Reg's Blog

An Omission from Friday

Every once in a while, I make a mistake (rare I think but others when asked, would convey a different sentiment).  This gaff is really an omission; a missed thought from Friday’s post on “What’s Trending”.  In reviewing my notes (the mess that they can be), I noticed I forgot to include a “watch” tip for Monday, July 23.  This is the day that the CBO is set to release its findings on the costs (go forward implementation) associated with the Supreme Court’s ruling on the PPACA.

What I’ll be looking for up to the release and after, are the following issues.

• This is political stuff on steroids as the election battle heats up, deficit talks are imperative given the looming automatic cuts ($1.2 trillion) and the “fiscal cliff” created by the lapse point of current tax cuts.  What the CBO opines on the financial impact of the PPACA post Court ruling will fuel one side’s argument “pro law” or the other’s, “pro repeal”.  While the CBO is hardly accurate with their estimates, their veil of political impartiality gives them a certain amount of credibility for argument’s sake.
• Medicaid is now equivalent to a two-ton gorilla in the debate and the various governors are all taking sides (albeit cautiously in some cases); pro-expansion or anti-expansion.  I’m not sure that the CBO numbers will change too many positions but I’ll read with interest the conclusions.  The developing rub is the costs that the states will bear for expansion.  Some estimates suggest that, given current funding requirements under the law, the costs will be minimal to the states – a less than 3% increase in Medicaid costs.  Others state that even a 3% growth on top of an existing Medicaid deficit is too onerous.  Their argument is bolstered by the “double tax and fund” argument of having their state taxpayers pay more to underwrite the federal funding promises.  In short, many are convinced that the federal funding promises are shallow or hollow without additional tax revenues to cover the outlays.
• The trick for the CBO is how to estimate who plays and who does not.  The Court left states and opt-out clause and thus, CBO estimates can vary widely on the cost outlay if a multitude of states choose to opt-out of expansion and let the Feds fund private insurance contracts or subsidies for the newly eligible Medicaid participants.  The unknown is the cost of insurance as opposed to the subsidy paid to the state under Medicaid.  Some early estimates of a scenario such as this suggest the Government could spend as much as $100 billion more per year.

On a final note, providers have yet to fully weigh in.  I am tracking physician and hospital reactions but both groups are in a bit of a wait-and-see posture.  Hospitals in states that seem vehemently opposed to expansion tend to be the most concerned for fear of undercoverage and a continued burden of unfunded care.  Some in states with current high levels of uninsured and disproportionately high levels of poverty (the window area targeted by expansion) are likely the most cautious about what “next”.

July 16, 2012 Posted by Reg Hislop III | Uncategorized | CBO, Health Care Reform, Medicaid, Medicare, Payment, Trends, Washington | Leave a comment