Obama administration must use policy levers, political heft to encourage states to undertake Medicaid expansion, Baker Institute expert says

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David Ruth
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Jeff Falk
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Obama administration must use policy levers, political heft to encourage states to undertake Medicaid expansion, Baker Institute expert says
Ho: The 4 million people who are at risk of not gaining Medicaid coverage are low-income individuals

HOUSTON – (March 18, 2013) – The ongoing implementation of the Affordable Care Act (ACA) continues to be a major point of contention in the halls of Congress and in state capitols across the nation, in particular as it relates to the opportunity for states to individually choose whether to enact Medicaid expansion provisions. The Obama administration must use policy levers and political heft to encourage states to undertake the Medicaid expansion offered in the ACA, according to a health care economics expert at Rice University’s Baker Institute for Public Policy.

Vivian Ho, the James A. Baker III Institute Chair in Health Economics, a professor of economics at Rice and a professor in the Department of Medicine at Baylor College of Medicine, outlines her recommendations in “Implementing the Affordable Care Act: Recommendations for Realizing Legislative Goals,” part of a recent, wide-ranging Baker Institute report, “2013 Policy Recommendations for the Obama Administration,” prepared for President Barack Obama’s second term.

Ho said the Congressional Budget Office estimates that the Supreme Court’s decision to allow states to individually choose whether to elect the Medicaid expansion will reduce the number of newly insured individuals under Medicaid and the Children’s Health Insurance Program (CHIP) from 13 million to 7 million. “Voluntary participation by states in Medicaid and CHIP is expected to lead to 4 million fewer individuals gaining health insurance coverage,” she said.

Ho said the administration should aim to encourage all states to elect the Medicaid expansion. “The 4 million people who are at risk of not gaining Medicaid coverage are low-income individuals. Low income is associated with worse health status, so that both poor children and adults need significant medical care for a range of acute and chronic conditions. Most of these individuals cannot afford to pay out-of-pocket for medical care, so they frequently seek care from hospital emergency rooms, where federal regulations (e.g., the Emergency Medical Treatment and Active Labor Act) require that these patients be examined and receive stabilizing treatment if necessary. This care represents an extraordinary financial burden on hospitals, most of which is financed by local, state and federal taxpayer dollars. Obtaining Medicaid coverage for these individuals would facilitate their ability to obtain care from medical clinics and outpatient facilities. Doing so would lead to more coordinated care, which would improve the health of the patient and reduce inefficient expenditures in the health care system.”

The administration should be aggressive in explaining to the public the financial benefits of state participation in the Medicaid expansion, Ho said. “The federal government should emphasize the generous terms of the Medicaid expansion to the states. States will receive 100 percent federal funding for the expansion from 2014 through 2016. State contributions will increase after 2016, but the federal government will continue to pay for 90 percent of the expansion from 2020 onward. This federal funding is essential for local hospitals, which will be losing subsidies for disproportionate share payments under the ACA. The additional federal dollars will yield substantial economic benefit for local economies through a multiplier effect on local spending.”

Ho said the administration should also encourage the Department of Health and Human Services (HHS) to explore flexible alternatives that allow at least partial uptake of the Medicaid expansion where state leaders are reluctant to participate. “For example, some large counties in Texas are exploring the possibility of approaching HHS to negotiate participation in the Medicaid expansion on a county-by-county basis. The federal government would need to waive the requirement that eligibility standards for Medicaid apply statewide, and the Texas Legislature’s approval would also be required. But this approach may be politically feasible, particularly with the strong lobbying power of large hospital systems in the biggest cities in Texas.”

Ho’s policy recommendations can be read on page 45 of the report, available online at http://www.bakerinstitute.org/publications/BI-pub-PolicyRecommendations-021313.pdf.

The Baker Institute has a radio and television studio available for media who want to schedule an interview with Ho. For more information, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

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Related materials:

Ho biography: http://bakerinstitute.org/personnel/fellows-scholars/vho/.

Founded in 1993, the James A. Baker III Institute for Public Policy at Rice University in Houston ranks among the top 20 university-affiliated think tanks globally and top 30 think tanks in the United States. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows and Rice University scholars. Learn more about the institute at www.bakerinstitute.org or on the institute’s blog, http://blogs.chron.com/bakerblog.

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