Bob McClure: Masking Medicaid malaise
Published: Tuesday, July 16, 2013 at 11:49 a.m.
Last Modified: Tuesday, July 16, 2013 at 11:49 a.m.
Addressing the House on March 9, 2010, U.S. House Speaker Nancy Pelosi famously told her colleagues, “We have to pass the bill so that you can find out what is in it, away from the fog of the controversy.”
Alas, the more we “find out what is in it,” the more the “fog of controversy” lingers. The current hot-button issue -- in Florida, Texas, and other states where lawmakers decided not to expand Medicaid -- stems from a major error in a bill so flawed that the Obama Administration has now delayed implementation of significant portions of it.
As most Americans now realize, in January 2014, everyone is supposed to be covered by some form of health insurance. Those Floridians whose income is 100 percent or less of the federal poverty line will still qualify for the state's Medicaid program.
For many other Floridians, their employers will provide health insurance – although the mandate that workplaces with 50 or more employee must do so has now been delayed until 2015 -- safely past the 2014 congressional elections.
All other Floridians are supposed to buy their own coverage online through a “health-insurance marketplace.” In Florida and the 26 other states that didn't set up their own exchange, the federal government is supposed to do it – although the feds now concede that they're way behind schedule.
The sticker shock inevitably experienced by many of these insurance exchange shoppers will be partially offset by subsidies from Uncle Sam. Crafty congressional negotiators who worked out the details of the PPACA devised a way to provide these subsidies -- by fining businesses whose employees will need subsidies because (1) their employer doesn't furnish coverage and (2) they make a bit too much money to qualify for Medicaid. Businesses with 50 or more employees will face steep fines of $2,000 a year per employee.
Under the PPACA, nobody is eligible for both Medicaid and subsidies. Moreover, the drafters expected Medicaid's income threshold nationwide to be 138 percent of the federal poverty line, but they neglected to spell it out in all sections of the massive bill.
Later, when the U.S. Supreme Court ruled that the feds couldn't force states to expand Medicaid eligibility to 138 percent of poverty, the impact of the omission was magnified.
Not expanding Medicaid left a group of “in-betweeners” – including an estimated 900,000 in Florida -- whose income ranging between 100 percent and 138 percent of the federal poverty line is too high for Medicaid but low enough to need a subsidy when they shop for health insurance.
What often happens when Congress miscalculates is that someone else must pay the price – and still others will be unfairly blamed for the fallout.
Businesses understandably lament that they'll face a Hobson's choice: providing costly health insurance for their workers or else paying a fine for the “in-betweener” employees who'll need subsidies to buy health insurance because they don't qualify for Medicaid.
Like business owners, the Florida Legislature faced a tough dilemma, but recognized that although the feds promise to cover 100 percent of the cost for the first three years, the long-term outlook is largely problematic.
Indeed, an analysis prepared by the Legislature's Social Services Estimating Conference indicates that for Florida, expanding Medicaid would likely result in budget-busting consequences -- as much as $3 billion a year as the federal share diminished. That would have required big tax hikes or cutting other vital services.
Businesses pleading for an expansion of Medicaid may fail to realize they'd likely have to pay a bundle anyway if the state were forced to raise taxes to cover a Medicaid expansion whose price tag starts at $3 billion.
In this complicated case, expanding this flawed program will only mask the symptoms of a more serious condition that stands to weaken the fiscal vitality of Florida and the nation. As for the businesses that'll have to pay, they should aim the blame at the real culprits: the Washington lawmakers who erred when drafting a major bill that had to be passed so we'd know what's in it.
Bob McClure is president/CEO of The James Madison Institute.