Friday, November 13, 2015
By The Oklahoman Editorial Board Published: November 13, 2015
WHEN they passed the Affordable Care Act, Democrats in Congress believed the law would grow more popular as people started receiving benefits. Instead, opposition remains as strong as ever, and opponents have the upper hand even in states that embraced Obamacare.
Take Kentucky, which was the only Southern state to expand Medicaid under the health law and run a state exchange where people could purchase Obamacare policies. The state's uninsured rate fell from 20.4 percent in 2013 to 11.9 percent by mid-2014.
Yet the people of Kentucky have now elected a Republican governor, Matt Bevin, who promised to turn the state exchange over to the federal government and also campaigned on rolling back Medicaid expansion in some fashion.
The reason for that outcome is simple: Obamacare's costs are exceeding its alleged benefits. Taxpayer expenses are surging, hospitals finances have been imperiled and patient outcomes aren't improving.
Under the law, the federal government pays 100 percent of the cost of Medicaid expansion through 2016. By 2020, states must cover 10 percent of costs. Yet even that relatively small share adds up, and state estimates have proven wildly inaccurate.
In Kentucky, officials expected the state portion of Medicaid expansion would cost $33 million in 2017. Now that estimate has more than doubled to $74 million because enrollments exceeded projections. By 2021, the state now expects to pay $363 million a year for
Kentucky isn't an outlier. Medicaid enrollments dramatically exceeded projections in California, New Mexico, Oregon and Washington. In Illinois, officials expected Medicaid expansion to cost $573 million from 2017 to 2020. Now they expect it will cost $2 billion.
But even if more people are on Medicaid than originally expected, supporters argue that reduces the cost-shifting created by the uninsured. With fewer uninsured patients, hospitals will be able to collect payment in a larger share of cases.
At least that was the theory. But in practice, Kentucky hospitals now find themselves in worse shape. In July, the Kentucky Hospital Association issued a report, “Code Blue: Many Kentucky Hospitals Struggling Financially Due to Health System Changes.” The report revealed that Kentucky hospitals “will lose more money under the ACA than they gain in new revenue from expanded coverage.” Overall, Kentucky hospitals project a loss of $1 billion from 2014 to 2020.
Medicaid expansion played a significant role in those losses. The report found fewer hospital patients were covered by private health insurance after Obamacare's passage.
And Kentucky hospitals reported up to 20 percent of people now covered by Medicaid previously had private health insurance. Because that private health insurance paid more than Medicaid, the expansion of Medicaid actually reduced hospital revenues associated with those patients.
“While more patients have coverage under health reform, a larger portion of reimbursements made to hospitals will not cover costs,” the report noted.
Given the demographic similarities between Oklahoma and Kentucky, those results should not be ignored. In 2013, a Leavitt Partners report predicted Oklahoma taxpayers would pay $850 million over 10 years for Medicaid expansion. But if cost overruns are comparable to those experienced in Kentucky, the true state taxpayer cost could easily be in excess of $1.6 billion.
Yet the survival of many Oklahoma hospitals would still be in question.
State support for Obamacare is proving to be bad fiscal policy. Kentucky's election results suggest it's also bad politics.