Obamacare Medicaid Split Creates Two Americas for Poor

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Insurance agents with Sunshine Life and Health Advisors try to purchase health insurance under the Affordable Care Act at the kiosk setup at the Mall of Americas on Dec. 22, 2013 in Miami. Close

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Insurance agents with Sunshine Life and Health Advisors try to purchase health insurance under the Affordable Care Act at the kiosk setup at the Mall of Americas on Dec. 22, 2013 in Miami.

Amber Sanchez, a San Francisco cancer survivor, skipped visiting the gynecologist last year to check a growth on her ovary because she was uninsured. This year, it’s at the top of her New Year’s plans.

The difference: As of Jan. 1, the 27-year-old is eligible for California’s Medicaid expansion under Obamacare.

In Alabama, which rejected the expansion, Jefferica Poindexter isn’t so lucky. Dealing with high cholesterol, chronic sinus pain and a bad back, she depends on emergency rooms and nonprofit clinics -- when they can see her.

“I’ve tried to go the clinic,” said Poindexter, who is 63. “They’re already booked by the time they get to me.”

The Fate of Obamacare

The women’s fates are the consequence of a political debate that’s divided the U.S. roughly along party lines: Democratic-led states have expanded Medicaid programs for the poor under the health law; most Republicans have refused. While the law’s online exchanges draw more scrutiny, it’s Medicaid that may determine the health of millions of Americans. The expansion is one of the twin pillars created by the law to supply medical care to the nation’s uninsured, complementing subsidies for private insurance.

Still, with only 25 states choosing to participate in the expansion, almost 5 million people will be left out, according to the Kaiser Family Foundation, which studies health policy.

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An affordable health coverage sign stands as a man peeks in a window from outside a Montgomery County Department of Health and Human Services building in Silver Spring, Maryland.

Real People

“These are real people with real health-care needs who may work but don’t have a lot of income, and no way to be able to afford health insurance,” said Kathleen Stoll, health policy director at Washington-based consumer group Families USA.

About 2.1 million people enrolled in private medical plans through the Patient Protection and Affordable Care Act last year, as its online insurance markets rebounded from software flaws that hobbled their debut in October. About 3.9 million more people were newly enrolled in Medicaid through November, according to a Dec. 20 report from the U.S. Department of Health and Human Services.

Medicaid sign-ups may have been higher if 25 states, mostly Republican-led ones in the south, hadn’t been able to opt out of the expansion. A 2012 Supreme Court decision upheld their right to refuse. The Obama administration is trying to persuade more Republicans to follow the lead of Arkansas and Iowa, which expanded Medicaid using private insurance plans, David Simas, a White House deputy senior adviser, said Jan. 2.

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The Medicaid expansion is one of the twin pillars created by the Patient Protection and Affordable Care Act to supply medical care to the nation’s uninsured, complementing subsidies for private insurance. Close

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Photographer: Patrick T. Fallon/Bloomberg

The Medicaid expansion is one of the twin pillars created by the Patient Protection and Affordable Care Act to supply medical care to the nation’s uninsured, complementing subsidies for private insurance.

Election Advantage

The Medicaid fight offers hope for Democrats whose 2014 election chances took a hit from the embarrassing October rollout of the insurance exchanges, said Ed Rendell, the former Pennsylvania governor and ex-chairman of the Democratic National Committee. In states like Florida and Pennsylvania, Medicaid may make a difference in governor’s races, he said.

“You’re telling people who don’t have health care now that you can give it to them, and that’s something that can get people off their duffs and turn out the vote,” Rendell said in a telephone interview.

Obamacare replaced a patchwork of state eligibility requirements that typically excluded childless adults from Medicaid. The 2010 law opened the program to anyone making less than 138 percent of the federal poverty level, about $16,000 for an individual.

Medicaid’s critics say the program discourages work and provides substandard care. They say states can’t afford expansion, even if the law requires the federal government to cover at least 90 percent of costs for new enrollees.

$710 Billion

“We’re having a desperate struggle to pay for those on the rolls now, and to add several hundred thousand, the money’s not there,” said Alabama Representative Jim McClendon, the Republican chairman of the state House’s health committee. “It’s just that simple.”

Obamacare is expected to add about 13 million people to Medicaid over the next decade, at a cost of $710 billion, according to the Congressional Budget Office. Among those not covered in states opting out, about half are black and Hispanic and half white, according to a study last month by a Menlo Park, California-based Kaiser. Seventy-nine percent live in the south.

Poindexter, the Alabama woman, said she’s biding her time for now. She said she hopes to avoid serious illness for the next two years, until she’s old enough for the federal Medicare program for the elderly.

When a doctor prescribed medication last year to control her cholesterol, Poindexter refused because of the cost. She also decided against a colonoscopy a physician recommended.

“I’ll make it to Medicare and get it done then,” she said in an interview last month in her Birmingham home.

Hospital Bills

Poindexter said she’s been unemployed since 2009 when she left her home-health job, after developing chronic back pain from a pinched nerve. She receives $731 a month from Social Security, and already has $750 in unpaid hospital bills she can’t afford, she said.

The Birmingham woman tried to enroll for health insurance in December and learned she falls into the law’s new coverage gap: She makes too much for Alabama’s more-restrictive Medicaid program, which covers families making less than $111 a month, and too little to qualify for the federal law’s private-insurance subsidies, which kick in only above the Medicaid limit of 138 percent of poverty.

Poindexter said she’s not concerned. She’s just trying to stay healthy. “Things you can’t control, why would you be worried about them?” she said.

$771 Million

Some 191,000 Alabamians are in the Medicaid coverage gap, according to the Kaiser report. Expansion would pump $20 billion into the state’s economy through 2020, between federal spending on new enrollees and the benefits of a healthier population, according to a study last year by economists with the University of Alabama at Birmingham.

Still, there are costs: The state would have spent an added $39 million on administrative expenses this year and $771 million in total by decade’s end, the economists found. That’s in addition to $11.7 billion U.S. taxpayers would pay.

“Medicaid continues to take a bigger and bigger bite out of our general fund,” squeezing out other needs, said McClendon, the Alabama lawmaker. Many of his colleagues have pledged not to raise taxes, making increased spending a non-starter, he said.

“If we had all the money in the world, expansion wouldn’t be a challenge,” he said.

California expects to add as many as 2 million Medicaid enrollees under Obamacare. That includes Amber Sanchez, the 27-year-old skipping checkups.

Ovarian Growth

Sanchez had surgery in 2008 to remove her left ovary, lymph nodes and appendix to keep the cancer from spreading. She was dropped from her parents’ coverage with Oakland, California-based Kaiser Permanente two years ago, and hasn’t found an insurer willing to sell her an individual plan, she said. She last had her ovarian growth checked in October 2012.

“It’s a little stressful because I don’t know how far it’s grown,” Sanchez said in an interview at the St. Anthony Free Medical Clinic in San Francisco, where she signed up for Medicaid last month. “It could be still the same size as it was, which would be great because it was really small and they weren’t too worried about it. Or it could have progressed to a golf ball-sized tumor by now. It would be nice to know my health isn’t at risk.”

A part-time college student and sales associate at Williams-Sonoma Inc. (WSM), Sanchez lives with her parents. She earned about $13,000 in 2012. Along with her cancer history, she also has asthma. She’s been unable to afford the $130 a month cost of an inhaler, she said, and has been careful to avoid getting hurt so medical bills don’t drain her savings.

No Guarantee

Sanchez still is waiting for confirmation of her coverage from California. When she gets it, the gynecologist appointment is her top priority.

“It’s exciting that I’m actually going to have insurance again,” she said.

Coverage under the law won’t guarantee people can see doctors. Even under the previous, more limited Medicaid system, 38 states reported difficulties getting enough providers to see enrollees, according to a 2012 report by the Government Accountability Office, the nonpartisan investigative arm of Congress.

States cited an overall shortage of physicians as well as Medicaid’s low payment rates. The Affordable Care Act raised reimbursements for primary care doctors who participate in the program, but the increase only runs through next year.

The doctor shortage is one reason Republicans and Democrats disagree on whether Medicaid actually helps.

Mixed Results

A study released in May of 12,000 enrollees in Oregon gave a mixed diagnosis: Researchers found no statistically significant improvements for Medicaid recipients suffering from high blood pressure, high cholesterol or diabetes over two years. Yet they also found beneficiaries more likely to use medical services than poor people outside the program.

Enrollees had lower rates of depression and were less likely to face “catastrophic” medical bills, those exceeding 30 percent of income, according to the study.

A follow-up report last week said Medicaid recipients visited emergency rooms more often than the uninsured. That counters hopes that that they’d use less-expensive venues, like doctor’s offices, for medical care.

The results so far “put to rest two extreme views of the program,” said Katherine Baicker, a Harvard University economist who co-authored the studies. Republicans argue Medicaid offers long wait times and poor care at high costs, Baicker said in a telephone interview; Democrats’ rosy view is that expanding coverage will save the nation money by keeping people healthier.

“In between those two views, you’re left with the more nuanced reality that the program has substantial costs and it’s yielded substantial benefits and it’s up to policymakers to weigh those costs and benefits,” she said.

To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net; Alison Vekshin in San Francisco at avekshin@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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