Saturday, March 04, 2017

The Tragedy of the Medicaid Expansion (Part II)

Stephen Griffin

In Part I, I described the impact of the Court’s creation of a Medicaid expansion option for state governments as “sectional” and related to race.  As an introduction to both aspects, consider a 2015 report by the Kaiser Family Foundation.  It described the impact of the coverage gap created once a state refuses the Medicaid expansion.  As I recounted in Part I, it is the gap with respect to adults who Congress expected would be covered by the Medicaid expansion yet do not earn enough to qualify for the alternative of receiving subsidies to purchase insurance on the exchanges.  The Kaiser report stated: “Uninsured Black adults are more than twice as likely as White and Hispanic uninsured adults to fall into the coverage gap. Nearly one-quarter (24%) of uninsured Black adults fall into the coverage gap, compared to 11% of White uninsured adults and 7% of Hispanic uninsured adults. This reflects the fact that a large share of uninsured Black adults resides in the southern region of the country where most states have not adopted the expansion.”  The South, in other words.

Consider an example.  Governing Magazine tells the story of Deadra Malloy, who moved from New York to South Carolina prior to the passage of the ACA although she was HIV-positive.  She wasn’t aware that she had crossed a sectional border from a state and region with generous Medicaid benefits to a region with no benefits.  After going without her expensive medication for a year, she ended up in the emergency room with pneumonia.  The article summarizes: “None of the nine deep Southern states with the highest rates of new HIV/AIDS diagnoses—Alabama, Georgia, Florida, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and Texas—has opted to expand Medicaid under the Affordable Care Act. Those states also have the highest fatality rates from HIV in the country, according to the Southern AIDS Coalition.”  As I noted in my first post, Louisiana has since accepted the Medicaid expansion.

The tragedy of the Medicaid expansion is that this southern failure after Sebelius was both predictable and very unfortunate in terms of its impact on health outcomes for all the poor in southern states, but especially for racial minorities.  The topic of Medicaid eligibility has its complexities and I am not a health law expert.  But as I said at the outset, I think this issue is relatively neglected by constitutional law scholars so it is worth taking on, despite the risk of making (hopefully minor) mistakes.  There are also, I believe, some important lessons to be learned about the policy consequences of the Court’s federalism doctrines.  For those interested in checking my claims (those not documented by links), I will attach a short bibliography to the last post.

To appreciate the distinctive southern problem that existed prior to the ACA, the problem that Sebelius exacerbated, it is useful to think of Medicaid as applying to just two groups: (1) children and pregnant women and (2) nonelderly adults.  Eligibility for the first group pre-ACA was (and is) fairly robust across the US as it is covered up to and well beyond the federal poverty level.  This means that not only the poor, but the near-poor have substantial health benefits in every state.  There is thus a considerable degree of national uniformity for the first group.  Coverage for the second group was more limited.  Before the ACA parents were covered, but childless adults were not.

Now the key point is that Medicaid eligibility standards have always been low in southern states with respect to the second group and, indeed, with respect to the first group as well, at least before the significant expansion in eligibility that occurred in the 1980s (highlighted in Justice Ginsburg’s dissent in Sebelius).  But if we focus our attention on the situation existing just prior to the ACA, it was well known that standards for eligibility for the second group were lower for decades in southern states.  This was regarded as a longstanding policy problem, at least if you view the purpose of Medicaid as providing health care to the poorest among us.

In fact, according to Shanna Rose’s excellent study Financing Medicaid, in the 1980s southern governors argued that Medicaid should be expanded to address the problem of the low rates of eligibility for the first group.  Unfortunately, there was no fix for the second group.  Rose comments that southern governors wished to go further, “but they realized that a broad increase in eligibility would be a hard sell due to complicated racial politics and anti-welfare sentiments.”  Hence the focus on infants and pregnant women. So it was that prior to the ACA, an income sufficient to grant an adult like Deadra Malloy access to Medicaid in New York would not be enough to give you access in South Carolina or Mississippi.  This led to arguments among the governors (governors appear to be highly attentive to the Medicaid program as it is a large component of their budgets) as to whether southern states were carrying their proper weight in the federal scheme.  This suggests resistance to eligibility expansion is centered mostly in southern legislatures.

The ACA fixed this longstanding problem, not only by expanding Medicaid to cover all adults, but specifying a uniform nationwide eligibility level of 133 percent (really 138 percent it turns out) above the federal poverty level.  The uniform level was quite important given the lack of funding prevailing in southern states.  It is true that this would mean southern states would have to pay more, on a relative basis, for the Medicaid expansion.  By the same token, however, the ACA was not imposing much of a burden at all on those states which had always provided more generous eligibility limits for parents.  In his book Medicaid Politics, Frank Thompson assesses the balance: “In general the ACA imposes the least new costs on states that have historically had more generous Medicaid programs and lower rates of uninsured residents.  This means that states in the Northeast will face less additional cost than those in the South. (By the same token, however, southern states will also have the greatest percentage increases in the infusion of federal Medicaid dollars.)”

In a real sense, some northern states were already in compliance with the ACA standard (at least for parents) that Chief Justice Roberts treated as an across-the-board radical expansion of “old” Medicaid.  I don’t think you can pick up this fact from the Roberts opinion, which makes it pretty misleading.  The ACA was truly “new” only for childless adults, which Roberts duly noted, although without adequately accounting for the 1980s expansions in eligibility.  One more point.  Rose comments that state governors were very successful in lobbying Congress during consideration of the ACA with respect to obtaining more generous terms than were originally proposed.  She concludes their success in whittling down their financial contribution “illustrates their tremendous influence in Washington.”  This point in aid of a vision of cooperative federalism is worth bearing in mind.

But did southern legislatures justifiably fear the financial consequences of expansion?  The expansions already accomplished in Arkansas and Louisiana, hardly well off states, argues for the opposite.  So does the evidence summarized by Elizabeth Weeks Leonard in her illuminating “Red State Option” article.  Governors and state officials in West Virginia, Ohio (that’s John Kasich), and Virginia commissioned studies by independent experts that uniformly showed substantial financial benefits from expanding Medicaid.

The ultimate impact of the lack of expansion is compelling in the various Kaiser reports.  According to Kaiser, there are 2.6 million Americans in the coverage gap, 91% of which are in the South.  In fact, just four southern states – North Carolina, Texas, Florida and Georgia – account for more than half of the adults in the coverage gap.  Consider that these states all have dynamic metropolitan areas and vibrant economies.  If Louisiana can afford the Medicaid expansion, there is little doubt these states can.  These states also show the lamentable racial impact of the coverage gap.  People of color comprise 38% of those in the coverage gap in North Carolina.  For Texas, it is 68%, Florida 48%, Georgia 69%.  These are substantial percentages.  Overall, blacks are the largest racial group of those uninsured in the coverage gap.  This is compelling evidence of the sectional and racial impact of Sebelius.

Finally, let’s be clear about the benefits of Medicaid.  I have to disagree with one point in Tomiko Brown-Nagin’s article – according to Rose, it would appear that far from being a program for the poor that has “poor support,” Medicaid has been steadily popular through the decades.  Perhaps Americans make a distinction between handing out grants to the “undeserving” poor and providing them with medical care.  In addition, there is strong evidence that access to Medicaid leads to favorable health outcomes.  Rose reports that Medicaid “has greatly increased access to health care, and has significantly improved the health outcomes of low-income Americans by virtually every conceivable measure—including infant mortality, maternal mortality, disease incidence, and life expectancy.”  We ought to ponder this given that according to one study ten of the twelve states with the worst healthcare systems are southern states.  Medicaid expansion is what their citizens need.

Certainly from the standpoint of racial justice, the consequences of the Sebelius opt-out ought to trouble anyone.  Health care law scholar Mark Hall wonders what could possibly justify not expanding Medicaid, as its continuing consequences involve the “suffering and premature deaths of millions of citizens,” many of them poor African Americans.  That is indeed the tragedy of the Medicaid expansion.  The Supreme Court’s response to these consequences is ultimately the claim that the constitutional principle of state sovereignty justifies such a severe intrusion on the authority of the federal government.  But is this claim redeemed by our history?  That’s the question for the next post.

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