December 31, 2014
Column #1,740
The Inequities of Obamacare
By Mike McManus

Obamacare (the Affordable Care Act, or ACA) “is riddled with inequities,” writes my son, John McManus, a columnist with “Life Science Leader.”

First, illegal immigrants may soon get Medicaid coverage financed 100% by the Federal Government, “while 7 million American citizens who live below the poverty line receive no coverage. Why? If the poor live in 23 states which refused to accept 100% federal financing of the expansion of Medicaid, they are not covered.

On the other hand, in those same states not serving the poor, a family of four with an income up to $95,400 will enjoy subsidized coverage.

What sense does that make?

A Supreme Court decision gave states the freedom to not sign up for ACA. Many states in the South and West refused to sign up, even though Obamacare provided 100% federal financing for Medicaid expansion for the first three years, and 90% federal sharing afterward.

Traditionally, Medicaid has been targeted at women with minor children and the elderly poor. States with lower per capital incomes pick up 27% of Medicaid costs while the most affluent states cover 50% of its costs. The Federal Government covers the balance. Those programs continue under ACA.

However, ACA expanded the coverage to married couples with children and single individuals – if states signed up for Medicaid expansion. The result has been an additional 9 million people getting health care for the first time.

The Urban Institute summarized the strange results. In states that expanded Medicaid, two-thirds of the previously uninsured now qualify for Medicaid. The median income of adults who qualify average $25,164 per year. And if that adult has a family of four, their income could be as high as $95,400 – and still be eligible for subsidies.

However, in states which did not expand Medicaid, adults who are ineligible have an income averaging only $9,500 a year.

Stunningly, Obamacare gives subsidies to the upper middle class but not to many of the poor.

In Texas a quarter of the population has no health coverage. And the poorest people can’t sign up for subsidized coverage, because it is limited to those above the poverty line.

The inequities could get even worse. A case will be ruled upon by the Supreme Court in June, Pruitt v. Burwell, which will decide whether Americans living in 36 states which refused to set up state health exchanges – can receive any subsidies under Obamacare. Presently, they are enrolled in the federal health exchange, through the infamous Healthcare.gov website which was so difficult for people to sign up for a year ago.

However, the ACA appears to limit federal subsidies to those states which create state health exchanges – only 14 of which did so.

Finally, another fundamental problem of Medicaid is that its reimbursement level is so low that most physicians turn away Medicaid patients. Obamacare provided a temporary fix: a raise to the payment level of Medicare. That resulted in a 73 percent increase in payments.

“Just one problem,” my son points out. “The provision lasted for just two years and expired at the end of 2014. Why? It was a budget gimmick to mask the true cost of the program.”

Why has Obama been so silent on his own law, supposedly his greatest achievement as
President? The Republican House has voted down Obamacare 40+ times. However, it has failed to propose specific remedies. It is time for President Obama and the new Republican Congress to act like adults and begin working together to rewrite the law.

Obama also has to be willing to give Republicans something they want — like a repeal of the individual mandate to buy health insurance There is no dialogue at all and Obama has to initiate it.
Three major changes are needed:

1. The poor are the people who most need help, and should get it – regardless of what state they live in.

2. If cuts are needed to rein in costs – upper income people should lose subsidies.

3. Doctors should be given reasonable payments for their services.

The Affordable Care Act should be redesigned to serve the most needy at a reasonable
cost.