A Clouded Vision, Part 2: The Carrot

Please read Part 1 of this post.

The Carrot

If the Obama administration agrees to the Medicaid "reforms" described in Part 1, then Pennsylvania will accept its gift of virtually free money. However, there is an important catch. People who make up to 133% of the Federal Poverty Level (FPL) will be given this money to purchase private insurance policies through the national health insurance exchange. (Corbett refused to establish a PA exchange, so Pennsylvanians will be using the national exchange.) This means that people who would have been eligible for Medicaid expansion under the Affordable Care Act (ACA) will now be exposed to all the disadvantages associated with the private insurance market, including copayments that are likely to be considerably higher than PA Medicaid's current copayments. An exception is made for people in this income group deemed to be “medically frail,” who will be allowed to enroll in PA Medicaid.

Moreover, there is ambiguity in the meaning of this proposal. Most of you probably know that private health insurance offering comparable coverage is significantly more expensive than Medicaid—about $3000 more per person per year, according to the Congressional Budget Office. It is possible that Corbett is asking the federal government to pay the full cost of these private policies, in which case it will be paying more for Medicaid expansion in PA than in other states. The other possibility is that Pennsylvanians will be given a sum of money comparable to the cost of Medicaid, and they will either have to pay part of the premium themselves or accept less comprehensive coverage. A similar plan proposed by Arkansas asks the federal government to pay the full cost of Arkansans' private insurance, but it's not certain if this is legal. If this is what Corbett is proposing, people from other states are being asked to pick up part of the tab for PA's more expensive private health insurance! Since conservatives claim to be concerned about the high cost of providing health care to poor people, this seems like an odd stance for them to be taking.

Not mentioned is the fact that adding so many low income people to the exchanges will almost certainly drive up the cost of insurance premiums for everyone, since they are likely to be in poorer health than the general population.

There is no timetable for when Corbett's plan will take effect, but since it was not submitted to the Obama administration until now, it's unlikely to be available in January 2014.

People who are committed to health care for all Pennsylvanians will find obvious drawbacks to Corbett's Medicaid “reform” package. It significantly weakens the Medicaid program. It increases costs and reduces benefits for the poorest Pennsylvanians, and is almost certain to result in less actual health care being received. The job search requirements are unnecessarily punitive in an economy that falls far short of providing full employment and seem designed to force Pennsylvanians to accept jobs that fail to provide a living wage.

The “expansion” component of the package is likely to drive a wedge between progressive groups. On the one hand, it's just more corporate welfare for the private health insurance companies, corporations that are almost certainly among Corbett's and the Republicans' more generous contributors. On the other hand, if the proposal is accepted, 500,000 to 700,000 working class Pennsylvanians who are presently uninsured will receive some health care. It won't be as good as what they would have received under the ACA, but many progressives will argue that something is better than nothing.

Compared to Medicaid expansion under the ACA, the two parts of Corbett's plan represent a significant transfer of wealth from PA's poor and working class citizens to some of its largest and most profitable corporations.

Single-payer health care advocates are faced with a similar conflict to the one they faced with the ACA. Is half a loaf better than none? As the loaf gets progressively smaller, at what point do we withdraw our support and say, “No more!”?

Whether Corbett's plan will be implemented depends on whether it is accepted by the Obama administration. How “flexible” is the President willing to be? Similar plans have been advanced by Arkansas and Iowa, but Health and Human Services has not yet announced whether they will be approved. One feature of Corbett's plan that is unprecedented is the job search requirement as a condition of receiving Medicaid. Some states charge monthly premiums for Medicaid, but only for people with incomes above 100% of FPL. Are there any health care principles that Obama will not compromise? Having already moved pretty far to the right, Corbett's plan may seem to the White House to be just a baby step further.

Watch this space. Further details of the plan and data describing its financial impact are likely to become available soon. I will update this report as soon as they do.

You may also be interested in reading:

Tom Corbett to PA's Working Poor: “Drop Dead!” (Part 1) (See all four parts.)

Medicaid Expansion Update