How Medicaid Cuts Affect Us Here

It seemed a simple question: how would the Republican healthcare bills’ proposed cuts to Medicaid affect us here around Athens, GA?  And how would the various proposed amendments affect us?

It’s been a moving target, and the most recent Senate vote was literally to try to pass an almost unknown and unevaluated bill… but in short, in any variations to date, the bills would cost Georgia money, jobs and the health of many of its citizens.  The bills proposed so far do not directly affect the care people need, or the cost of that care… they only change how much of the total of Medicaid care is paid by the federal government. Using the government’s estimates, under the original Senate plan, by 2026 Georgia would have received $3.7 billion less federal money to pay for Medicaid care.  By 2030 the cumulative estimate is $10.7 billion. This is because the bills include place a lower cap on federal payments that grows less than the expected costs.   So while the government projects the growth rate for total Medicaid costs will be 4.4%, under the senate rules, payments can only increase by 2.4% annually.  The House plan was better in that regard, growing at medical inflation, estimated at 3.7% (but still less than 4.4%).

That’s cost for needed care, and Medicaid patients are, by definition, the poor, the elderly, low-income children, and the disabled; they can’t be expected to pay that much more out of pocket.  So either Georgia would have to come up with that money itself, foregoing other benefits in education, public safety, and infrastructure, or Georgians would have to go without care.  The explicit availability of waivers for coverage of pre-existing conditions, for example, provides one tempting path to resolve the gap… but, one way or another, people would lose coverage.

These people would have to live with chronic conditions and a lower quality of life—until something that hadn’t been a crisis became one.  Sometimes that would be fatal (higher mortality rates from preventable heart attacks, for example), sometimes it would require an emergency room visit.  Hospital emergency rooms cannot legally turn those in need away, but with the proposed changes to Medicaid, they wouldn’t be paid for the care. Increased “indigent care” means hospitals cannot maintain their staff, or update their equipment and services, and may eventually risk bankruptcy and closure. That has ripple effects economically as well as in public health.

What that means for the Athens area

We have two major hospitals in Athens, as well as many individual practices, laboratories, clinics, long-term and elder care facilities, and so on, most of which serve patients on Medicaid across much of northeast Georgia.  Using 2013 numbers, Clarke and its surrounding counties (Oconee, Barrow, Jackson, Madison, and Oglethorpe) contain about 3% of the state’s Medicaid enrollees.  Assuming costs follow that same proportion—which is a risky assumption, I admit—under the Senate plan, the region would lose about 3% of $3.7 billion by 2026: $112 million dollars less spending in the Athens economy.  By 2030, it’s a cumulative $321 million less in Athens.  That is a loss of medical employers investing in their businesses, hiring staff, offering raises; it ripples further to a lack of spending by healthcare workers at other, non-healthcare businesses.  Beyond the economic costs, there would also be a human cost in unmet care for low-income patients, including children and elders. In net,  the region would be sicker overall, and we would suffer losses to the local economy, compared to today’s law.

Looking specifically at the two hospitals, ARMC is Athens’ third largest employer, behind UGA and the county government; St. Mary’s is fifth.  (If you break the school district out from the government generally, they’re second and sixth.)  So, a big cut to Medicaid expenditure in the region is a big loss of revenue for two of our biggest employers.  Assuming we see a resulting increase in unreimbursed emergency care, it likely also results in cuts to other services.  For example, some rural hospitals, required to provide emergency care but underfunded overall, close obstetrics: you might have to go to Atlanta to deliver a baby, or for any of a myriad other non-emergency services we now get locally.

Revisions

Under the Cruz (R-TX) amendment, substandard plans are allowed.  That suggests a dangerous misunderstanding of insurance: any of us might get cancer, or be in a severe car accident, and need ruinously expensive care.  Allowing a tiered system, with a cheaper plan for healthier people, hurts us two ways: the less healthy can’t afford care, and the healthy-but-unlucky can’t either, because their “plan” doesn’t cover their suddenly increased requirements.  The recent Portman (R-OH) amendment does offer some assistance to those losing Medicaid through the loss of Medicaid expansion… but it’s not nearly enough to cover private insurance.

The repeal-only option, also rejected, is irresponsible because it provides no predictability for the insurance market; that can’t help but raise costs.  And in two years or so, should we expect Congress to agree on a replacement, when they’ve proven unable to do so already?

And today’s vote, to debate and then attempt to pass an unknown, un-evaluated variation of bills that already?  That’s irresponsible, too.  Even setting policy aside, if your bill has to be passed in a cloud of secrecy and dark of night… you’re doing something wrong.

Conclusions

Almost nobody likes the House or Senate bills, and they haven’t improved.  Keeping them hidden is worse.  We do have a serious problem with healthcare… but pushing the costs around doesn’t help; we need to address the rising costs themselves, head-on.

None of the Republican do that; they only reduce the federal payments, and would eventually force Georgia to either cut benefits, or to cut other services.  In Athens, that’s hundreds of millions of dollars by 2026; that reduces employment, as well as making people live sicker, unable to afford or unable to access treatment.

There is work we can do to address the actual problem of health care costs directly.  Sadly, many of the most obvious approaches are politically anathema to somebody.  So, rather than addressing the actual problem, Congress is merely passing the buck.  Literally.  And if the states don’t pay it, and patients can’t pay it… then we all go without.

But there is work we can agree on.

  • Medicaid helps patients avoid high-cost care, by offering reliable medication and preventative care.  Paying that “ounce of protection” makes more sense, as public policy, than leaving people sick.
  • If we stop changing the rules, then insurers can plan more accurately; according to those companies, the uncertainty, more than the market itself, has lead to the premium rises and exits from market we here about in the news.
  • Prescription drugs are more expensive in the U.S. than elsewhere.  They’re only about 12% of total medical costs, but the U.S. costs are often about 2-3x, or more, the costs in other developed nations.  So that’s about 6% of our annual medical costs that could probably be saved.  The companies do need to recover their R&D costs… but the U.S.A. doesn’t have to pay so much of it.
  • We can look at unhelpful state regulations.  For example, obstetrics care is expensive, and many pregnancies could be served at home by a midwife… but in Georgia, that is only legal in a hospital setting.
  • Medical insurers, including Medicaid, get negotiated pricing, often half or less of “retail” pricing.  So the uninsured both pay out-of-pocket, and pay higher prices.  Could we cap retail pricing, say to two or three times Medicaid’s (admittedly low) rates?  Doctors should be paid fairly for their time, expertise, facility costs, and risks (including malpractice suits)… but there’s clearly some room between today’s retail pricing, and the practice taking a loss.

A bill that used some of those ideas, or others, to reduce medical costs… that would offer some improvement.  It is, sadly, not to be found in Congress today.  Or at least there’s no reason to expect it, in the mystery box currently proposed.

Leaving Paris Accords: A Bad Idea

Early this month, the president announced that the U.S. is pulling out of the Paris Climate Agreement.  We have now joined Syria and Nicaragua as the only three countries in the world who have not signed this agreement.  

The Paris Agreement is a non-binding agreement that asks countries to set goals for reducing greenhouse gas emissions.  The signing countries agreed to a goal of limiting global temperature increase to 2 degrees Celsius.  The goal the U.S. set for itself was a 26% emission reduction from 2005 levels by 2025.  

These goals are well within sight for the U.S.  But here’s the thing: these are voluntary goals.  There is no punishment for failing to reach these goals.  Therefore, there was no practical reason to leave the agreement.  

In pulling out of the Paris Agreement, we have forfeited our role as a global leader.  Our entering into this agreement was a show of confidence, a means to encourage other countries, particularly high-emitting developing countries such as India and China, to commit to lowering their emissions as well.  It worked.  China and India (and 195 other countries) signed the agreement.  China has now emerged as a global leader in renewable energy.

The president has cited jobs as a major factor in his decision to pull out of the Paris Agreement.  What he did not address is the hundreds of thousands of jobs emerging in the renewable energy sector.  These are growing fields, and the potential for growth in these fields is enormous.  Just last year in Georgia, solar energy jobs grew by 23%, adding 3,924 jobs to our state.

In his speech announcing our exit from the Paris Agreement, President Trump stated that he was not elected to represent Paris, but Pittsburgh.  In response, Pittsburgh mayor Bill Peduto replied, “I can assure you that we will follow the guidelines of the Paris Agreement for our people, our economy & future.”

Peduto is not alone in vowing to work locally to reduce emissions, despite a lack of federal support.  In fact, 187 mayors from across the country (including Kasim Reed of Atlanta) and 10 governors have vowed to uphold the goals of the Paris Agreement.

It is notable that many high-ranking officials in the president’s administration, as well as those in industry (even the fossil fuel industry!) advocated remaining in the agreement.  Secretary of State Rex Tillerson, as well as industry leaders of Shell Oil, GE, IBM, and Google, among others, have argued against leaving this agreement.  

As we look at the decision to leave the Paris Climate Agreement, what stands out to me is that we have taken ourselves out of the picture.  We have taken ourselves out of discussions about solutions.  We have taken ourselves out of planning for new renewable energy-based industries and jobs.  We will be left behind if we do not act as towns, cities, and states.  We must do this ourselves; it looks like our president will not.