By Donald C. Fry
While more than a dozen states, including Virginia, are reportedly considering taking advantage of the Supreme Court’s ruling allowing states to decline to participate in the federal health care reform act’s expansion of Medicaid, Maryland is ahead of the readiness curve and is poised to embrace the full federal reform package that the court otherwise upheld.
That’s the consensus of the presidents of the state’s largest health insurer and two leading hospital systems who assessed the status of health care reform for Greater Baltimore Committee members earlier this week.
For example, Maryland state government and health insurers have already implemented many of the concepts promoted by the Affordable Care Act including community rating, where health insurance companies offer policies to all within territories at the same price and regardless of health status, said Chet Burrell, President and CEO of CareFirst BlueCross BlueShield.
Also, Maryland has already expanded Medicaid eligibility and is implementing a separate health care exchange for small businesses, noted Robert A. Chrencik, President and CEO of the University of Maryland Medical System.
Hospitals and health care providers support the federal reform act’s goals of expanding access to insurance, said Ron Peterson, President of the Johns Hopkins Health System. Uninsured patients “tend to access the health care process at a pretty late stage” of their conditions, he said, projecting that reform would reduce the percentage of uninsured Marylanders from 14 percent currently to 7 or 8 percent.
“This is a good thing for the individual and a good thing for families and for society at large,” Peterson said.
Nevertheless, the process of implementing the massively complex Affordable Care Act remains fraught with uncertainties, the three experts agreed.
Foremost among them is how the reform legislation and costs of Medicaid expansion will be funded.
For example, federal funding for Medicaid, the government health care program for low-income individuals and families, has historically amounted to roughly 50 percent of its cost in most states, with the rest coming from the state.
However, under the federal health care reform act, the cost of expanding Medicaid will be heavily funded by the federal government. The act calls for 100 percent federal funding of states’ Medicaid expansion costs between 2014, when the act takes effect, and 2016. After that the federal share of expansion costs would gradually ease to 90 percent in 2020 and thereafter.
Even with this level of federal funding, governors in eight states – Florida, Iowa, Kansas, Louisiana, Nebraska, Texas, South Carolina and Wisconsin – have suggested they might decline to participate in the expansion of Medicaid benefits. Instead, they would elect to continue receiving federal Medicaid allocations under the states’ existing eligibility requirements, according to a report this week by the Pew Center for the States. The Supreme Court has ruled that states have that option.
Another six states – Alabama, Georgia, Indiana, Mississippi, Nevada and Virginia – are also leaning in that direction, according to the Pew Center.
Meanwhile, the Congressional Budget Office projects that the health reform law will provide coverage to an additional 32 million Americans by 2019. Overall, the federal government could spend $923 billion on Medicaid expansion between 2014 and 2022. Combined state costs would amount to as much as $73 billion during the first five years of the program, the CBO estimates.
Other health care studies have estimated that combined state costs would be less, possibly as low as $20 billion, “but nobody is sure how many people will enroll in the Medicaid expansion,” the Pew Center reports. “Until they get definitive answers, many states will be busy weighing the costs of expansion against the potential benefits of a healthier population.”
Health care advocates also worry about the effects of the fall election on health care reform, and that federal Medicaid and Medicare spending could be primary targets of deficit-reduction measures in Congress.
In Maryland, our state has already made a head start in expanding Medicaid and costs of that expansion are already built into our state budget. This could mitigate some of the increased cost effects of the Affordable Care Act. Many hope so. Already, between FY 2010 and FY 2012, Maryland’s General Fund spending on Medicaid has increased more than $1.4 billion, according to the state Department of Health and Mental Hygiene data.
In any case, Maryland will most certainly not be among the tentative states when it comes to implementing federal health care reform, agreed Burrell, Chrencik and Peterson.
It’s clear that our state is already well down a health care reform track that will likely continue regardless of future political impacts on the Affordable Care Act and no matter who is in the White House.
Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.
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