The ACP Advocate Blog
by Bob Doherty
Friday, March 8, 2013
The Privatization of ObamaCare’s (Only) Public Option
Liberals lost the fight to include a new Medicare-type public option in the Affordable Care Act, but they took some solace in the fact that about half of the people expected to get coverage under ObamaCare would get it through the publically-run Medicaid program. Even though many didn’t like the fact that the other half would get coverage through regulated private insurance sold through exchanges.
But as it is has turned out, even Medicaid—ObamaCare’s last and only true public option--will be replaced in some states with private health insurance, blessed by the Obama administration.
The result will be “a larger, but more conservative” Medicaid program, blogs the Washington Post’s Sarah Kliff. “Emerging deals show [Republican] governors exploring approaches that would significantly reshape the program, such as moving beneficiaries into privately managed health coverage or giving enrollees a greater financial stake in their health care” she writes. And the Obama administration has gone along. For instance, Florida governor Rick Scott was able to get a waiver to move almost all of Florida’s Medicaid enrollees into private health insurance plans, right before announcing his change of heart in favor of expanding the program.
It isn’t just Republican governors, though, pushing for Medicaid privatization. Mike Bebee, the Democratic governor of Arkansas, reached a “super expensive, legally dubious” agreement with the administration to allow the state to “enroll new patients in the same private health plans that will be available for residents with higher incomes, “writes the National Journal’s Margot Sanger-Katz. “If the state Legislature approves the plan, all Arkansans earning below 133 percent of the federal poverty limit—or about $15,000 for a single person—will be able to get [private] health insurance. Other states are watching closely.” (Among them being Texas, where Republican lawmakers recently decided that they opposed expansion—for now—“but left the door open to doing so if the Obama administration grants Texas enough flexibility” reports the Texas Tribune.
On one hand, if you believe in federalism and states as the laboratories of innovation, the willingness of the Obama administration to allow states to privatize Medicaid could be viewed as a good thing, enabling states to achieve ObamaCare’s goal of covering all of the poor and near-poor using customized approaches that may be more suitable to a particular state’s culture and politics. It belies the argument that the Obama administration is trying to impose a one-size-fits-all federal program on states. And if it achieves the goal of getting poor people covered, why should anyone care if a state does it through private insurance instead of the traditional public Medicaid?
Well, you might care if it ends up costing federal taxpayers a lot more. The same National Journal article cited above reports that “Estimates suggest that a plan such as the one proposed in Arkansas may cost in excess of 50 percent more than the Medicaid expansion described by the Affordable Care Act. The cost would increase because private plans that will be sold on state insurance exchanges, or marketplaces, will be much more expensive than government-run insurance and won’t cover all of Medicaid’s required benefits.” And you might care if you believe that private health insurance plans are more likely to skimp on care or take advantage of poor people, and because you are worried that they will divert some of taxpayers’ money to insurance company profit rather than patient care. Yet liberals have for the most part been quiet about Obama administration’s willingness to let states privatize Medicaid, “even though Medicaid is now central to the progressive vision of a universal health care system” writes the Progressive Policy Institute’s Ed Kilgore in this month’s Washington Monthly. “This provides Republicans at the federal and state levels with a dual motive for sabotaging the Medicaid expansion, even if that means that federally run health care exchanges must pick up the slack.”
So here we have it: conservatives have consistently blasted the law and the Obama administration for imposing federally-run health care on the states, yet in fact the Obama administration is allowing conservative states to privatize Medicaid, as long as they agree to expand it to the poor and near-poor. Liberals fought and lost the battle to include a new public option in the Affordable Care Act, yet almost all got behind it in the end because they viewed it as a step toward achieving universal coverage. But how many liberals anticipated that the price they’d pay for getting more people covered would be increasing privatization of Medicaid, the ACA’s only true public option? Yet we are heading to result where more of the poor will end up in private insurance and fewer of them in public Medicaid, leading to “a larger and more conservative Medicaid ”--with relatively little public debate on whether that is the best result for patients.
Today’s questions: What do you think about the growing number of conservative states agreeing to expand Medicaid as long as they can turn it over to private insurance companies? Is this a good or bad thing for patients? And how do you feel about the Obama administration’s willingness to let them?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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