Friday, August 3, 2012
To expand or not to expand......
Over the past 11 months, I have interviewed dozens of people and had rewarding opportunities to speak with community audiences about healthcare. As I have spoken with groups about this issue, I have been amazed that when we connect as citizens the media noise and the political rhetoric disintegrates. Healthcare is an issue we all care about and we all want clear answers. Therefore, for the next few weeks I will be doing a series called “Concerns from the Community”. These are questions and concerns raised to me by people I have met through speaking engagements, e-mails, phone calls and my Facebook page.
This week’s question for the ongoing series comes from Christine. Her concern is:
"What are the next steps for PA in order to effectively implement the PPACA? How does the Supreme Court's decision on the medicaid expansion mean for PA?"
Recently, a study done at the Harvard School of Public Health concluded that when states expand medicaid, they discovered a 6.1% decrease in the percent of deaths in the state. Of course this is good news for public health and a validation to the recommendation in the PPACA to expand medicaid for individuals up to 133% of the Federal Poverty Level. However, the questions of cost remain as Pennsylvania and many other states grapple with the Supreme Court’s decision to make the expansion of medicaid optional. Furthermore, with the Supreme Court’s upholding of the PPACA, Pennsylvania needs to seriously begin the process of implementing the state based insurance exchanges.
The next step for Pennsylvania is to implement the PPACA as it was designed. According to a 2011 study done by the Robert Wood Johnson Foundation and the Urban Institute, with the implementation of the PPACA states are looking at a $90 Billion cost savings. In the state of Pennsylvania, the study determined that without the PPACA the state spends $7,098,000 on the uncompensated care of the uninsured. With implementation of the reform as it was designed, Pennsylvania is looking at reducing its uncompensated care costs to $3,811,000.
In order to see these savings, states need to expand medicaid and set up the state based exchanges. By doing this roughly 32 million more people will gain access to health insurance (17 million from the expansion of medicaid) and states will see significant savings from the decrease in the amount of uncompensated care that has been accrued from the uninsured/underinsured. With the expansion of medicaid, the federal government will pay for 95% until 2019 and 90% in 2020 and beyond. Even with the reduction in federal money, the study still projects that savings will outweigh costs for the state. However, with the opening of the exchanges, those currently uninsured that will see the private insurance industry beginning to flip the bill through the new policies they will be purchasing. Prior to reform, this tab was being picked up by state budgets, providers and increased premium costs ($900 a family in PA) from the insured.
Another overlooked cost savings for states is in the area of mental health. According to the study, in fiscal year 2008 states spent $16.7 Billion on mental health services. With mental health services now being one of the essential benefits under the PPACA, private insurance companies that participate on the exchanges will now pick up a significant portion of that cost for those that will acquire insurance on the exchange. Medicaid expansion will also now cover mental health services instead of other state sources that are currently being used.
Finally, with the improved coordination of services through the use of electronic medical records, our public health programs (medicaid and medicare) will see cost savings with the reduction of duplicated care and catching costly medical errors.