Medicaid Expansion: Reframing the Debate

It has been a little over a year since the Supreme Court ruled on the constitutionality of the Affordable Care Act (ACA). While the Court upheld the the individual mandate, it overturned the requirement that all states expand their Medicaid programs.

As originally enacted, the ACA would have required states to give Medicaid coverage to all citizens under age 65 with household incomes below 138% of the Federal Poverty Level (about $15,400 per year for an individual). To enforce this mandate, the Secretary of Health and Human Services was authorized to take away a state’s existing Medicaid matching funds. By striking down this provision, the Court effectively made Medicaid expansion a state-by-state option.

As of July, twenty-three states and the District of Columbia have announced that they will expand Medicaid eligibility and accept billions of federal dollars in additional matching funds. Twenty-two other states—including South Carolina—have declared their opposition to expansion.

Opinions on the Medicaid expansion split along party lines, and the arguments against expansion seem to be based on ideology more often than evidence. One exception to this observation is Anthony Keck, the Director of the South Carolina Department of Health and Human Services. Mr. Keck has been an effective critic of the ACA Medicaid expansion, basing his arguments on his interpretation of the body of evidence that reveals the shortcomings of our current healthcare system.

In an online editorial for Health Affairs, Director Keck explained his logic for rejecting federal funds for Medicaid expansion.

His arguments can be summarized as follows:
  • Medicaid expansion is too expensive and will divert public funds from more worthwhile investments “such as education, energy, water, transportation, agriculture, and employment.”
  • Health insurance doesn’t make people healthy. We should focus on “health behaviors, personal choices, income and employment, and education” which are more important social determinants of health and well-being.
Let us examine each of these arguments.

Is Medicaid Expansion Worth the Expense?

It is undeniable that the United States spends more per capita on healthcare than any other industrialized nation. It is also true that we are not getting our money’s worth in terms of health care outcomes. Our healthcare system has many flaws. It is uncoordinated and wasteful. These are critical flaws, but the ACA was designed to address many of them.

Contrary to Director Keck’s assertion, Medicaid is actually a good value for South Carolina taxpayers. While Medicaid spending has grown faster than GDP in recent years, this is largely due to the increase in enrollment caused by the economic downturn. On a per-enrollee basis, Medicaid spending has grown much slower than the growth in employer-sponsored health plan premiums, and has also grown slower than total per capita healthcare spending.

If saving money is a priority, then rejecting Medicaid expansion funds is the wrong decision for South Carolina. A recent RAND Corporation analysis projects that “the cost to states of expanding Medicaid would generally be lower than the cost of uncompensated care.” The RAND analysis showed that these saving might continue beyond 2020, when the states begin picking up 10 percent of Medicaid costs.

Failing to expand Medicaid also imposes additional costs on hospitals, businesses, and every citizen who makes out-of-pocket payments for health care. Hospitals will face cutbacks in Medicare and Medicaid disproportionate share payments. Employers may be hit with additional tax penalties when their employees who earn between 100 percent and 138 percent of the poverty level enroll in the health insurance exchange rather than Medicaid. And everyone who pays for health care will continue to foot the bill for uncompensated care—a hidden tax on every working family and an unnecessary drag on economic development.

Does Health Insurance Contribute to Health and Well-being?

In recent testimony before Congress, Director Keck described our health care system as “built on the tenuous logic model that health insurance leads to access to effective health care services, which leads to health.” In dismissing the importance of expanding healthcare access, he cites the often quoted but unsupported “factoid” that health services contribute only about 10 percent to overall health and well-being.

Let us first dispense with the 10 percent figure, a claim which does not stand up to scrutiny. Life expectancy has improved dramatically over the past 60 years, and most of this improvement has been due to reductions in mortality from cardiovascular disease and infant mortality. A 2005 study in the British Medical Journal found a 54 percent reduction in mortality from coronary heart disease between 1980 and 2000. Approximately half of this reduction was attributed to modern medical and surgical interventions (such as blood pressure and cholesterol management). The evidence for the efficacy of perinatal care is equally strong.

Simply stated, health insurance works. The Institute of Medicine found that having health insurance coverage is associated with better health outcomes, and people with health insurance are more likely to have a regular source of care and are more likely to make appropriate use of health care services.

The Oregon Health Experiment has provided more specific evidence of the benefits of Medicaid coverage. Uninsured adults who are provided Medicaid coverage are significantly more likely to have a regular place of care and a regular doctor. Medicaid recipients report improvements in self-reported health, and having Medicaid coverage virtually eliminates catastrophic medical spending.

Of course, the other social determinant of health are also important, and no one is making the case that providing health insurance will cure all social ills. However, there is strong evidence that health insurance is the most important social determinant of health in the United States. A good education and a comfortable income are blessings, but how many people so blessed would choose to cancel their own health insurance?

Asking the Right Questions

“The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong questions. President Obama and Congressional Democrats committed the more grievous of the two errors by framing their approach to reform as, 'How do we insure as many people as possible?' … In South Carolina we are instead asking, 'How do we most improve the health of our citizens?' and it leads us down a different path." — Anthony Keck
Family physicians should welcome the opportunity to reframe the fundamental questions of health care reform. Our Academy has been a strong advocate for health system transformation, and has long supported the reforms proposed by Director Keck in his alternative plan for addressing the uninsured population.

Hopefully, we can find common ground with advocates on both sides of the Medicaid expansion debate. We can work together to achieve the Triple Aim of improving the patient care experience, improving population health, and reducing per capita costs. We can also support SCDHHS initiatives such as advancing the Patient-Centered Medical Home model, expanding access, eliminating healthcare disparities, and moving toward a payment system based on value rather than volume.

Most of all, we can work together to move the discussion beyond being a pointless political debate. The goals of improving the health and well-being of all citizens should transcend our politics, and the solutions we choose should be based on evidence, not ideology.

Reframing the debate means asking the right questions. It also means taking a dispassionate view of the evidence—and the evidence clearly supports the benefits of expanding Medicaid coverage in South Carolina.

This article was published in South Carolina Family Physician.