May 13, 2011— U.S. House Republican proposals to repeal health care reform and convert Medicaid into a block grant could add up to 44 million people to the ranks of the uninsured by 2021, a new study this week by the nonpartisan Kaiser Commission on Medicaid and the Uninsured concludes.
The U.S. Department of Health and Human Services (HHS), meanwhile, reported on the same day that there are already 50 million Americans without health insurance and that very few have savings that they can use to pay for hospitalizations. The results, HHS said, is between $56 billion and $73 billion in uncompensated care annually, with about two-thirds of that amount borne by hospitals.
Grace-Marie Turner, president of the free-market oriented Galen Institute, called the Kaiser study’s findings “nonsense.”
“Giving states greater flexibility is the key to greater efficiency in Medicaid spending so states can modernize their programs to fit the needs of their citizens and match the resources available in the individual states,” she wrote in her blog for National Review Online.
Michael F. Cannon, director of health policy studies for the libertarian Cato Institute, said the HHS study was “blowing a real but relatively small problem way out of proportion.”
Uncompensated care for the uninsured, Cannon said, represents less than 3 percent of health care spending. “This HHS report adds nothing to our understanding of this problem,” he said. “Everyone already knows that nearly everybody would have a hard time paying an expensive hospital bill if they didn’t have health insurance.”
Budget Negotiations Continue
The Kaiser and HHS studies were released on May 10, the same day that the U.S. Fourth Circuit Court of Appeals heard arguments in two Virginia cases testing the constitutionality of last year’s Affordable Care Act (ACA), which will expand access to Medicaid and health insurance. The reports also came as the Obama administration, House Republicans and Senate Democrats ramped up negotiations over how deeply to cut federal spending in fiscal 2012 and beyond.
Ultimately, those talks will determine how much money the Office of Pharmacy Affairs (OPA) will get to administer the 340B drug discount program. OPA receives $2.2 million a year now. Earlier this year, it said it was forced to curtail technical assistance services to 340B providers because it did not get adequate funding from Congress to manage the program’s expansion under health care reform.
President Obama sought $10.2 million for OPA in his 2012 budget request, about $5 million of which would come from a new 0.1 percent fee on 340B drug purchases. It is unclear if Republicans in Congress will accept the fee proposal because doing so might be portrayed as voting to raise taxes.
The Senate Democratic caucus is debating a 2012 budget resolution that calls for reducing the deficit by $4 trillion over the next 10 years, half through budget cuts and half through tax increases. The GOP-controlled House approved a fiscal 2012 budget in early April that, among other provisions, would halt Medicaid’s expansion under health care reform and change it from an entitlement into a system of block grants to the states—a move that could potentially imperil the 340B drug discount program.
The federal government currently requires drug manufacturers, as a condition for obtaining Medicaid coverage for their drugs, to sign 340B pharmaceutical pricing agreements with HHS. That requirement might be one of the federal strings cut in the transition from a Medicaid entitlement to block grants. If that happened, a manufacturer’s participation in 340B presumably would become voluntary and it would suffer no penalty for opting-out.
Uncompensated Care
The Kaiser and HHS reports suggest that the GOP budget would nearly double the ranks of the uninsured and, consequently, increase the burden of uncompensated care on hospitals.
States with the tightest Medicaid income eligibility rules and the highest proportion of people in poverty would be the biggest losers under the House GOP plan, the Kaiser report said. “The repeal of the ACA combined with the adoption of the Medicaid block grant would add millions more to the number of uninsured Americans and compromise Medicaid’s role as the health safety net,” said Diana Rowland, the executive director of the commission that prepared the report.
Most of the tens of millions of people who are uninsured now have virtually no savings that they can use to pay hospital bills, the HHS report said. Every year, it said, nearly 2 million uninsured Americans are hospitalized. On average, the study found, uninsured families cannot afford to pay for hospitalizations that family members might experience about 90 percent of the time. Even uninsured families with incomes four times above the federal poverty level can afford to pay in full for hospitalizations only about one-third of the time.