What the Election Means for Health and Health Care… The Re-Election of President Obama Curtails the Likelihood of Major Medicaid Reductions

Nov 26, 2012, 9:13 AM, Posted by

Frank J. Thompson, PhD, is a professor at the School of Public Affairs and Administrations and at the Center for State Health Policy at Rutgers, The State University of New Jersey.  Thompson is a 2007 recipient of a Robert Wood Johnson Foundation (RWJF) Investigator Award in Health Policy Research, studying Medicaid: Political Durability, Democratic Process and Health Care Reform.  The RWJF Human Capital Blog asked scholars and fellows from a few of its programs to consider what the election results will mean for health and health care in the United States.


Human Capital Blog: What do you think the election will mean for the country’s health care system?

Thompson: It means that the country can go forward with implementing the Affordable Care Act (ACA).  My research focuses on Medicaid—the federal grant program to the states that insures some 65 million low-income people. Under the ACA, Medicaid is slated to cover most people with incomes up to 133 percent of the poverty line as of 2014. In the recent election, the differences between the two parties on the ACA and Medicaid were stark. The Romney-Ryan ticket pledged not only to repeal the ACA but to convert Medicaid to a block grant and to cut funding for the program by more than 30 percent over ten years. The degree to which a Romney administration would have achieved these objectives remains an open question. But the reelection of President Obama curtails the likelihood of major Medicaid reductions over the next four years.

HCB: Do you think there will be fewer challenges to the Affordable Care Act and more attention to how to implement it?

Thompson: In the case of Medicaid, the Supreme Court’s decision on the Affordable Care Act in June 2012 had already defused conflict between the national government and the states. The court ruled that the ACA so enlarged and transformed Medicaid that the federal government could not penalize a state’s existing Medicaid program if it failed to comply with ACA’s enlargement of Medicaid. The expansion became an option for states and not a mandate.

In the wake of the Supreme Court decision, Medicaid eligibility will more than ever depend on the state in which a person lives. Some states, such as California, are avidly pursuing the Medicaid expansion. Meanwhile the governors of three of the ten most populous states—Florida, Georgia, and Texas—have rejected it. The decisions of these three states loom particularly large because they are home to over 20 percent of the uninsured people targeted for Medicaid coverage under the ACA.

The federal government’s willingness to pay 90 percent (100 percent initially) of the costs of expanding Medicaid will over time be a strong inducement for most states to participate. Moreover, the history of the program suggests that states will eventually sign on. A year after Medicaid’s birth in 1965, only half the states had opted to participate. But by the end of 1970, all but two states were participating. Arizona, the last state to join, did not do so until 1982. To be sure, states face more fiscal stress now than they did in the late 1960s. Moreover, many Republican policy-makers in the states have steadily moved to a more full-throated embrace of small government and related libertarian themes. Still, I expect that over the next decade a substantial majority of states will choose to expand Medicaid.

HCB: Do you think the influx of previously uninsured patients into the health care system will materialize and, if so, are there enough providers to offer them high levels of access to quality care?

Thompson: There’s little doubt that millions of previously uninsured people will gain coverage. Even with the Medicaid expansion becoming a state option, 11 million people are projected to become eligible and sign up for the program. Provider network adequacy will generally be a problem and has long been the Achilles heel of Medicaid in particular. Although Medicaid payment rates have varied from state to state, they have typically trailed those of Medicare or employer insurance, especially for physicians. Because of this many doctors do not participate in Medicaid or greatly restrict the number of Medicaid patients they treat. The ACA makes some efforts to shore up network adequacy via temporary pay increases for certain primary care doctors and by expanding the number of community health centers. But these measures will do little to address a chronic problem for Medicaid enrollees—inadequate access to specialists.

HCB: If you had the ear of President Obama and congressional leaders, what would you suggest their health-related priorities should be in the next few years?

Thompson: I would stress one major caveat with respect to Medicaid’s potential contribution to debt reduction. The opportunities for Medicaid savings, that would also not undermine access and quality, are limited—much less than in the case of Medicare or private insurance. To be sure, policy-makers can probably wring some savings out of Medicaid without doing damage. Intensified efforts to fight fraud and abuse would yield some benefits. Initiatives to place the elderly and people with disabilities in managed care may prove cost-effective. (The managed care organizations will, however, need to build their capacity far beyond current levels to achieve that end.)

Ultimately, however, Medicaid remains a bare-bones program for society’s most vulnerable.  Thanks partly to low provider payment rates and Medicaid’s embrace of managed care, the program has done better at constraining costs than other sectors of the health insurance system. Program spending per enrollee has, for instance, risen more slowly than premiums for employer-sponsored health insurance.

Read more about the RWJF Investigator Awards in Health Policy Research program, and about Thompson’s work.

This commentary originally appeared on the RWJF Human Capital Blog. The views and opinions expressed here are those of the authors.