RAYMOND - I wanted to provide some answers to questions you may have about Medicaid expansion in New Hampshire. These four points cover some of the main political issues surrounding expansion. These do not address the alternative proposal that was brought before the commission the week of September 12th. I will try to bring you more information on the alternative proposal as it develops.
Frequently asked questions on Medicaid Expansion in New Hampshire, as I understand it, are as follows:
1. Proponents of Medicaid Expansion are calling it a $2.5B infusion into the New Hampshire economy. Is that an accurate statement?
No. As part of Obamacare, Medicaid expansion is funded, in part, by over 20 new or increased taxes, including taxes on employers and individuals who choose not to buy health insurance, a surtax on investment income, a tax on health savings accounts, a tax on medical device manufacturers, and taxes on insurance companies, drug companies and charitable hospitals, among others. According to the Congressional Budget Office (CBO), only 65% of the federal health law’s funding comes from these new taxes and fees, and the Obama Administration’s recent decision to delay penalties for the employer mandate is expected to reduce these revenues even further.
Also, in order to pay for Obamacare, there will also be cuts to Medicare that could total over $700B. Seniors may have to deal with higher out-of-pocket costs, fewer benefits, and fewer plan choices.
There is no dedicated federal funding stream specifically for Medicaid expansion except for borrowed dollars that will increase our already staggering nearly $17 trillion national debt. The CBO estimates that the federal government is expected to run annual deficits. If New Hampshire expands Medicaid, it will add $2.5billion to those deficits and debt.
This is not “free money” from Washington. New Hampshire citizens and businesses will be paying for this expansion through federal taxes, and future generations will be burdened with even more debt than we see today.
2. But this money will only go to insure people who are currently uninsured, right?
Wrong. According to a study done by the Lewin Group, of the 100,000 New Hampshire citizens who become newly eligible for Medicaid, 51,000 of them already have private insurance. Of the 58,000 citizens who are expected to enroll in Medicaid, an estimated 20,500 would leave their employer sponsored private health insurance and enroll in Medicaid. These 20,500 who are already insured will shift from private insurance, for which they have to contribute, to Medicaid, which is free to them but paid for by other taxpayers. This is called “crowd-out”.
Research focusing specifically on the populations targeted by the federal health law predicts a much higher crowd-out effect. Some economists predict that the federal health law’s Medicaid expansion could produce a crowd-out rate of 82%, suggesting that the optional expansion will merely shift workers and their families from private to public insurance, rather than reduce the number of uninsured. In New Hampshire, a crowd-out rate of 82% could mean more than 40,000 privately insured people could switch to tax-payer funded Medicaid.
3. Will the State incur any costs as a result of expanding Medicaid?
Yes. In addition to an annual $3.5m administrative cost borne by the state, the federal health law promises to pay for Medicaid expansion at 100% for the first few years, then tapering down to 90% in 2020 and beyond. A study, commissioned by the NH Department of Health and Human Services, determined that the State costs from 2014-2020 could be as high as $102M.
There have already been proposals to cut Medicaid funding to the states. President Obama’s FY 2012 and FY 2013 federal budgets proposed a “blended rate” that would dramatically increase the States’ share of Medicaid expansion costs over time.
Using CBO numbers, The Heritage Foundation estimates that with just a 10% cut to what the federal health law has promised, New Hampshire’s share of Medicaid expansion costs could more than double.
With a continuing resolution funding the federal government, nearly $17T in debt, and continued gridlock in Washington, federal funding cuts to Medicaid will always be on the table.
4. Could New Hampshire expand Medicaid now, but end the program if the federal government doesn’t uphold their end of the bargain?
Yes, but it would necessitate specific language in the New Hampshire law to trigger a withdrawal. For example, Arizona’s expanded Medicaid law contains language that would end the program if federal funding drops below 80%. As most people would realize, it is much more difficult, if not nearly impossible, to rescind these types of programs after they’ve been instituted.
Hope this gives you some helpful information.
(Editor’s Note: NH State Representative Mike Kappler can be reached at firstname.lastname@example.org)