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The Cost of Care

News & Features | November 23, 2015

When President Barack Obama’s Affordable Care Act (ACA) was signed into law in 2010, it was presented as a foolproof means to ensure that all Americans, regardless of age, wealth, health, or location, could afford health insurance. While its most famous provision mandated that all citizens obtain insurance, it also contained clauses creating extensive government infrastructure that made securing that insurance considerably easier. Government-run exchanges, subsidies for families with incomes up to 400 percent of the federal poverty line, and penalties for corporations employing more than 50 people who did not offer insurance were all provisions of the law designed specifically to make it easier to acquire health insurance.

But there was one more provision that was key to easy access to healthcare nationwide: the expansion of the Medicaid program, a government-run healthcare program for low-income individuals. Originally, a person’s eligibility for Medicaid was determined by state rules, which differed across the country. Some states had upper limits as low as 18 percent of the federal poverty line. With the passing of the ACA, that upper limit was to be cemented nationally at 133 percent of the poverty line, and was projected to cover an additional 17 million people. In order to pay for this expanded coverage, the law promised full federal funding of the program for the first three years and 90 percent of the financing on a permanent basis after that. Essentially, the federal government would be forcing states to widely expand their Medicaid coverage, but would be funding a vast majority of the expansion.

But since Medicaid is a state-administered program, the law could only pressure states—not force them—to expand their coverage. It did this by threatening to cut existing Medicaid funding for noncompliance. This was murky legal territory. In the case of National Federation of Independent Business v. Sebelius, the Supreme Court ruled that such pressure was “too coercive” toward states. This decision gave each state the choice to expand Medicaid, with full federal support, or not. After it came down, 26 states decided not to expand their coverage.

In states where expansion did not occur, a large group of low-income people was stranded without affordable health insurance. Since the law had been written with national expansion of Medicaid taken for granted, there were no subsidies available to anyone under 100 percent of the poverty line. This created what is called the “Medicaid gap.” In many states where Medicaid was not expanded, many people were left with little or no support in buying health insurance—essentially forgotten by their state governments.

One of these states was Maine. Under the charge of conservative Governor Paul LePage, the state refused additional federal funding and maintained its current standards for Medicaid eligibility. The Governor argued that federal funding was unreliable and could dissipate at any moment, leaving Mainers to foot the bill for a program he didn’t find necessary.

The governor’s actions have had serious consequences for residents of his state. In comments to the Tufts Observer, State Representative Ryan Fecteau, a Democrat and outspoken supporter of Medicaid expansion, cited several examples of constituents who have been devastated by the policy. He remembered a local business owner who was in the gap, required regular medical attention for both herself and other members of her family, and was now forced to pay out of pocket—an expensive undertaking. “Her plea hit me once in the gut and once in the heart,” Fecteau said. He also mentioned a college student who described her new choice as “between her health and her textbooks.”

Fecteau said that in the legislature, support for Medicaid expansion is divided pretty evenly by party lines, with Democrats calling for it and Republicans casting doubt. Conservative disapproval became particularly strong after the 2014 election, when LePage was reelected to the governorship with nearly half of the vote, giving conservative principles the appearance of popularity in the state.

Maine’s struggle is a microcosm of a national problem—conservative politicians voicing fear about the federal government’s ability to fund Medicaid in the long term, and people losing possible coverage as a result. Distressingly, the states where expansion has been rejected are those where it is needed more. While the 26 states that have rejected the policy are home to about half of the US population, they hold 60 percent of the nation’s uninsured poor.

In correspondence with the Observer, Amy Lischko, Professor of Public Health at Tufts Medical School, explained this situation. “It is largely the poorer states that have not expanded—even 10 percent could add up to a significant price-tag in some states,” she said. In Mississippi, one of the least prosperous states in the country and a rejecter of Medicaid expansion, the bill would come out to $649 million per year—a price of several hundred dollars per recipient every year. In a state strapped for cash and loath to raise taxes, that price could be unsustainable.

Still, Lischko describes expansion as a good deal for most states. A study by the Center on Budget and Policy Priorities found that “expansion does not impose substantial financial burdens on states,” and that it will “significantly reduce state costs for uncompensated care and related programs and offset some or potentially all of the increase in state Medicaid costs.”

Yet conservative lawmakers continue their rampage against expansion. In Kentucky—one of the first states to expand Medicaid—the newly elected governor, Republican Matt Bevin, ran his campaign on a pledge to reverse expansion. This is particularly troubling because Kentucky was one of the states where expansion had the greatest effect—after implementation of the plan, the uninsured rate dropped from 13.3 percent to just over 6 percent. Now, people like Gary Ryan, a Kentucky patient with Hepatitis C, worry that Governor-Elect Bevin’s tenure could be “a life-threatening thing,” since he would be in the Medicaid gap without the currently enacted expansion.

Due to Republican intransigence on this issue, most proponents of the law think the only solution is to run them out of office. In Maine, Fecteau’s wish is to get a supermajority of Democrats in the state legislature to override LePage’s vetoes of expansion bills. However, this is rather unlikely, and leftward movement in other state houses and governor’s mansions across the nation seems equally improbable. A recent piece by Vox’s Matthew Yglesias investigates nationwide failures of the Democratic Party in local organizing, leaving most state legislatures, governorships, and even Congressional seats firmly in Republican hands. “The Democratic Party is in much greater peril than its leaders or supporters recognize, and it has no plan to save itself,” he wrote.

In lieu of political action, Lischko thinks that the only way to ensure uniform Medicaid expansion across the country is for the federal government to fund it entirely. But she also believes there is reason to hope many states will change their minds and expand in the coming years. “Part of the ACA assumes that more people will have insurance coverage because of Medicaid expansion and tax credits for insurance. Because of this, the federal government [will] begin decreasing payments that go to hospitals that care for the uninsured. As hospitals will lose a lot of funding, there will be pressure on states to expand.”

Politics and funding aside, it is important to remember the core of this issue: millions of people are being essentially disregarded by their government, for no reason other than their income and their state of residence. The inability of government to act on this issue and help out many of its most vulnerable constituents is just another reminder that in the 21st century, equality under the law is still outside of our grasp.