Expanding TennCare would hurt patients, taxpayers

March 17, 2013 1:26PM

Beacon Director of Policy Trey Moore warns against the consequences – both fiscal and moral – of expanding Medicaid in Tennessee. This article originally appeared in Sunday’s Knoxville News Sentinel. by Trey Moore Gov. Bill Haslam recently announced he would decide this month whether to expand Tennessee’s Medicaid program in accordance with President Barack Obama’s Patient Protection and Affordable Care Act. While special interests support an expansion, such a move would significantly harm current Medicaid enrollees, our state’s neediest population, who already face substantial barriers to medical care. Additionally, expansion would expose Tennessee taxpayers to untold future burdens at a time when they’re already struggling to comply with the costly new law. Medicaid, administered in Tennessee as TennCare, currently acts as a safety net for our state’s most vulnerable citizens, including pregnant women, families with children, the elderly and the disabled. Yet even at such limited eligibility standards, Tennessee’s Medicaid patients still struggle to find a doctor who will see them. A 2012 Health Affairs study revealed that almost half of Tennessee doctors do not accept new Medicaid patients. That’s not because Tennessee doctors are mean people; rather, Medicaid pays so little for services that they must balance the number of Medicaid patients with enough privately insured patients to make payroll and keep the lights on. Yet, as Tennessee debates whether to add half a million or more to its Medicaid rolls, the state has yet to address one of the its most glaring problems: a shortage of primary care physicians. According to the federal Health Resources and Services Administration, 55 of 95 counties don’t have enough doctors to meet demand. What’s worse, such shortages primarily exist where Medicaid enrollment is highest. So, any move to expand Medicaid without first reforming the program to encourage more participation by providers is dangerous for Medicaid patients. Expansion proponents point to truckloads of “free federal money,” since the law requires the federal government to pay 100 percent of new coverage costs for the first three years and 90 percent for two years afterwards. That sounds too good to pass up, but unless Washington also sends truckloads of new doctors, those with new Medicaid “coverage” will find those insurance cards useless. As new enrollees compete with current recipients for physicians’ services, those unable to access primary care will inevitably flock to emergency rooms. This is one reason why a 2010 Centers for Disease Control and Prevention study found that Medicaid patients were more likely — even more than the uninsured — to visit emergency rooms. A 2012 study by the American College of Emergency Physicians found similar trends. This increase of undercompensated care to hospitals’ costliest operation — the emergency room — would do little to improve a struggling hospital’s bottom line. Ironically, emergency room red ink is the main reason offered by Tennessee hospitals in support of expansion. In addition to making access to care much worse for Tennessee’s neediest residents, a Medicaid expansion hangs huge liabilities around the necks of taxpayers. The law explicitly requires states to cover all administrative costs of expansion, which studies indicate to be about 2.5 cents per dollar of coverage. Thus, billions in “free” federal funds would require hundreds of millions in state costs up front. This money would have to come out of current spending on education, transportation or safety services, or even worse, require a tax increase. While hospitals clearly face challenges in dealing with $5.6 billion in Medicare cuts, they agreed to those cuts when they endorsed Obama’s health care law. But unlike Medicaid, Medicare is purely a federal program. Hospitals should go back to the table in Washington instead of forcing Tennessee’s most vulnerable citizens and taxpayers to shoulder the burden of these cuts through an expansion of Medicaid. Tennessee should refuse Obama’s Medicaid expansion and tantalizing federal money on both fiscal and moral grounds. The health of Tennessee’s neediest citizens and the financial security of our state are on the line. Trey Moore is the director of policy at The Beacon Center of Tennessee, the state’s free market think tank.