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The New York Times is reporting that the Obama administration is now urging Republican governors who are reluctant to sign onto Medicaid expansion in Obamacare to use the Arkansas model. That is, accepting the Medicaid expansion money, and using it to subsidize the purchase of private insurance for those who would qualify. Ohio is negotiating with the administration now, and other states including Florida, Louisiana, Pennsylvania and Texas have said they would consider accepting the expansion under these terms.

While expansion under any terms is good for the people who are uninsured and could now get coverage, there are some serious drawbacks to this idea spreading. There's the corporate welfare aspect—even more public money being poured into private insurance companies coffers, the question of whether this is the appropriate use of public money. But more to the point, is this is an effective use of taxpayer money. The doctors and hospitals like it, they get higher reimbursements from private insurers than from Medicaid. But, as Josh Barro argues, that's not good for the taxpayer.

Medicaid expansion through private insurance, if spread to many states, will sharply drive up the cost of implementing the Patient Protection and Affordable Care Act. Arkansas Governor Mike Beebe admits to the Times that his plan will likely cost more than a regular expansion of Medicaid, with federal taxpayers picking up nearly the whole tab.

If the administration starts letting other states take the Arkansas route, it’s hard to see how we don’t end up with a privatized Medicaid expansion in 50 states, for the same reason that some sort of Medicaid expansion in every state is inevitable. When the federal government offers states free money, sooner or later they are going to take it. The Arkansas plan comes with even more free money than the already rich Medicaid expansion deal.

Now, maybe that will make the plan moot.  Federal law says that privately purchased Medicaid must be “comparable” in cost to traditional Medicaid. But nobody knows yet what “comparable” means, and if Republicans increasingly decide they can make peace with the Medicaid expansion through privatization, there could be pressure for a liberal reading of the term or even a legislative fix. It’s happened before: Republicans love Medicare Advantage, a privatized version of Medicare benefits, so much they agreed to spend more per beneficiary on it than traditional Medicare.

Barro argues that the constituencies that stand to gain from a privatized Medicaid—doctors and hospitals—also have a lot of sway with lawmakers, meaning more and more states could be jumping on the privatization bandwagon. In the long run, the cost savings from Obamacare, one of the whole points of the exercise, are decreased because we're spending more on one of the linch pins of the plan: expanded Medicaid. And increased costs for Obamacare add fuel to the critics and would-be repealers complaints that the law is a budget-buster.

As Barro says, better to let Arkansas be the test case here, running this as a pilot project to see if costs under this system can be at all comparable to traditional Medicaid. If it works, great. If it doesn't, wait until the states come around to the idea of accepting free money to help balance their budgets.

Originally posted to Joan McCarter on Tue Mar 26, 2013 at 10:58 AM PDT.

Also republished by DKos Pennsylvania.

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Comment Preferences

  •  Tip Jar (23+ / 0-)

    "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning." —Warren Buffett

    by Joan McCarter on Tue Mar 26, 2013 at 10:58:47 AM PDT

  •  The minute there is a benefit (20+ / 0-)

    for the private sector they drop the battle cry that "we can't afford it".  Even if it costs more money than the Medicaid expansion it is suddenly perfectly fine.

    Apparently the "we can't afford it (TM)" is just a cover for "there's nothing in it for me".

  •  It's getting downright surreal in D.C... (13+ / 0-)

    "The four business gangs that run the US."

    A corporatocracy pathetically placated with tithe upon tithe...all at the expense of the financially strip-mined masses...writ larger with every passing day.

    Do these folks even realize that this type of behavior actually could/will kill citizens?

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Tue Mar 26, 2013 at 11:11:57 AM PDT

  •  neo-liberal true believers in the WH (13+ / 0-)

    Apparently, I'm not cynical enough. I didn't think the WH would actively push the privatization of Medicaid.

    •  that's a misreading (7+ / 0-)

      the question is whether expanded, privatized medicaid is better than no medicaid for the affected population.  The administration argued to the Supreme Court that the states should have to expand all of it, no privatizing, and actually expanded Medicaid quite a bit in the first place, but that falls outside your narrative.

      Difficult, difficult, lemon difficult.

      by Loge on Tue Mar 26, 2013 at 11:23:30 AM PDT

      [ Parent ]

      •  But if they start charging co-pays (2+ / 0-)
        Recommended by:
        viral, lostinamerica

        and deductibles to use it, even people who are nominally "covered" aren't going to be using it. Which means that "expanded, privatized medicaid" isn't better than no Medicaid at all -- it's the same thing. People will go without care, just like they do now. But some crony at the insurance company will still get paid the monthly premium, and the state gets to count those people as "insured."

        What part of not having money for medical care don't these people get?

        "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

        by Brooke In Seattle on Tue Mar 26, 2013 at 12:50:09 PM PDT

        [ Parent ]

        •  it would still be better (0+ / 0-)

          for the providers and the rest of the market.  It wouldn't accomplish the goal of reducing costs by making sure easily treatable conditions are addressed early or lowering overhead, but ER charges would be absorbed by CMS, not passed on to other insurance consumers.  

          I don't know if it's true they'll charge co-pays or deductibles, but at best, that leaves nobody directly any worse off than if the admin said "leave it," for the precise reason that they wouldn't have the money anyway.  "Better than nothing" means exactly what it says and no more.

          Difficult, difficult, lemon difficult.

          by Loge on Tue Mar 26, 2013 at 01:05:27 PM PDT

          [ Parent ]

      •  Sorry...they are pushing a privatized alternative (2+ / 0-)
        Recommended by:
        viral, lostinamerica

        to medicaid....if you don't see the risks in that split the baby stance, well more power to you...

        "Small Businesses Don't Build Levees" - Melissa Harris Perry

        by justmy2 on Tue Mar 26, 2013 at 01:18:56 PM PDT

        [ Parent ]

        •  no, they're not (2+ / 0-)

          "pushing" it, at least not at the expense of traditional medicaid.  They are proposing it as an alternative to leaving a hole of uninsured people who don't qualify for pre-PPACA medicaid and couldn't afford the exchanges even with subsidies.  If you don't see the risks to the rest of the act from that, you're not giving the governors enough credit.   This still leaves in place state-by-state comparisons that would likely show that traditional medicaid works better.  Nothing is without political risks, but here, the benefits outweigh them, precisely because it does more to expand access and rein in costs than not expanding Medicaid at all, in any form.

          Difficult, difficult, lemon difficult.

          by Loge on Tue Mar 26, 2013 at 01:36:03 PM PDT

          [ Parent ]

  •  Makes no sense for Administration to do this (9+ / 0-)

    Teabagger Govs and Legislatures should have to either take it or leave it - and when they leave it their voters will finally wake up and remove the GOP from office in these States in 2014 when they see the citizens of the Blue States benefitting and they are not.

    Even Cristie figured that out.

    •  That hasn't been working so far (5+ / 0-)

      as a number of governors in states both poor and more conservative than Christie's are indeed "leaving it."  It also threatens the rest of how the ACA works from a cost standpoint and, most importantly, leaves a pool of uninsured working poor (often, the people who vote republican because the federal government "never does anything for them").  Basically, for costs to come down, more people have to be covered, and vice versa.

      Obama's trying to make the best of a bad situation, the problem is the Supreme Court and the republican governors.

      Difficult, difficult, lemon difficult.

      by Loge on Tue Mar 26, 2013 at 11:28:23 AM PDT

      [ Parent ]

      •  It is up to the voters (3+ / 0-)

        If they want healthcare they will get out to the polls and vote the GOP out of all these Red States.  

        Republicans are quite good at telling lies and getting people who are less educated to vote against their own interests.  

        •  Low-info voters (0+ / 0-)

          These are red states, the government in those states is actively trying to kneecap the ACA.

          Do you really think the voters in those states are getting much real, accurate info about Obamacare?

        •  and if they don't, (1+ / 0-)
          Recommended by:
          ahumbleopinion

          the structure of the ACA shouldn't come crashing down with it.  indeed, who gets the upper hand if the republican governors say they offered "medicaid advantage," and it was Obama who turned it down?  Medicaid advantage is key to cost containment, so that the cost of providing care to people who aren't insured aren't passed on to participants in the exchanges.  The way the denials work is that the republican governors can even bet that some people eligible for expanded medicaid will indeed vote to throw them out but they'll be buoyed by voters at higher income levels who will see a failure of Obamacare's design, not a failure by the state to implement it.  

          That's the long story - the short story is getting people to vote against their own interest is the argument to call the republicans' bluff and give the governors and state legislatures just enough they can't turn it down, and then point to states that have full medicaid expansion as reasons why states should move to that model.  

          At the very least, the argument that this is an intentional move by Obama is thoroughly contradicted by everything else the administration has done.  Whether he's a purist is certainly not in dispute, to his credit.  We'd all be worse off if the lack of Democratic votes for the public option in the senate had been allowed to sink the whole bill, just as we'd be worse off if Obama had listed to Emanuel and tried to do something smaller.

          Difficult, difficult, lemon difficult.

          by Loge on Tue Mar 26, 2013 at 12:24:30 PM PDT

          [ Parent ]

      •  that is certainly one way to spin it (1+ / 0-)
        Recommended by:
        Brooke In Seattle
        Obama's trying to make the best of a bad situation, the problem is the Supreme Court and the republican governors.

        "Who are these men who really run this land? And why do they run it with such a thoughtless hand?" David Crosby

        by allenjo on Tue Mar 26, 2013 at 01:16:24 PM PDT

        [ Parent ]

        •  why expand medicaid at all, (0+ / 0-)

          why defend it in the court, why urge traditional medicaid expansion as the first preferred alternative?  The only spin here is your stunning lack of long term perspective and lack of appreciation for how all the parts of the statute are supposed to fit together.

          Difficult, difficult, lemon difficult.

          by Loge on Tue Mar 26, 2013 at 01:38:13 PM PDT

          [ Parent ]

      •  Oh...you mean the folks that said ACA (0+ / 0-)

        had issues and trusting Republicans to be rationale was a fool's errand had a point?

        "Small Businesses Don't Build Levees" - Melissa Harris Perry

        by justmy2 on Tue Mar 26, 2013 at 01:20:00 PM PDT

        [ Parent ]

        •  I've never said the ACA is perfect (0+ / 0-)

          and I bet my criticisms of it in the abstract would be similar to yours.  But the bill passed by two votes in the House, one vote in the Supreme Court, and it does a hell of a lot of good for a hell of a lot of Americans.  Comparing an ideal bill to a bill that was ultimately passable is fundamentally dishonest.  It was Lyndon Johnson who maid medicaid administered by the states, and building on the existing program had the support of every single payer advocate who mattered.  The only question was degree, and that confronts you with having to actually address plausible legislative paths to passage instead of sniping like Waldorf and Stadler.  There's nothing wrong with the fact of criticizing the administration, but when you start from such a dishonest premise, it starts to look like an end in itself.  It's not even that it's wrong, it's just lazy.  There were people saying the admin should drop health care or limit its scope (most, but not all, were republicans).  I'm thankful the administration didn't listen, and when the bill passed, I was glad there were the policy compromises that Clinton refused to make back when.  Cynicism isn't empathy, and it's not political wisdom.  

          Difficult, difficult, lemon difficult.

          by Loge on Tue Mar 26, 2013 at 01:50:48 PM PDT

          [ Parent ]

  •  There is only one good reason for the White House (2+ / 0-)
    Recommended by:
    footNmouth, lostinamerica

    or anyone else to push a program like this, and that reason is their friends will profit from it. This is NOT a particularly Democratic approach, and I for one am not pleased.

    What is truth? -- Pontius Pilate

    by commonmass on Tue Mar 26, 2013 at 11:20:51 AM PDT

    •  Alternate explanation: (5+ / 0-)

      Without the Medicaid expansion, the number of uninsured will remain unacceptably high. (It may anyway, but will be worse.) The big promise of Obamacare was that everyone would have coverage somehow -- affordable coverage. If we get to 1/1/14 and that turns out not to be true, and there are still say 40 million Americans without any coverage, that's a major fail.

      So his success is riding on this. I would guess that's more the issue than whose pockets are getting lined, although I'm sure the lobbyists are working this hard.

      And I strongly suspect that the 40 million figure is closer to what will actually happen -- that "affordable" to number-crunchers and "affordable and doable" to employers, families, whatever are way too far apart to make this workable.

      My only hope is that once this private-sector "solution" fails, we may be able to have a better conversation about a public option that is so much better and cheaper that it becomes a de facto single payer plan.

      •  It would only be a temporary situation (1+ / 0-)
        Recommended by:
        Brooke In Seattle

        When the voters in the Red States figure out they are the ones being screwed because voters in Blue States are getting healthcare and they are not - it will be 2014 and it will be up to them to pickup their torches and pitchforks on election day and kick all the Republicans to the curb.  

        Rick Scott and the Republicans know this - they know if they fail the Medicaid Expansion they are cooked.  I want them well done.

        •  Not sure if that would happen in most of them. (1+ / 0-)
          Recommended by:
          Loge

          Too many voters in red states take pride in voting against their self interests.  They would rather do without health care themselves than have "undeserving" people get it.  They are not going to let the government do anything that might improve their health - it is their right to keep smoking, eating foods that are bad of them, and shooting anyone who "scares" them.

          “The future depends entirely on what each of us does every day.” Gloria Steinem

          by ahumbleopinion on Tue Mar 26, 2013 at 01:07:18 PM PDT

          [ Parent ]

  •  "Comparable" cost is the key (3+ / 0-)

    How the WH and HHS interpret it hangs millions of low income uninsured adults in limbo.

    The primary question is whether the WH will place greater emphasis on pleasing GOP governors vs controlling costs for low income consumers.  

    It is an old strategy of tyrants to delude their victims into fighting their battles for them. FDR

    by Betty Pinson on Tue Mar 26, 2013 at 11:21:21 AM PDT

  •  This is a big bowl o' nothing (4+ / 0-)

    that's how the ACA works (subsidizing the purchase of private insurance) only difference is Medicaid has some cost controls that the exchanges [frankly] need.

  •  Just a follow-up gift to the insurers as if (4+ / 0-)

    Obamacare wasn't already the biggest gift to health insurers ever.

    The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. Bertrand Russell

    by accumbens on Tue Mar 26, 2013 at 11:27:49 AM PDT

  •  But There's No Federalized Option for Those States (6+ / 0-)

    comparable to the federal ACA health insurance exchanges, right?

    In other words, if a state refuses to expand and the Feds don't offer privatized Medicaid, there is nothing at all to cover those poor constituents.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Tue Mar 26, 2013 at 11:30:31 AM PDT

  •  Et Tu, Barack?/Shouldna! (0+ / 0-)

    Monsanto is poison, they gotta be stopped.

    by renzo capetti on Tue Mar 26, 2013 at 11:43:47 AM PDT

  •  So what are the options then? FL refuses to (6+ / 0-)

    expand traditional Medicaid. They will either do nothing or possibly accept the expansion coupled with privatization. I guess your preferred choice is to do nothing.

  •  How does that affect benefits? Do they go to a (1+ / 0-)
    Recommended by:
    Brooke In Seattle

    Doctors office or the emergency room, when they need non emergency care?

  •  Would it necessarily cost the fed gov a lot more? (0+ / 0-)

    I'm trying to understand how this would work. Since it apparently will cost 3k more to get private insurance on the exchange vs. Medicaid, would the federal government be providing that difference(3k) to people as well?

    I think an analysis by the AR health department noted it might cost only about 15% more or potential not anything.

    But I suppose that makes the argument that AR should only be a test case for now to see how things pan out.

  •  I wonder (1+ / 0-)
    Recommended by:
    Deep Texan

    Is something like this a possible workaround?

    The federal government Monday awarded a family planning grant to a coalition of Texas health groups that can now circumvent the state to provide funding to clinics including Planned Parenthood.
    http://www.dallasnews.com/...

    "No one life is more important than another. No one voice is more valid than another. Each life is a treasure. Each voice deserves to be heard." Patriot Daily News Clearinghouse & Onomastic

    by Catte Nappe on Tue Mar 26, 2013 at 12:02:28 PM PDT

  •  What a great idea! (6+ / 0-)

    since giving in to Republican bullying has worked so well in the past.

    s/

    When you triangulate everything, you can't even roll downhill...

    by PhilJD on Tue Mar 26, 2013 at 12:19:51 PM PDT

  •  Privatizing the system seems (0+ / 0-)

    like a recipe for disaster...but hey...that just me...

    See Glass Stegall for grand let the market work it magic plans...

    "Small Businesses Don't Build Levees" - Melissa Harris Perry

    by justmy2 on Tue Mar 26, 2013 at 01:17:56 PM PDT

  •  So this is what everyone meant (1+ / 0-)
    Recommended by:
    Brooke In Seattle

    by "improving it" after passage?

    "Small Businesses Don't Build Levees" - Melissa Harris Perry

    by justmy2 on Tue Mar 26, 2013 at 01:22:09 PM PDT

  •  In line with the ACA (3+ / 0-)

    Subsidize the procurement of private insurance rather than the public model.  It sucked then and it sucks now.

    www.buonoforgovernor.com

    by Paleo on Tue Mar 26, 2013 at 01:25:06 PM PDT

  •  It's not the governors. It's the batshit crazy (0+ / 0-)

    teabagger legislators.  Even in Florida.  Scott wants this because he can make money off privatized Medicaid, but the legislature wants NO Medicaid expansion.  And I'm afraid that's what's going to happen in AR, IN, OK, KS, and other places.

    "Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity." --M. L. King "You can't fix stupid" --Ron White -6.00, -5.18

    by zenbassoon on Tue Mar 26, 2013 at 03:25:27 PM PDT

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