Study: Private health exchange to aid bottom line better than Medicaid for Ohio
State economy predicted to gain if Medicaid expansion is avoided
by Jim Provance
September 20, 2013
Source: Toledo Blade
COLUMBUS - The state would be better off forgoing eligibility expansion of Medicaid and instead encouraging lower-income, uninsured Ohioans to take advantage of federal subsidies to buy private health coverage through a new online market, a study said Thursday.
The study from the Dallas-based, conservative National Center for Policy Analysis suggests that, even if the state opts to pay more on the front end to subsidize premiums, the state's economy would gain on the back end as private policies pay doctors and hospitals higher rates than Medicaid.
The study was released just as the Ohio Ballot Board gave supporters of Medicaid expansion the green light to gather voter signatures to force the issue with lawmakers.
Republican Gov. John Kasich has bucked some conservative elements of his own party by pushing lawmakers to expand eligibility for the federal-state health insurance of last resort to those earning as much as 38 percent over the federal poverty threshold. That amounts to about $32,000 a year for a family of four.
His proposal expected the expansion to add about 275,000 uninsured, mostly working adult Ohioans, 18,356 of them in Lucas County, to the Medicaid rolls over two years.
Other studies have estimated the economic benefits to Ohio from taking advantage of expansion, particularly because the federal government would be expected to send about $13 billion more to Ohio during seven years to pay for it.
The federal government has promised to pay 100 percent of the expansion cost for the first three years, with the reimbursement gradually falling to 90 percent after that.
But the newest study suggests that the state would do better by directing those who would otherwise be eligible under Medicaid expansion to the new insurance marketplace or "exchange."
Open enrollment under the federal Affordable Care Act will start on Oct. 1 as individuals prepare for the mandate that they have coverage as of Jan.1 or face tax penalties.
Ohio has opted to let the federal government run the state's exchange in which private insurers will compete for customers. Many who would be eligible for Medicaid coverage under the expansion also would be eligible for federal subsidies if they shopped the exchange instead.
The nonprofit NCPA promotes private alternatives to government. It has called for repeal of portions of the Affordable Care Act, commonly called "Obamacare," including the individual mandate.
"In Ohio, and this is true in all states, the average physician's fee is one half under Medicaid than what private insurance would pay for the same care," said Devon Herrick, a senior fellow at the center and co-author of the study.
"... You're expecting doctors to treat patients for fees below their average costs," Mr. Herrick said. "That would make it difficult to find doctors to treat them."
Mr. Herrick said about 28 percent of Ohio physicians refuse to accept new Medicaid patients.
The study suggests that Ohio would experience a net gain of $4.4 billion in health-care spending over a decade from higher-paying private insurance policies purchased in the exchange.
The nonpartisan Health Policy Institute of Ohio, which has not taken a position on the federal health-care law, found earlier this year that the state would see a net gain of $1.4 billion through 2022 if it pursued Medicaid expansion.
Health Policy Institute of Ohio, however, did not look at the impact of differing provider rates.
"If you did not expand Medicaid coverage, it is true that people above 100 percent of the federal poverty level could go into the insurance marketplace and purchase health insurance coverage that way," said HPIO President Amy Rohling McGee.
"Those people would be eligible for cost-sharing, subsidies, and premium tax credits to offset the cost, but people below 100 percent who are not currently eligible would have no subsidized health coverage option," she said. "Our analysis shows that number would be about 370,000 [by 2017]."
As the federal government proceeds with its plans to reduce reimbursements for uncompensated care in emergency rooms, hospitals could still be adversely affected financially for that population, she said.
As state lawmakers argue, supporters of Medicaid expansion hope to force the issue by gathering roughly 115,000 valid signatures of registered voters to put a bill on the General Assembly's desk at the start of 2014.
If lawmakers don't act to the group's satisfaction within four months, it would gather the same number of signatures to put the proposed law directly to voters next November.