By Ron Feemster
Dr. Dean Bartholomew, a family practitioner in Saratoga, lives daily with the pros and cons of whether Wyoming should expand Medicaid to serve some 30,000 of the state’s poorest residents.
On the one hand, Dr. Bartholomew’s local clinic, like hospital emergency rooms around the state, turns no one away and provides care to people who can’t afford the full cost of treatment — or who simply don’t pay their bills. If his poorest patients had Medicaid coverage, his practice would incur fewer risky debts.
“Speaking as a physician and a small business owner, that would be great for my clinic,” Dr. Bartholomew said. “It’s a population I struggle to collect from.”
On the other hand, as a political conservative, he wonders if the United States can pay for a sudden expansion of coverage under the Affordable Care Act, the national healthcare law that even the president now calls “Obamacare.”
“All physicians want to increase access to care,” said Dr. Bartholomew, who is on the Board of Directors of the Wyoming Medical Society. “We all want more people to have more insurance coverage and get better treatment. But we have to wonder if this is a financially viable solution to the problem.”
In the next six months, Wyoming must decide whether to extend Medicaid to people on the fringes of the healthcare system, giving medical coverage to thousands of adults who rarely see a doctor and often wait so long to seek treatment that their care costs more than that of patients with medical insurance. The expansion tempts many stakeholders in the state healthcare system, since the federal government will absorb the lion’s share of healthcare costs for these new Medicaid enrollees. But as Dr. Bartholomew’s views show, it runs against the political grain for many Wyoming residents.
If Wyoming does not expand Medicaid under the Affordable Care Act, it removes the state’s poor from the new insurance system. Under the law, people who earn between 133 percent and 400 percent of the federal poverty level — $14,500 to $45,700 for single, childless individuals — receive a subsidy to help pay for a private health insurance plan. Those below the lower threshold get nothing under the law, unless Medicaid is expanded to include them.
Even today, not covering the poor is not free. Although hard data are tough to come by, Wyoming’s poorest residents almost certainly cost taxpayers money. They use the state’s clinics and emergency rooms without paying the bills and avoid care until simple maladies reach crisis levels. At least that is what many stakeholders in the state medical system intuitively believe. But doctors, hospital administrators and people who run low-cost clinics acknowledge that quantifying these costs, and especially determining how they could be reduced under an expanded Medicaid program, is a difficult and controversial undertaking, about which there is little consensus.
“I’ve visited with a lot of groups,” said Gov. Matt Mead on a conference call last week. “Some who said ‘Absolutely, do want the Medicaid expansion,’ and some who said, ‘Do not.’”
The problem Mead mentions first when discussing the Affordable Care Act is the unresponsiveness of Washington. In July, he famously wrote a letter to Kathleen Sebelius, Secretary of Health and Human Services, requesting direction from HHS. As of this week, that letter has gone unanswered and Wyoming has fallen further and further behind the federal schedule to implement the ACA.
“As these deadlines come and go, until we get some more answers, I think it puts all the states in a very difficult position to make informed decisions,” Mead said.
At first glance, the new Medicaid playing field seems clearly marked. The state will pay to enroll people and administer the program. The feds will pay for care for new enrollees. Washington pays 100 percent of the care costs in 2014. The subsidy drops to 90 percent by 2020.
If a new enrollee is eligible for Medicaid under the current rules, the state will receive only a 57 percent federal reimbursement, the same level it would receive if the patient were already enrolled. The national government expects currently eligible people to “come out of the woodwork” to enroll in 2014, when the federal mandate to purchase health insurance takes effect, so the state will have to pick up 43 percent of their Medicaid costs, instead of paying nothing, as with other new enrollees. When they try to buy subsidized health insurance, these “woodwork” cases will be enrolled in Medicaid instead.
Enrolling “woodwork” cases and children is required, even if the state chooses not to expand Medicaid. But expanding the program to include new enrollees is up to each state.
If states choose to expand the program, new eligibility rules will take in single adults who earn less than 133 percent of the federal poverty level (FPL). FPL is $11,170 per year for individuals in FY 2012, so 133 percent of FPL is $14,856. For a family of four, FPL is $23,050. Currently, childless adults who are not disabled are not eligible for Medicaid in Wyoming, even if they earn less than 100 percent of FPL. Exceptions are made for pregnant women, who can earn up to 133 percent of FPL and parents of children, if they earn less than 51 percent of FPL. In June of fiscal year 2011, about 70,000 people in Wyoming were enrolled in Medicaid, according to the report. More than 60,000 of those Medicaid recipients were children.
The State of Data
If the basic plan seems simple, the details can be confounding. Gov. Mead’s letter raises questions about how insurance exchanges will determine Medicaid eligibility. And on his recent conference call, he wonders about Medicaid enrollees sliding between different income groups. What happens if a new enrollee’s income changes and he or she becomes eligible under the old rules? Does the subsidy change? What if a “woodwork” enrollee becomes eligible under the new rules? Does federal reimbursement rise from 57 percent to 100 percent? Who monitors this process? How do they do it? And how often?
A report for the Wyoming Department of Health prepared by Milliman, Inc., an actuarial consulting firm, forecasts the added costs of the program at $116 million to $148 million between 2014 and 2020, based on their best estimate of 28,200 new enrollees. The report said the enrollment could be as low as 17,000 and might exceed 44,000. Under the best estimate, Milliman expects about 3,700 “woodwork” cases that the federal government would reimburse at only 57 percent.
In the same report, Milliman notes potential for significant savings. Some current state health programs would be at least partially subsumed under Medicaid, enabling the state to discontinue their funding and save money. But forecasting these savings — frequently called “cost offsets” — is much more difficult than predicting the cost of enrolling new patients in Medicaid.
“Detailed data was available for the Medicaid cost analysis,” said Jill Van Den Bos, a senior consultant at Milliman and the lead author of the study. The researchers used U.S. Census data and claims-data, among other sources, to predict costs.
“But it was harder on the cost-offset side,” Van Den Bos said. Eligibility for some free services offered by the state — such as colorectal cancer screening, and breast and cervical cancer treatment — is set at 250 percent of FPL. But it is difficult to know how many participants in those programs would fall under the eligibility limit of 133 percent of FPL.
“There is no hard data,” Van Den Bos said. “Assuming uniform distribution, it’s about half.” The state might also be able to reduce its bill for funding the Wyoming State Hospital, which took $60 million from the general fund and “generated only $1.4 million in revenue from all third party payers,” including Medicaid, the report said. But once again, the savings are hard to pin down, since it is unclear how much Medicaid will pay for the indigent — for example, how many days of care per year — until more information arrives from Washington.
“The uber-person who had access to all of the data on Earth would still have a better data for the cost side than the cost-offset side,” Van Den Bos said.
Waiting on the Feds
The Department of Health, which commissioned the Milliman report, is mining its own data to determine how much Medicaid expansion might save. Although officials will eventually have to make tough policy calls, they currently face complex technical issues that cannot be decided without federal input.
Foremost among these is the definition of essential benefit plans. The federal government has listed 10 essential benefits that plans must include. But each state must define these benefits in detail, said Thomas O. Forslund, director of the Wyoming Department of Health.
The state plans to make the largest small-group insurance plan the benchmark in Wyoming, Forslund said. But it is not possible to simply look up benefits in that plan, the Blue Cross Business Choice Plan, until new federal rules are set. For example, the rules for coverage parity between mental health and medical health have not yet been worked out.
“There will be savings at the State Hospital,” Forslund said. “But we don’t know yet what portion of cost can be reimbursed by Medicaid and for how many days. These are some examples of the things we don’t know. We’ll have a better idea when the feds put out rules.”
On the policy side, Forslund said, the state can reduce funding for healthcare from the state’s general fund. For example, the state now funds in- and out-patient treatment at community mental health centers completely from the general fund. But the question is how to make the reduction.
“Now that the centers can bill insurance for services, should the state eliminate all funding to community mental health?” Forslund wonders. “What if not all services will be eligible for reimbursement? How much do we cut back?”
Finally, Forslund notes that if the state does not expand Medicaid eligibility, a large number of Wyoming residents will be too poor to qualify for federal health insurance subsidies.
One might expect federal subsidies for the private insurance market to cover the state’s poorest residents, but that is not what the law says. When Congress passed the ACA in 2010, the law specified that Medicaid would cover all single adults and families making less than 133 percent of FPL. Federal insurance subsidies would help cover the cost of insurance for those making more than 133 percent but less than 400 percent of FPL (about $92,000 for a family of four), provided they buy private insurance through a health insurance exchange.
In its June ruling, the Supreme Court upheld the insurance exchange and subsidy system for those making more than 133 percent of FPL, but ruled that requiring states to expand Medicaid in order to keep current Medicaid funding was too coercive. Instead, the Court left Medicaid expansion up to the states.
If a state does not expand Medicaid, Forslund points out, residents between 133 and 400 percent of FPL remain eligible for insurance subsidies. However, single adults under the age of 65 whose incomes fall below 133 percent of FPL get nothing. So Wyoming’s poorest residents will not qualify for Medicaid and earn too little money to qualify for a subsidy.
It is unclear how many people fall into this category. The Milliman report does not address who falls through the cracks if Medicaid is not expanded. However, according to U.S. Census data, some 37,000 Wyoming residents between the ages of 18 and 65 live below the federal poverty level.
Last Ditch Care
Many of Wyoming’s poorest adults and families now seek care in low-cost clinics like the Community Health Center of Central Wyoming in Casper, or its sister clinics in Riverton and Dubois.
“From our perspective about 30 to 35 percent of our practice is Medicaid,” said Dan Reiner, head of the clinic and chief executive officer of the Wyoming Primary Care Association, an organization that seeks to expand access to healthcare in the state.
Reiner estimates that his clinics dispense care worth about $10 million every year, but take in only $7.5 million in fees and reimbursement. The other $2.5 million is essentially free or provided at less than cost. One of Reiner’s goals is to grow larger so that he can give away more free care.
“We are seeing an accelerated percentage of uninsured and underinsured patients,” he said. “New Medicaid enrollees would be a benefit to us. We would have more dollars available.”
Reiner suggests that much of his core clientele might fall on the border between Medicaid eligibility and subsidized health insurance. He describes young families with a husband who earns $25,000 to $30,000 and a wife who stays home with three children. After housing and food, he estimates that such families have $200 to $300 in disposable income per month.
If they have so-called “catastrophic” coverage with a high deductible, they must pay for routine preventive care out of pocket. If they go to a doctor at all, they appear at the clinic and pay $20, the low fee on the sliding scale. But these patients often wait too long before seeking care and land in an emergency room for ailments that could have been prevented.
In Reiner’s view, expanding Medicaid and opening the healthcare exchanges could encourage many young working residents of Wyoming to seek preventive care and stay healthier.
“I have a lot of optimism about where we are going,” Reiner said. “I’m just not sure of the exact course yet.”
Last year, 26 hospitals in Wyoming provided care worth $199.8 million for which they did not receive payment, according to Dan Perdue, president of the Wyoming Hospital Association (WHA). That includes care given as charity but also bad debts and emergency room services to indigent people who could not be turned away under federal law. This figure does not include doctors’ fees or lab work done outside the hospital, according to WHA.
“Our board feels intuitively that if you add almost 30,000 people to Medicaid, that will reduce uncompensated care provided by our members,” Perdue said. But he worries that Gov. Mead’s initial skepticism about Medicaid expansion may make it a hard sell. “We have a strong inclination to support expanding Medicaid,” Perdue said. “But we need to come up with additional data.”
The WHA has contracted with the Hospital Industry Data Institute in Jefferson City, Mo., to determine with greater accuracy who uses the state’s hospitals and who fails to pay. For legal and technical reasons, the hospitals do not know how many non-paying patients might be eligible for Medicaid under the new rules.
“We can’t just ask them what their income is when they come in to the ER,” Perdue said. “That is against federal law, too.”
Perdue expects the new data by the end of October. Until then, the WHA is withholding final judgment on whether expanding Medicaid coverage could reduce the amount of uncompensated care provided by Wyoming hospitals.
Wyoming is not Alone
States around the country are grappling with Medicaid expansion. An analysis by The Advisory Board Company, a healthcare and higher education consulting firm, suggests that 11 states are committed to expanding Medicaid while six have indicated that they will not participate. The remaining 33 are like Wyoming, working on the issue, trying to balance costs and benefits, sometimes looking for middle ground.
Healthcare analysts would be forgiven for thinking the ‘W’ in Wyoming stands for “Wait.” Nearly every major player in the state is waiting for something. The governor is waiting to hear from Secretary Sebelius. The Health Department is waiting for federal rules on essential benefits. The Hospital Association is waiting for better data about its members’ uncompensated care costs.
The Wyoming Medical Association, a group of physicians with about 850 members, including 550 physicians practicing in the state, is waiting until its next board meeting on Oct. 13 to draft an official position. An informal poll of the membership before representatives met with Gov. Mead on Sept. 17 indicated that state doctors are divided on their support for Medicaid expansion and the ACA overall, according to Dr. Bartholomew, a board member who attended the meeting with the governor. But it seems safe to assume that many, like Dr. Bartholomew, will seek to balance their desire to expand access to care with some fiscally conservative caution, before presenting a formal position to the legislature and the governor.
Meanwhile, Wyoming lawmakers are forced to wait until the legislative session starts before they can commission new studies on the issue. The legislature passed a law in March preventing the state from taking any actions that would commit it to implementation of the ACA before April 1, 2013. And under federal grant-making rules, Wyoming’s own state legislative committees cannot access funds to pursue actuarial studies without such a commitment to implementing the federal law. Legislators are in limbo, waiting to change their own rules, which have hamstrung a crucial part of the planning process.
Finally, everyone is waiting to see what happens Nov. 6. If Republicans win the presidency and control Congress, they vow to “repeal Obamacare.” Many members of Wyoming’s healthcare community would heave a huge sigh of relief. And Wyoming’s glacially slow planning process might grind to a halt. If the Democrats win, officials and legislators must press forward, however they feel about it. At least the finality of the election might speed the flow of data.
— Ron Feemster just finished two years as a Visiting Professor of Journalism at the Indian Institute of Journalism and New Media in Bangalore, India, and previously taught journalism at Northwest College in Powell. He has reported for The New York Times, Associated Press, Newsday, NPR and others.
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