Health Care Expansion Plan Could Strain States; Coverage Would Extend By 10 Million

WASHINGTON -- The government programs that provide health care to the poor would expand to cover nearly one in five Americans under health insurance legislation pending in Congress, putting pressure on federal and state budgets.

Medicaid, one of the fastest-growing government programs for two decades, and the State Children's Health Insurance Program would grow from about 50 million people today to more than 60 million in 2019, according to data from the Congressional Budget Office and Kaiser Family Foundation. That would be the biggest single expansion since Medicaid was created in 1965.

The expansion is designed to cover the poorest adults among the nation's 46.3 million uninsured. It would change a program aimed mostly at children, people with disabilities and elderly nursing home residents into one that includes more low-income parents and, for the first time in 45 states, adults without children.

Medicaid grew in the 1990s as children ages 6 to 18 were added. Now adults would be covered up to 133% of the federal poverty line, or about $14,440 for individuals. Average eligibility for adults is 67% of poverty ($7,220), dropping to 17% in Arkansas.

"This is one of the most significant changes in the health reform bills," says Ron Pollack, executive director of the liberal health care advocacy group Families USA. "This affects the people who are the poorest of the poor."

It also affects already stretched state budgets, prompting governors such as Phil Bredesen, D-Tenn., and Linda Lingle, R-Hawaii, to question if states can afford their share of the expansion cost.

The federal government paid $258 billion for Medicaid in 2009, about 57% of total costs, but would pay 90% of the expansion. States would pay about $33 billion, according to the Congressional Budget Office.

"If you go to the store and the shoes are 90% off, it doesn't matter if you can't afford the 10%," says Alan Weil of the National Academy for State Health Policy.

Most of the 14 million adults who would be added over the next decade lack insurance and get health care at emergency rooms and community health centers. The federal government pays some of that cost, but hospital payments would be reduced.

Most of the costs to cover the uninsured are absorbed by the facilities or passed on by insurers to employers and employees in the form of higher premiums. Because new Medicaid beneficiaries would use more health care services than they do now, government costs would increase.

"No one believes declines will exceed increases in the short run," Weil says. "In the long run, a more efficient system with everyone covered could and should certainly cost less in total, but that requires systemic changes that won't happen overnight."

Among the questions prompted by the proposed expansion:

*Can states afford it? Medicaid already consumes about 22% of state budgets, and 13 million people are eligible but not enrolled, the National Governors Association says. The expansion also could tempt more of those currently eligible to sign up.

"States have a legitimate concern in terms of what they are facing in their budgets," says Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.

*Can states handle the expansion? Fourteen states, half of them in the South, accept only parents at less than 50% of the poverty level, so the expansion would be vast. Aging computer systems used to set eligibility may not be up to the task, says Ann Kohler, director of health policy at the American Public Human Services Association.

*Will there be enough doctors? Many parts of the country already face an acute shortage of general practitioners, 35% of whom did not accept new Medicaid patients last year, according to the Center for Studying Health System Change. House legislation would require states to raise Medicaid payment rates to doctors, but Senate legislation would not.

"There has to be improved payment for what primary care physicians make, or they will make a very simple business decision that they can't afford to take on those patients," says Ted Epperly, American Academy of Family Physicians' chairman.