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Coverage vs. care

Medicaid expansion under Obamacare may result in more Americans being covered, but it is deepening long-standing problems with the program at the expense of those who need it most


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LONGVIEW, Texas—Jackie LaBaron spent 25 years working as an assistant veterans services officer in East Texas county government. She loved helping veterans receive the services they earned and says she would still be doing it if health problems hadn’t forced her to retire early. Due to frequent falls at home, she moved into a nursing home and onto Medicaid in 2012.

LaBaron says she gets adequate care for her lung and nerve-damaging diseases, but she wishes she could hear her 12-year-old granddaughter in both ears. The Texas Medicaid program used to cover two hearing aids, but it dropped to one in 2012. “I’ve got to sit on the right side of people, so I can hear them,” said LaBaron, 67, who colors her cropped hair brown. “You work all your life, and then you need care, and it’s not always there for what you need.”

Nelda Worley, LaBaron’s social worker at Clairmont Longview, told me the story is a common one. She routinely hears from crying patients who say the government doesn’t care about them anymore, because they can’t get the healthcare they need. Worley works out of a tiny closet-turned-office with wall art that reads, “Keep calm and think of the beach." She said the problems have worsened over the last six months. “You’ve pretty much got to be like a piranha” to get anything approved, she said, citing the Affordable Care Act (ACA) as the primary factor: “Some people die waiting.”

Texas is one of 22 states that have so far declined to expand Medicaid to cover more persons—and the pot of federal money that comes with it. Obamacare supporters paint these state decisions as purely political moves undermining the law’s main goal of lowering the number of uninsured Americans. I traveled to Texas, the largest non-expansion state, to see if that was true and found evidence that non-expansion states have good reasons to think twice.

Texas’ already overloaded program is struggling to keep up with population growth, state lawmakers are scrambling to fund it, and “covered” Medicaid enrollees are searching for care from a shrinking pool of providers. Adding more persons to the program would only make those problems worse, hurting those the program was most intended to help.

Medicaid rolls have ballooned to 62 million—equivalent to the 23rd largest nation in the world—and the ACA plans to increase that number beyond 80 million by 2020. The Congressional Budget Office projects in 2030 Medicaid, Medicare, Social Security, and interest payments on the national debt will consume all federal revenue.

President Barack Obama once saw this as a problem. In 2009, he said it wasn’t acceptable simply to add more people to Medicaid or Medicare to increase coverage without cost controls and reform: “Another way of putting it is we can’t simply put more people into a broken system that doesn’t work.”

Yet that’s exactly what happened the following year, when Obama signed the ACA featuring Medicaid as the primary means of expanding healthcare coverage. It didn’t include any structural changes to a program that was already busting state budgets and producing long wait times and worse health outcomes than those with private insurance—or even those with no insurance at all.

A 2010 University of Virginia study based on almost 900,000 surgical operations found Medicaid patients were 13 percent more likely than uninsured persons to die before leaving the hospital (even after adjusting for age, health, gender, region, and income). The New England Journal of Medicine published a study on Oregon’s 2008 healthcare expansion that found it increased the use of healthcare services but “generated no significant improvement in measured physical health outcomes.”

What might structural changes look like? Congressional Republicans are pushing plans to give states flexibility in the way they administer their programs, such as a capped allotment of money that would grow with inflation and population increases. The primary Democratic proposals include more spending and price controls.

Avik Roy, a health policy scholar at the Manhattan Institute, suggests allowing adult enrollees to shop on exchanges similar to Obamacare, giving patients incentive to control their own care and costs while keeping whatever they save. But states can’t make such changes. “Texas is constrained—there’s only so much they can do,” Roy told me. “Every change has to be approved by the Health and Human Services secretary in Washington. That can take years.”

AT A RECENT MEDICAID BRIEFING at the U.S. Capitol, I sat down beside two suit-clad men who were discussing how well the ACA is working. They noted the decrease in the uninsured rate—down from 14.4 percent in 2009 to 11.9 percent now, according to Gallup—and marveled that the law doesn’t have an 80 percent approval rating. Raw partisanship is the only answer, they said.

The presentation, held for congressional staffers and policy wonks, did little to change minds: It focused on abstract charts, statistics, and systems—all positive—with no discussion of the actual care people receive. There was no hint of why in March, on ACA’s fifth birthday, a Real Clear Politics polling average showed Americans disapprove of the law 53.5 percent to 42 percent—a 10.5 percent deficit identical to the day the legislation passed.

To understand those numbers you have to talk to someone like Nelda Worley at Clairmont Longview, or Charles Beatty, who operates East Texas Hearing Solutions two miles away. Beatty, 68, fit his first hearing aids as a teenage apprentice to his father in 1964, before state laws licensed and regulated audiologists. Walking down the hallway to his office reveals a visual history of hearing aids: Shadow boxes display amplification devices that date back to 1908. Several look more like walkie-talkies than hearing aids.

Beatty can recite from memory details about recent studies showing the links between hearing loss and Alzheimer’s, expertise that is more than professional—it’s personal. A childhood bout with the mumps left Beatty with significant hearing loss, which he says helps him relate to his patients. In his East Texas drawl he recounts patient stories of a blind man whose hearing aids allowed him finally to get a cell phone, and a woman who, through tears, said her husband was able to converse with his sons for the first time in 10 years.

Beatty accepted Medicaid patients for years, but he stopped after the state cut reimbursements down to the net cost of one hearing aid. He said the paperwork was “unreal,” and it would take four or five months to receive a check. Now he works with the Starkey Foundation to obtain free hearing aids he fits without charge for low-income patients. “It costs me less to donate my time,” said Beatty, whose wire-rimmed glasses sit between his graying hair and mustache.

Beatty’s dilemma is not an outlier. Last year Forbes magazine named Longview the sixth-fastest growing small city in the United States, but no audiologist in the area of more than a quarter-million residents accepts Medicaid patients. Provider shortages are worst among specialists, including audiology, neurology, and most specialized pediatric care, but it also extends to primary care physicians.

According to a biannual Texas Medical Association (TMA) survey, the number of physicians accepting all new Medicaid patients plummeted from 67 percent in 2000 to 32 percent in 2012. That number ticked up to 37 percent last year due to an ACA-mandated bump in physician reimbursements, but the temporary increase expired in December.

The physician exodus from Medicaid has occurred while Texas Medicaid rolls doubled from 2 million to 4 million. That dynamic has funneled scores of patients into crowded emergency rooms, where care costs most but admittance is guaranteed.

“The vast majority of the time the emergency rooms are used by Medicaid patients as primary care physicians,” said Dr. Doug Curran, vice chair of TMA’s board of trustees.

Curran told me Medicaid reimburses him about $30 for a routine office visit that costs him $45. Curran takes some Medicaid patients at his family practice because “it’s the right thing to do,” but “we have to be careful how much we do, because we have to keep the doors open.”

Bottom line: Coverage is not the same as care, and expanding Medicaid coverage to more people has led to less care for those who really need it.

MEDICAID SPENDING, MEANWHILE, is crippling state budgets as well as the federal Treasury. Texas Medicaid spending has spiked from 12 percent of the state budget in 1989 to an expected 29 percent in the 2016-17 biennium. Lawmakers have allocated $24.8 billion in state funds for Medicaid—surpassing the education budget for the first time. The Heritage Foundation estimates Medicaid expansion would cost Texas an additional $4 billion by 2022.

“It should be clear to all that this trajectory is simply unsustainable,” said Republican state Sen. Charles Schwertner, a physician who chairs the Health and Human Services Committee. During a March press conference he said the federal government uses “gold-plated handcuffs” to prohibit states from instituting necessary reforms, including health savings accounts, co-pays, and work requirements for able-bodied adults.

As states try to control costs, cutting doctor reimbursements tops a short list of options. The federal government requires certain populations remain eligible, restricts cost-sharing, and prohibits eligibility guidelines that would result in fewer qualified enrollees.

Many states have moved toward managed care models, which proponents say curb overtreatment. Private companies overseeing care have been able to cut costs, but patient advocates say it often comes at the expense of vulnerable people who have nowhere else to go. Nelda Worley told me Medicaid case workers are making it much more difficult to gain approval for legitimate needs.

Although the Supreme Court’s 2012 Obamacare decision made Medicaid expansion optional for states, the federal government has continued to pressure states into expanding: Indiana had a special waiver to administer its altered program, but the administration wasn’t going to renew it without expansion—which Indiana announced in January. In April, Florida announced plans to sue the administration over its threat to withhold $1 billion in annual funds for low-income Floridians because the state hasn’t expanded Medicaid.

Some states have negotiated reforms with the federal government: Michigan enacted cost-sharing measures for new recipients, and Arkansas used expansion money to purchase private insurance plans. Doctors and hospitals say Texas should pursue similar reforms while expanding immediately, but critics argue the deals always favor the federal government. “What they start with is hard core, but it ends up Medicaid expansion with a few tweaks,” said John Davidson, director of health policy at the Texas Public Policy Foundation. “The Pennsylvania governor couldn’t even get a $2 increase [from $8 to $10] in co-pays for non-emergency emergency room use.”

STATES HAVE FOUND EXPANSION doesn’t solve the kinds of problems Texas is experiencing. I spoke with social workers in Maryland, which expanded Medicaid two years ago, and they confirmed that expansion has brought significantly longer wait times to many patients. Hospitals across the country have reported heavier emergency room traffic. The Department of Health and Human Services inspector general released a nationwide report in December showing half of all doctors listed as taking Medicaid patients were not available to treat them. Many who did participate required long waits.

“What good is a list of statutory benefits if they can’t find a doctor to provide them?” Pennsylvania Rep. Joe Pitts, chairman of the House Subcommittee on Health, told me. “A lot of time Medicaid promises care but denies access—and for a lot of patients, care delayed is care denied.”

Worse than the unintended consequences, expansion is inherently unfair: As Medicaid opens to persons up to 138 percent of the federal poverty level, including childless adults, the federal government is paying 100 percent of the cost. That progressively drops to 90 percent in 2020, but federal reimbursements for existing Medicaid patients—likely the neediest—will remain between 50 percent and 73 percent. That gives states and providers a perverse incentive to focus on a higher-income, able-bodied population.

‘What good is a list of statutory benefits if they can’t find a doctor to provide them?’ —Rep. Joe Pitts

The high match rate is the biggest argument for expansion, but Chairman Pitts said it’s a “virtual mathematical certainty” that the promised 90 percent will not last. He said Congress—facing large deficits—historically pushes costs onto states: “States that have expanded Medicaid under Obamacare may come to regret that decision in a few years.”

Another unfair feature of expansion: Medicaid continues to subject traditional enrollees in the long-term care population to an asset test, meaning their net worth must be very low before they qualify for coverage. The expansion population has an income test, but no asset test. States have reported numerous millionaire lottery winners whom they can’t eject off Medicaid, because their income remains low.

That’s a bitter pill to swallow for Jackie LaBaron, who had to get rid of her truck and run her assets dry before Medicaid would pay for her stay at Clairmont Longview. She never sees her monthly retirement or Social Security checks, she said, but instead receives a $60 monthly allowance. That’s especially hard since it keeps her from doing much for her granddaughter: “Medicaid makes it so dog-gone tough for people, you just have to get rid of everything. … You can’t buy hardly anything for $60.”

Supporters point out that new Medicaid-eligible, single adults still only make about $16,000 a year. It’s easy to argue the government should help that population with healthcare—but harder when it’s at the expense of those who need it even more. LaBaron worries that further expansion will water down her care. She told me able-bodied adults have an option to work that she doesn’t have: “[Eligibility] should be about your physical ability to work. … If you’re in a nursing home, you need the care.”

Lost to fraud

The FBI estimates Medicare and Medicaid fraud cost taxpayers between $75 billion and $250 billion in 2012 alone—enough to fund the entire Department of Homeland Security roughly up to six times. Using conservative estimates, about 10 percent of all claims are fraudulent, but some experts believe it may be as high as 20 percent to 30 percent.A bipartisan group of lawmakers, led by Rep. Peter Roskam, R-Ill., has introduced the PRIME Act, a bill that would impose incentives and penalties at various levels of the programs to help clamp down on waste, fraud, and abuse.

The legislation has 44 co-sponsors, 26 Republicans and 18 Democrats, but don’t expect a groundswell of support any time soon. Since eliminating waste, fraud, and abuse ultimately means investigating their own, often-influential constituents, lawmakers are likely to leave it on the back burner. According to Open Secrets, in 2014 the medical industry spent more than $488 million on lobbying—among the highest amounts of any industry. —J.C.D.


J.C. Derrick J.C. is a former reporter and editor for WORLD.

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