Thursday, June 14, 2012

I Am Government Man

Its been awhile, hasn't it? I didn't find anything particularly compelling to write about from the national or international stage that hasn't already been beaten like the dead horse it was. Instead, I thought I might write about Mitt Romney's plan for health insurance that wouldn't work, but I've already basically done that. No sense in repeating myself until he says something more about it, because his plan is frighteningly light on details. So I guess what I'll do today is give you all the lowdown on what I've been doing down at the Statehouse for the past few days.

Well, I'm drafting a legislative proposal for Ohio to implement something called a Basic Health Program. What is that, you might ask? Well, its one of Obamacare's lesser-known provisions (I didn't even know about it until I started working on this!). To understand how this would work, it might be prudent for me to explain how health care would be obtained under Obamacare based on where you are relative to the Federal Poverty Line (FPL from now on).

Basically, under the initial ACA plan, people under 138% of the FPL would be covered under traditional Medicaid. Legally present immigrants under 138% of the FPL would only be able to purchase insurance through their state's Health Insurance Exchanges, which, at their income levels, even with a subsidy, would be incredibly expensive, simply because they're too poor. For those between 138-400% of the FPL, they'd get a tax credit and a subsidy to purchase private health insurance through the Exchanges. Those above 400% of the FPL wouldn't get a subsidy, because presumably they wouldn't need one to afford insurance or would have it through their employer already, but they would still be able to buy it through the Exchange.

Now this is where the Basic Health Program comes in. Under Obamacare, the law says that states can, if they want to, set up a program that would cover people between 138-200% of the FPL instead of pushing them into the Exchanges. The program would work sort of like Medicaid, except instead of being very nearly free for enrollees, they would have to pay some modest level of premiums and pay certain co-pays. Basically, the entire idea of the BHP for Ohio is that it will sort of bridge the gap for people between 138%-200% of the FPL. When you become ineligible for Medicaid at 138%, you'd be facing a pretty sizeable jump in costs, from the nearly free Medicaid to facing costs of about $1,500 a year in premiums, which, for people at this income level, is about 1 month's worth of their yearly pay. The other problem is that, at lower income levels like this, people's yearly earnings can fluctuate wildly. This means that they could be lose Medicaid eligibility and regain it within the span of 6 months. This, needless to say, might cause a number of issues, like inconsistencies of care, higher administrative costs for Medicaid (because of the frequent loss-regaining of eligibility), not to mention the inconveniences! With a Basic Health Program, people would face somewhat higher costs per year over Medicaid, but it would be a modest increase in costs instead of a large jump. It would also aim to be a much more seamless transition, because the program is effectively Medicaid that they would have to pay for. The great thing about this program is that it does two things: it bridges the gap for poor people AND it saves states money.

Well, I should be clearer on that last part. Right now, state budgets are getting screwed over by Medicaid costs, because many of them have expanded eligibility from the Federal minimum (100% of the FPL prior to Obamacare) to 200% or in some cases 300% of the FPL! They've done this in many cases because there simply wasn't any other way for people to get insurance. But with Obamacare, the mandated minimum for states is 138% of the FPL, and above that point, people can buy insurance in the exchanges. So what a lot of states might (some already are) do, is start reducing the Medicaid eligibility to the minimum and pushing people into the Exchanges, where their expenses will be subsidized by the Federal government, rather than state governments. Needless to say, pushing them off of the state's books will save a lot of state dollars. Now, where does the BHP come in? Well, the way it'd work is that funding for the program would, again, come from the Federal government. 

The way it would work is like this: If, say, Ohio adopts a BHP, then any people who would have otherwise been getting tax credits and subsidies in the Exchange would get enrolled in the BHP. The Federal government would then take the money they would have given for subsidies to the states as funding for this program. Since Medicaid has much lower patient costs (largely because it doesn't pay health care providers very well), this means that the federal dollars paid to states would likely be something like 20-30% more than what it would cost to insure each person. The law prohibits surpluses to be used on anything else but the program, so what states might be able to do is to start paying health care providers higher rates. One of the biggest problems with Medicaid right now is that not very many doctors accept patients with it, simply because they don't make much money off of it. If states used the surplus federal dollars to pay doctors a bit more, people's access to care might increase as some doctors choose to accept Medicaid again. 

I never knew anything about this program before Tuesday, to be honest. But I'm pretty excited about the framework I'm putting together for it. I hope my explanation wasn't too rambling or dreadful. It just seems like the program would accomplish a lot of good things at once: it helps state save money, it helps poor people better afford insurance while simultaneously not just giving it away for free, and it potentially could increase payouts to doctors. 

Sounds like a win-win-win, if you ask me?

P.S. I'll put up my notes on the proposal in a future post for those interested.

P.P.S. Here are my whiteboard notes I was taking as I drew up the proposal:

Why yes, I have gone mad.