Medicaid standstill: Thoughts of raising local taxes

Wyoming and Alaska share similarities as sparsely populated states with a majority Republican base and strong ties with mineral extraction industries. Yet the two states’ politics have diverged recently on health care.

Alaska’s Gov. Bill Walker, a former Republican who won election last year as an independent, announced July 16 that he will expand Medicaid without seeking approval from a state legislature that sought to block him from such a move.

Walker campaigned with a pro-Medicaid expansion position last year, favoring a program that he said would expand coverage to some 42,000 low-income Alaskans. Walker’s administration estimated the plan would create 4,000 jobs, and bring $150 million in federal money to the state.

Wyoming’s Gov. Matt Mead (R), who opposed Medicaid expansion throughout his first term, changed his position after his successful bid for reelection in 2014. He threw his support for Medicaid expansion through his SHARE Plan, which legislative leaders quickly rejected in the 2015 session.

Mead’s administration projected the SHARE plan would provide coverage for 17,600 low-income people, create 800 jobs, and bring in more than $110 million in federal funds annually after 2017. In lieu of that, lawmakers this summer are exploring whether allowing counties to raise or shift more local taxes to county hospitals might help reduce the budget strain on health care providers.

While Mead continues to support Medicaid expansion, he will not follow the course of Gov. Walker to expand Medicaid without legislative approval, according to his policy director Mary Kay Hill. That option is not open to Mead for a combination of legal and philosophical reasons, she said.

“[Gov. Mead] does not believe that he has the authority to unilaterally commit Wyoming to a Medicaid expansion,” Hill said. “He has also said that he would not expand Medicaid without legislative approval. That’s a big decision, an important decision, and a decision that should be made jointly by the legislative and executive branches, if in fact the program is going to be successful in this state.”

While emergency budget powers allow Mead to accept one-time federal funds without legislative approval — such as firefighting funds — these cannot become ongoing expenditures. That means accepting federal funds for an ongoing Medicaid expansion without the Legislature is off the table in Wyoming, according to Hill.

Thirty-one states have approved the optional expansion of Medicaid. Governors in four states did not wait for legislative approval before accepting the federal funds. Gov. John Kasich of Ohio, a recent addition to the slate of Republican presidential candidates, was among those who expanded Medicaid without lawmakers’ full endorsement.

“The last Republican I can think of who expanded Medicaid was Ronald Reagan,” Kasich said in an interview with NPR. “If other people don’t want to take the money, that’s up to them, but I got money I can bring home to Ohio. It’s my money. There’s no money in Washington. It’s my money. It’s the money of the people who live in my state.”

The U.S. Supreme Court made Medicaid expansion optional in a 2012 decision that struck down part of the Affordable Care Act requiring states to share the cost of expanding Medicaid.

That left the so-called Medicaid gap, where some of the poorest people who make less than 100 percent of the federal poverty level were ineligible for Medicaid and also for tax credits if they bought insurance through Healthcare.gov. Those who make 100-400 percent of the federal poverty level receive the tax credits.

Wyoming’s most recent rejection of Medicaid expansion was at the hands of the state Senate earlier this year, on a 19-11 vote. After the vote, the House Labor, Health, and Social Services Committee opted not to consider the measure for the 2016 session because of the resounding rejection by the Senate.

Discussion of Medicaid expansion has since come to a standstill in Wyoming. Mead has made no move to push Medicaid expansion during the 2015 interim, leaving it to the Legislature to come up with its own solution.

“[Gov. Mead’s] position is that he made his offer, he had his solution, it was rejected, it is now their turn,” Hill said. “It is the hope of this office that there are alternatives being worked on, and when the Legislature convenes they will have solutions for access to health care, and solutions to uncompensated care that is dragging Wyoming hospitals.”

Yet, Hill says she’s heard nothing from lawmakers to indicate they have a plan of their own.

Meanwhile, the chairwoman of the Labor, Health and Social Services Committee, Rep. Elaine Harvey (R-Lovell), says expansion is not on the table for 2016. There’s no chance of winning the two-thirds vote needed for introduction in each legislative chamber, based on votes in the 2015 session, she said.

That leaves the Labor Committee as the main state entity working on policies to address the state’s top health care challenges: access to care, and uncompensated care among hospitals.

One policy idea under discussion is changing the mill levy statute to allow local governments to raise more taxes for county hospitals, because they don’t get guaranteed tax revenue unlike hospital districts and rural healthcare districts.

“There is quite a disparity between county memorials and hospital districts,” Harvey said.

Commissioners can designate to county memorial hospitals a portion of the 12 mills they are authorized to tax, but that is at their discretion. Most memorial hospitals get 1 mill or less from their counties.

“With that, is there a way that we can help by changing the statutes where they have the ability to [levy] more mills so that it is a local decision, a local issue?” Harvey said.

In other words, lawmakers would allow counties to potentially raise or shift taxes to support county hospitals, even while the state rejects federal money that would also help support these hospitals.

“I don’t think the Legislature is going to force anybody to increase or use more [county] mills for health care, but I do think there may be a fair discussion to have about equalizing the opportunity for different hospitals in communities, and let the people decide that,” said Rep. Eric Barlow (R-Gillette), who serves on the Labor Committee.

A recent legislative study found that eight Wyoming hospitals get local taxpayer support averaging $2.2 million per hospital, or roughly 6 percent of their revenues. In total, Wyoming hospitals and clinics get about $40 million in local tax support. Even so, they face more than $100 million in uncompensated care each year.

Marguerite Herman, a lobbyist for the League of Women Voters, sees raising local taxes as a stop-gap measure to ease the challenge of hospitals providing uncompensated care to the uninsured.

“The alternative may be closure of an essential source of community health care, which is no alternative at all,” Herman said. “Until Medicaid is made available to low-wage adults, this may be the only option.”

The Labor Committee also is considering whether rural health clinics may need to be expanded to fill gaps in care. Neither of these ideas are committee-endorsed or in bill form.

For now, this is as close as lawmakers have come to crafting homegrown policies to improve health care, an approach labeled the “Wyoming Way” by Majority Floor Leader Sen. Eli Bebout (R-Riverton) during the 2015 session.

Public opinion

Whether or not they support Medicaid expansion, Wyoming residents clearly feel the pinch of high healthcare costs.

“It’s all about cost,” said Angelika Bridgmon of Laramie. “We are retired, so we pay for our own health care, and we pay $800 a month for catastrophic insurance with a $9,000 deductible. It’s bad. It’s expensive. If you are going to retire, you have to plan for exorbitant costs.”

Bridgmon considers it unlikely that Wyoming lawmakers or the governor could do anything to lower costs. “It’s out of their hands,” she said. “From what I understand, because we are such a small population, we don’t have a lot of choices.”

Wyoming’s small population does contribute to the state’s highest-in-the-nation costs for insurance. The rural population also makes it difficult to keep local hospitals afloat, particularly when many Wyoming residents travel out of state to receive care in Colorado’s Front Range, Billings, Montana, Rapid City, South Dakota, and Salt Lake City, Utah.

A majority of Wyomingites are in favor of Medicaid expansion, yet their Legislature rejected it on multiple occasions.

“We should go ahead and make that investment [in Medicaid expansion], and at the same time, investing in those people in getting better jobs,” said Nanette Nelson, who works at the University of Wyoming. “If they are working, and they are still below 138 percent [of poverty] or lower, you have to scratch your head and say, what’s wrong this picture? They’re not just welfare-state people.”

While such views aren’t prevalent in the Legislature, a 2014 University of Wyoming poll found that 55 percent of respondents in Wyoming favored Medicaid expansion, even while 70 percent opposed the Affordable Care Act.

“I think that good health care goes together with good quality of life and a good economy,” Nelson said. “All of those things are wrapped up for me.”

Rob Harder, a small business owner in Laramie, said Wyoming’s opposition to Medicaid expansion seems to be solidified — at least with the current slate of elected officials — and any changes will likely depend on what happens in the next state election.

“It would be nice if they weren’t trying to do it all themselves,” Harder said of Wyoming lawmakers’ approach to health care. “It’s OK to be part of Obamacare. I think it is here to stick around.”

Harder has known several people for whom the Medicaid program made it possible to have a family and provide health care for their children.

“It’s seems hard for us to be a state with conservative family values, and not support people that need that,” he said. He urged lawmakers to “think about people, rather than politics.”