Law of Unintended Consequences Bites Red States in the ACA

It must have sounded like a win/win. When the SCOTUS ruled in National Federation of Independent Business et al v. Sebelius that all provisions of the Affordable Care Act were Constitutional except the Medicaid expansion, Tea Party politicians across the nation cheered. Another chance to stick it to the poor by denying them necessary, lifesaving health care while ensuring that the middle and upper classes citizens who had been kept out of the health insurance markets due to the pesky “pre-existing conditions” clauses were able to get insurance. It also allowed the GOP to pander to the health insurance industry which was counting upon the individual mandate to force citizens to buy private insurance whether they planned to use it or not. Great, the GOP must have thought. Our very own ACA, good for our base, good for our donors, and it will punish the poor the way that God wants them to be punished----He wouldn’t have made them poor if He did not hate them.

Then, something very important happened. Something that almost passed under the radar. In the past, everyone with AIDs qualified for Medicaid. This meant no one had to do without lifesaving meds. However, under the ACA, in states that did not take the Medicaid expansion, it was possible that someone could lose their Medicaid and find themselves faced with $50 to $150 a month premiums for not quite comparable “silver” ACA coverage. If the AIDs sufferer had no extra income to spend on premiums, he or she would be forced into a so called “bronze” plan with a high (we are talking $5000-10000 deductible) and very poor drug coverage. In other words, certain death.

Charitable funds from Ryan White were made available so that these individuals in Louisiana---one of the states that did not take the Medicaid expansion--- could upgrade to silver plans. Sounds reasonable. But there was a hitch. The private insurers refused to accept the money. They did not want a bunch of AIDs patients on their insurance---a bunch of AIDs patients with guaranteed high medical bills. When they signed on as ACA providers they were hoping to get mostly healthy young to middle aged working Americans who needed insurance in order to avoid paying a fine. They did not count upon getting stuck with a bunch of sick people who needed their insurance in order to pay for health care. The insurers cited the CMS which, last fall said that third parties could not make premium payments. Lamba Legal services went to court. Federal district court for Lousianna ruled the insurers had to take the money. Meaning, they had to write policies for people who were too sick and too poor to afford silver insurance—people who were guaranteed to use their insurance. A lot.

http://www.aidsmeds.com/articles/aca_louisiana_ryan_white_1667_25269.shtml

Within days the federal government amended its previous statement.

This interim final rule requires issuers of qualified health plans (QHPs), including stand-alone dental plans (SADPs), to accept premium and cost-sharing payments made on behalf of enrollees by the Ryan White HIV/AIDS Program, other Federal and State government programs that provide premium and cost sharing support for specific individuals, and Indian tribes, tribal organizations, and urban Indian organizations.

https://www.federalregister.gov/articles/2014/03/19/2014-06031/patient-protection-and-affordable-care-act-third-party-payment-of-qualified-health-plan-premiums

Note that this does not allow a chiropractor to pay your premiums and do manipulations on you every day for the rest of the year. That might be fraud. It does allow a government body or charitable organization to pay the insurance premiums for anyone it chooses---including someone with severe, chronic medical conditions and medical expenses so high that even the means adjusted premiums of the ACA may put “affordable” insurance out of reach. Like an AIDs sufferer working a job that pays just less than 200% of the minimum wage who can barely afford to pay for food, rent, utilities, much less insurance premiums, copayments and deductibles. The kind of person who would have been covered by the Medicaid expansion, except that 24 states decided not to expand Medicaid---leaving the chronically ill lower income workers in their state scrambling for coverage with the privates that signed on to the ACA.

Now, step back a second. The 24 states which chose not to expand Medicaid are mostly “red.” However, within many of these states are “blue” urban areas with huge public health and public hospital systems that provide care for low income people with chronic disease. The tax payers of the urban areas were not asked if they wanted to accept the money. Indeed, some states (such as Texas and Georgia) passed laws making it illegal for their cities to cut separate deals with the feds. As a result, a land owner in Atlanta, Georgia or Houston, Texas now has the dubious honor of being double taxed---once to pay for the Medicaid expansion in 26 other states and once to pay for their own hospital district---“charity” hospitals that are often used by the entire state though only a few counties wend up footing the bills.

The people who pay for Grady are taxpayers in DeKalb and Fulton counties, the two largest counties in Georgia, which bisect Atlanta and its immediate suburbs. Grady draws resources from charitable contributions, Medicare and Medicaid payments, private insurance reimbursements, and property tax assessments in these two counties. That tax money goes to general funds, not a "Grady" line item, meaning local money that’s spent on everyone’s health care is money not spent on other local priorities.

“Only two counties pay for [Grady] out of more than 150 counties,” says DeKalb County Commissioner Larry Johnson. “But most of those counties use that service.”

The state of Georgia has also repeatedly declined to help fund Grady, even as Atlanta sits as the seat of the state capital and the epicenter through which its highways, tourists, events and business flow.

A similar tension has long existed between urban hospital districts (and the taxpayers who fund them), and suburban and rural counties that sit within driving distance of that care without helping to subsidize it. Texas's largest urban areas, spanning San Antonio, Austin, Houston, Dallas, Fort Worth and El Paso, all currently have large local taxing districts to help support health care for the indigent.

http://www.theatlanticcities.com/politics/2013/11/biggest-obamacare-losers-cities-states-wont-expand-medicaid/7537/

Ha,ha, said the GOP state governments in the 24 states that declined the Medicaid expansion. We will have our cake and eat the poor folks cake too. The (Democratic) cities will continue to foot the bill for all the indigent care, our rural and suburban base will get insurance through the ACA and we can brag that we thumbed our noses at Obama while sending plenty of business to the private insurers whose lobbying money we covet.

All of that changed in March, when nonprofit organizations across the country—including nonprofit local public health systems learned that they can enroll some of their sickest, most chronically ill patients in silver private insurance plans courtesy of the ACA. You see, not everyone who needs a liver transplant is destitute. Many sick people have working spouses who make just over 200% of the poverty level. Many people with severe congestive heart failure also have working spouses who are poor but not indigent. These people qualify for care at places like Ben Taub and Grady. The private insurers assumed that they would continue to received their care at Ben Taub and Grady. These families were so strapped for cash trying to pay off ambulance rides and buy food and keep the electricity on that they had no extra cash for $50 to $150 monthly premiums. Most of them seemed destined for “bronze” plans that would do them little good since they had poor drug coverage, few in plan specialists and even fewer primary care providers---

Parkland in Dallas was ahead of the curve. As early as last fall they were encouraging their patients to get signed up with ACA. Now that the hospital can pay $50 to $150 a month to get comprehensive coverage for patients whose monthly medical bills may be in the thousands of dollars, this is deal that is too good to pass up---especially when you consider the billions of dollars in Medicaid expansion money that Rick Perry denied to the Dallas County hospital. The article below estimates that 25,000 Parkland patients could qualify. Parkland patients are not your average patients. Poor folks do not navigate the Parkland system on a whim. They do so because they have serious ongoing health problem. Very often, they are poor because of inherited health issues that affected their parents, themselves and their children. A few of these 25,000 will be young, healthy mothers, but many of them will be chronically ill with diseases like cirrhosis, heart failure, copd, renal failure, cancer---a private insurers worst nightmare. And they belong to a hospital system which has made an art out of making it easy for low income people with transportation issues to get necessary care with extended hours, clinics in poor neighborhoods, lots of primary care doctors---everything that a private insurance plan most fears. And if Parkland pays the premiums, the patients will never lose their ACA insurance, no matter how long they stay in the ICU in a coma---with all their bills going straight to Blue-Cross.

http://article.wn.com/view/2014/03/13/Parkland_other_Dallasarea_hospitals_encourage_patients_to_ge/

It is only a matter of time before all the other urban areas in the 24 states that did not expand Medicaid follow suit. Harris County (Houston-Ben Taub) estimated last fall that 75,000 of its patients qualified.

http://app1.kuhf.org/articles/1380210028-Harris-Countys-Public-Hospitals-and-Clinics-Will-Help-In-Obamacare-Enrollment-Effort.html

The private plans that agreed to dispense with the “pre-existing condition” clauses and accept all comers in exchange for a “mandate” assumed that they were get a representative slice of the population. As of the beginning of March, Texas (with its ‘opt out’ or ‘go naked’ campaigns) was lagging in enrollment, especially among young, healthy people. Only 295,000 Texans had signed up for ACA plans. If the state’s county hospital districts succeed in signing up the majority of their active (read sick) patients who qualify for ACA insurance in silver plans, the privates are going to find themselves swamped with catastrophically ill members---

Leaving them with just one option. Pull out of the red states that did not take the Medicaid expansion.

Now, all this could change. The Supreme Court could jump in and rule that Private Insurance Companies are “people” and that they have a 1st amendment right to refuse to accept premium payments as a kind of freedom of speech (good luck with that one). Both Houses of Congress could sit down and pass some legislation to help the insurance industry—but what are the chances of that? The major urban areas of the 24 red states that refused to accept the Medicaid expansion could be persuaded to listen to “reason” as in “You don’t really need any help paying those billions of dollars in medical bills. Just raise local property taxes again. Come on. Think of the good of the health insurance industry.”

The way I see it, the ACA in the 24 states that did not take the Medicaid expansion is doomed---unless the states backtrack. We will see state houses across the country bow to insurance industry and consumer (“What do you mean I’m losing my Blue Cross? I just got it?”) pressure and scramble for Medicaid money. All except the states like Texas, where someone (Rick Perry) thinks he has a snowball’s chance in hell of being nominated for Vice President. And the consumer anger in Texas could turn the state blue in 2016.

Law of unintended consequences. Don’t push desperate people—or desperate public health officials up against a wall unless you are ready for a fight. Because the poor and the sick do not just vanish, no matter how inconvenient you think they are. And the people who fight for them, fight tooth and nail, and they will even fight dirty if they have to.