Capitol Report: Nov. 14, 2013

Obamacare has been the primary news story for the last month. Part of the new health care law includes Medicaid. It is this part of the program that brings the state of Missouri, and all other states, into the mix.

Medicaid in and of itself is a very complicated program, so we should begin with some basics. Medicaid is government funded health care for those of low income and limited resources. The federal and state governments share the cost of Medicaid (states can be required to support up to 50 percent of the cost), and the delivery is managed by the states. States are not required to participate in the program, but currently all 50 have some type of Medicaid program.

Many states have adopted a type of health care management system for Medicaid recipients: the underlying foundation of the program employs health management organizations in an effort to reduce costs. All but two states have received waivers from the Center for Medicare and Medicaid Services (CMS) to use such programs. This is where we are today, but changes are on the horizon.

Obamacare (officially the Patient Protection and Affordable Care Act) of 2010 greatly expands the Medicaid program. On January 1 of 2014, the eligibility ceiling will rise from 100 percent of the poverty level to 138 percent (this is the actual number, 133 percent with 5 percent "disregarded" making a total of 138 percent). The law as originally written required all states to have this level of coverage or sacrifice Medicaid payments from the federal government. In NFIB v. Sebelius the U.S. Supreme Court ruled this portion to be coercive, so today the law allows states to continue to receive Medicaid funding from the federal government even if expansion is not adopted by the state. So far, half of the states have expanded Medicaid.

The expansion program provides for federal funding at the following rates:

Year: Rate
2014: 100 percent
2015: 100 percent
2016: 100 percent
2017: 95 percent
2018: 94 percent
2019: 93 percent
2020: 90 percent
Subsequent Years: 90 percent

This is the coverage for the expansion portion only. The Congressional Budget Office estimated in May that Medicaid expansion will cost the federal government about $74 billion through 2023. They have since revised their numbers upward. This is on top of the fact that currently U.S. debt exceeds $17 trillion (that is $17,000,000,000,000). Here are the words from the September CBO report:

How long the nation could sustain such growth in federal debt is impossible to predict with any confidence. At some point, investors would begin to doubt the government's willingness or ability to pay U.S. debt obligations, making it more difficult or more expensive for the government to borrow money. Moreover, even before that point was reached, the high and rising amount of debt that CBO projects under the extended baseline would have significant negative consequences for both the economy and the federal budget . . . (http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013_0.pdf)

Also, keep in mind that interest rates today are historically low. When interest rates rise, which inevitably they will do because of the artificial nature of the low rates, the federal government will be spending more and more of your money just in interest payments rather than lowering the overall debt. So what are states to do? Certainly avoiding possible debt shifting from the federal government is a concern.

Missouri has some budgetary features that must be taken into consideration. First, unlike the federal government, we are required to balance our budget. Representative Jay Barnes-Columbia (R)) has stated that Missouri can come out ahead in the budget with Medicaid reform of some type. However, if costs do spiral out of control, such as the federal government not meeting its promised obligations, the Hancock provisions of our state require a vote of the people if taxes are to be raised significantly. Otherwise, the only discretionary area of the budget where we have the amounts of money needed to overcome shortfalls at the level potentially required by Medicaid expansion would be education. Of course, that would require taking money from our future and consuming it immediately.

One of the states to recently expand Medicaid is Arkansas. They requested a waiver for a different type of expansion that the federal government accepted in September this year. To simplify the plan, Arkansas will take the federal expansion money and provide private insurance for the expanded population eligible for benefits. This plan has been closely looked at by the House interim committee headed by Barnes. It has been reported that during the first three weeks of the new Arkansas plan 66,000 applied for the newly expanded coverage, and 62,000 were approved. (http://www.therepublic.com/view/story/ 2733bf64604e45fc885e47fbd508a572/AR--Health-Care-Overhaul) Arkansas expects about 200,000 to enroll with the expansion, but the new plan will be revenue neutral for the state for three years (the 100 percent coverage of expansion by the federal government). The agreement lasts for three years at which time either party may decide to discontinue the program. (http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/27/arkansas-is-using-this-weird-trick-to-expand-medicaid/) The Missouri Senate has also had an interim committee on the future of Medicaid, but has yet to consider expansion. Certainly the Missouri legislature will have many questions during the next session.

Nationally, Obamacare rolled out on October 1 to an abysmal start. The constant freezing of the website, security issues, and other problems have plagued the program. Estimates of between 3 to 5 million insurance customers already have been cancelled from their existing policies despite repeated assurances from President Obama that "if you like your coverage, you can keep it." The president, the U.S. Senate, and the U.S. House of Representatives all have proposals to either delay these cancellations or eliminate the cancellation provision. This brings us to the next step, signing up in the new insurance exchanges.

The enrollment numbers released this week show that 106,000 have signed up for new health care coverage via Healthcare.gov or various state-run sites. This number is nowhere near the pace needed to sign up the federal government's anticipated 7 million new enrollees. There is a question of how many of the 106,000 have actually signed up for new health care or have a policy identified but have yet to officially sign up. The Missouri total is 751 as reported by the Associated Press. A far greater number have signed up for Medicaid, the national number reaching 396,000. If this trend continues, we can estimate that about 4 times the number of people will be moving to government programs as opposed to private plans.

Needless to say, this is a difficult and complex problem. However, the new health care program is a reality. The Missouri legislature has taken this problem seriously and continues to search for the best solution that works for our state. I will keep you informed as we move forward on this issue. As always, please contact me with your thoughts.

It is an honor to serve the 51st District in the Missouri House of Representatives. Each week I will issue a capitol report to keep you informed of activities in Jefferson City and Missouri. Any concerns or issues you might have are of great interest to me. I look forward to your input and thoughts, so please feel free to contact me at any time if you have questions, concerns, or ideas to improve our state government and the quality of life for all Missourians. My telephone number is 573-751-2204 or you may contact me by email at dean.dohrman@house.mo.gov. Thank you for working me to make Missouri a great place to live.