sees the rejection of billions of federal dollars as “mind boggling.”

Those dollars would save the residents of his county money. This year, Fulton taxpayers will spend $45 million to help Grady Memorial Hospital cover the cost of caring for the poor. The county has given the Grady as much as $100 million in years past.

But the impassioned arguments in favor and against expansion extend far beyond dollars and cents.

“I am interested in real economic development where Georgians are better equipped to provide for themselves and their families rather than rely on government welfare programs,” Deal said.

Many health care providers, consumer advocates, local politicians and religious leaders couldn’t disagree more strongly.

Yes, they say, Medicaid it’s flawed and inefficient. But it can be improved and, right now, it’s the best option states have to provide access to millions of uninsured Americans who have been left behind by the health care law.

Last week, church ministers and social activitists knocked on the govenor’s office door. In their hands: a purple plastic barrel with 50,000 signatures on petitions calling on Deal to reverse his decision.

“We can do better for our folks,” said Bishop Rob Wright, who heads the Episcopal Diocese of Atlanta. “We really want to be a Good Samaritan state. We will have left some people in a ditch unnecessarily.”