The stated goal of federal healthcare reform was to give more Americans access to affordable, quality health insurance and slow the growth of healthcare spending.
When the Patient Protection and Affordable Care Act (PPACA or ACA) was signed into law in 2010, it envisioned accomplishing this in several ways. To start, it would create health insurance exchanges that offer individuals different health insurance options and provide parameters for when employers must provide health insurance for employees.
Other provisions required states to expand Medicaid coverage, dramatically increasing the number of eligible people. The law stipulates the federal government would pay 100 percent of the cost for newly eligible Medicaid beneficiaries for the first few years, eventually lowering the federal government share to 90 percent by 2020. Typically, the federal government pays a much lower share for Medicaid recipients. As of October 2014, 27 states and the District of Columbia have chosen to expand Medicaid.
According to proponents of the law, establishing health insurance exchanges and expanding Medicaid to a much larger population would set the healthcare industry and the communities they serve on a path to a healthier and more financially secure future. With more people covered, there would be greater access to preventive care, fewer expensive emergency room visits and more shared risk on costly medical treatments.
Initial travel down this envisioned path was not smooth. The new controversial law was challenged in the courts for several years, making its way to the U.S. Supreme Court in June 2012. The Supreme Court ultimately upheld nearly all provisions of the law; however, the provision requiring states to expand Medicaid was struck down. When the law went into effect on Jan. 1, 2014, large portions of the population who would have been newly eligible for Medicaid were no longer guaranteed coverage as the law intended.
Under the ruling, the federal government could not force states to expand Medicaid; each state had the right to make that decision. While states that expanded Medicaid were eligible to receive millions in federal dollars for the newly covered, opponents of the law voiced serious concerns about the federal government following through on its commitment to pay the vast majority of costs associated with this population. As a result, 23 states have declined expansion, including North Carolina, Virginia, South Carolina and Georgia.
These state decisions not to expand Medicaid have left many in a “coverage gap,” where an individual’s income is high enough to prevent Medicaid eligibility but also low enough to make private, individual coverage unaffordable. Those in the coverage gap do not have health insurance but still require medical care, often turning to emergency rooms for even the most minor (but significantly more expensive) treatments.
The decision not to expand comes at a price, according to a recent Urban Institute study. For every $1 a state invests in Medicaid expansion, $13.41 would flow into the state over a 10-year period (2013 to 2022). In North Carolina, this means $39.6 billion in lost federal dollars. In Virginia, the commonwealth loses $15.8 billion, and in South Carolina, $14.7 billion stays in federal coffers. The Urban Institute study concludes these lost dollars translate to weaker economic activity and lost opportunities for job growth.
Not-for-profit health systems, including Novant Health, are committed to providing high-quality care to any and all seeking treatment, regardless of a patient’s ability to pay. For those unable to afford healthcare, the hospital covers the cost, resulting in tens of millions of dollars in charity care each year. While Novant Health believes this is the right thing to do for its patients and communities, over time, uncompensated care challenges hospital budgets. A hospital is most sustainable when most of its patients are covered by some type of insurance plan.
With millions in federal dollars still available and states continuing to struggle to pay for many programs, additional states should seek partnerships to make sure as many people as possible have insurance coverage. And though sometimes controversial, a financially beneficial option continues to be Medicaid expansion. Expansion does not have to be a one-size-fits-all approach, however. Many expansion states have taken creative approaches that better fit their population and approach to Medicaid coverage.
Most of these alternatives emphasize a partnership between enrollees and the state. Officials say this approach is important — both to ensure citizens have health coverage and to emphasize personal responsibility and choice.
In Michigan, for example, the Healthy Michigan program expands Medicaid coverage by sharing healthcare costs between the state and beneficiaries through state-provided health savings accounts that can be used for paying part of a patient’s medical care. Total annual cost sharing cannot exceed 5 percent of the beneficiary’s annual income, and cost sharing can be reduced if individuals participate in certain healthy behaviors and preventive care measures. Beneficiaries with incomes above 100 percent of the federal poverty line also make premium contributions not to exceed 2 percent of an individual’s annual income.
States that have not expanded Medicaid are at various stages in their discussions. In North Carolina, decision makers are considering ways to reform the Medicaid system as a whole to make current costs more predictable. Novant Health is hopeful that, once reform has taken place, a discussion on Medicaid expansion can begin in earnest.
Regardless of the approach, providing comprehensive coverage and giving most people access to quality healthcare should remain the top priority, as hospitals and health systems continue to adapt to the changing healthcare environment.