Expanding Medicaid Not A Cure-All

Are we really doing this again?

Another election year, another opportunity to pretend Medicaid expansion is a cure for Georgians. Both the working poor and rural hospitals are pitched as beneficiaries of enrolling more people in America’s safety-net program.

If it were actually that simple, Georgia might already have capitulated to the Affordable Care Act’s enticements for expanding Medicaid. As proponents are quick to point out, that offer includes federal taxpayers picking up the entire tab for the expansion’s earliest years.

But rather than starting with the financial aspects of Medicaid expansion, let’s look first at the people affected.

It’s increasingly hard for Medicaid patients to find a doctor. The State Health Access Data Assistance Center (Shadac) reports that, from 2011-2013, only 71.6% of Georgia doctors accepted new Medicaid patients. From 2014-2017, that number fell to 69.4%. The Georgia Board of Health Care Workforce, using a different survey, reports that in 2019-2020 the number was 60%.

In each case, more doctors accepted new privately insured patients – over 90% in both periods of time Shadac studied.

There are financial reasons for this. But before we get into those, let’s think through what this means.

For those who would gain coverage, it means the promise of receiving care is somewhat illusory. If it’s hard to find a doctor, many patients will go without care until they wind up in the emergency room. In other words, they’ll behave the same as when they were uninsured.

For those already on Medicaid – in Georgia, that means the truly vulnerable: children, pregnant women, the aged, blind and disabled, and the truly destitute – things will get worse. Suddenly, they would be competing with hundreds of thousands of additional people for a relatively small number of doctors appointments.

That’s a grim outlook for both groups.

Why is this so? Bureaucratic hassle is a major reason: Although proponents of single-payer (read: taxpayer-financed) healthcare love to bash insurance companies, and not wholly without reason, Medicaid isn’t so easy to work with, either.

And – finally we come to money – Medicaid’s payments can be not only slow, but skimpy. The latest data from the Georgia Hospital Association indicate Medicaid reimburses providers at 88% of cost. While that’s markedly better than for uninsured patients (22%), it’s still a loss.

We’ve already seen how hard it is for Medicaid patients to find doctors. But let’s forget that for a moment, and entertain expansion proponents’ arguments that new enrollees will receive more services. If that’s true, then might not a larger volume of loss-making patients offset the higher reimbursements?

This is the dilemma rural hospitals face. Yes, they would benefit from more cash flow. But those who understand the industry – including some hospital executives, in their unguarded moments – acknowledge this is a short-term fix. Losing less money per patient, especially if this spurs more volume, is a poor business strategy.

Rural hospitals struggle for two basic reasons. One is having too few people nearby: A rule of thumb is that you need a population of at least 40,000 to sustain a local hospital, and 110 of Georgia’s 159 counties don’t meet that threshold. That includes more than 50 counties with hospitals.

The other is their “payer mix.” Having uninsured patients who could be on Medicaid is less of a problem than having too few privately insured patients. Private insurance pays more than the cost of services, offsetting losses from other patients. If a hospital has too few privately insured patients, Medicaid expansion isn’t going to save it.

That’s one reason Gov. Brian Kemp’s Medicaid “waiver” plan held promise. Although fewer Georgians would be subsidized than under the ACA expansion, many of them would have joined their employer’s insurance plan. That would afford them greater access to care, while offering more reimbursement for providers and limiting taxpayer exposure.It’s easy to simply say “expand Medicaid.” Maybe that soothes some people’s consciences. Unfortunately, it doesn’t solve the problems many patients and providers in Georgia face.

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