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VOL. 41 | NO. 24 | Friday, June 16, 2017

Medicaid cuts could hit rural children hardest

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As Congress fiddles with an Obamacare replacement, one likely to cut billions in Medicaid spending, health care experts warn a decrease in funding could be hard on Tennessee.

During a recent forum in Jackson, Andy Schneider of the Georgetown Center on Children and Families reported that 50 percent of Tennessee’s children in small towns and rural areas are covered by Medicaid, a higher percentage than the rest of the nation, and more than in Tennessee’s urban areas where 39 percent have Medicaid.

As such, Medicaid, or the state’s TennCare plan, is “a basic part of the health care fabric of rural America, generally, and especially in Tennessee for kids and families,” Schneider says.

With the Republican-controlled U.S. Senate trying to pass a House bill to repeal and replace the Affordable Care Act, including provisions to cut Medicaid spending by $834 billion, what happens?

If the federal government reduces the amount it sends to Tennessee for Medicaid coverage, primarily for children, seniors and the disabled, Tennessee will have to raise taxes or take money from other state programs, Schneider explains. Or, it can cut the amount of money it spends on services for families and children or reduce the amount it pays providers for health-care services.

“None of those are particularly good options,” Schneider adds.

Such a move could damage health care statewide, for instance, harming the University of Tennessee Family Practice Residency Program run by Dr. Greg Mitchell, one of the state’s leading providers for Medicaid-eligible children.

More than 60 percent of his patients are insured through Medicaid, but with an operating margin of 1 percent or less already his services could suffer if those children lose Medicaid or the state starts paying less.

“So, there will be a ripple effect and it won’t be pretty, not just for family practice organizations like his, but for rural hospitals,” Schneider says.

Tennessee’s rural hospitals have been struggling for several years for a variety of reasons, with at least five shuttering. If more than half of the children it treats, along with many of the elderly, are on Medicaid, and the federal government, which pays 65 percent of the program’s cost, starts to walk away, the situation will escalate, Schneider says.

In addition, rural health infrastructure needs an overhaul as part of an overall rural development strategy involving job creation and transportation, he points out. The system must be reliable, too, or health care companies won’t make investments, and those who do want to invest will have a hard time finding the money because lenders won’t see paying customers.

The GOP’s American Healthcare Act would reduce the deficit by $119 billion over the next 10 years, according to the Congressional Budget Office. Its biggest savings would come from cuts to Medicaid and a replacement of the Affordable Care Act’s subsidies with new tax credits.

Most importantly, the number of people expected to be insured would be cut by about 23 million, the CBO estimates.

Federal spending would be increased by $117 billion for Patient and State Stability Fund Grants to reduce premiums. Another $210 billion is projected for penalty payments along with $664 billion in a repeal or delay on taxes on high-income people, fees on manufacturers and excise taxes enacted by Obamacare.

In reaching that bottom line, though, the act doesn’t factor in the impact on rural and Metro areas across the country.

“It’s all about what does the federal government need, how much does it need to save and let’s just turn the dial down,” Schneider adds.

Congressional outlook

Tennessee leaders are stuck in a mindset against Obamacare.

In fact, U.S. Rep. Scott DesJarlais, who helped kill the initial health care plan earlier this year because it wasn’t conservative enough, says he doesn’t believe the Congressional Budget Office calculations. And though he says he is concerned about people having insurance, he is hell-bent on repealing the Affordable Care Act, saying that’s the main reason he was elected.

“First of all, look at what we have in Tennessee,” says DesJarlais, a South Pittsburg Republican who represents Tennessee’s 4th Congressional District. “There’s counties where you can’t even buy a plan, so the CBO score of the Obama bill eight years ago missed the target on almost everything. I don’t put a lot of stock in what the CBO says because we haven’t had free market health care in a while.

“And I think what we pass is going to allow people to pick and choose what they want in terms of health care coverage, and they’re going to be able to buy it for a lower price.”

DesJarlais contends people have insurance cards and believe they have coverage but can’t afford co-pays and deductibles. He points out constituents tell him they want a return to what they had before Obamacare.

As they roll back the Affordable Care Act, he says, Republicans want insurance to be able to cross states, have permission for more generic drug coverage, tort reform and increased patient choice.

One of the main provisions DesJarlais likes about the Republican plan is a move to tighten restrictions on disabilities, making sure “able-bodied” people who can work don’t receive Obamacare subsidies.

No doubt, people who can work should find a job. But is that really what is undermining Obamacare. Or, is it states such as Tennessee, which refused to play ball with the feds because the Legislature didn’t want to give Barack Obama a win? Half the nation is making the Affordable Care Act work, but we can’t or won’t do it.

A group called Protect our Care Campaign, meanwhile, argues the American Healthcare Act, in addition to cutting coverage for millions, will raise premiums by 20 percent, especially for people over 50, and eliminate protection for people with pre-existing conditions, making them pay higher premiums for coverage, in addition to rationing care for Medicaid and stopping Medicaid expansion.

The bill also ends requirements for covering maternity and newborn care, as well as access to preventative and contraceptive care as it defunds Planned Parenthood, the group says. (Can you hear Republican Congresswoman Diane Black clapping?)

“While everyone else loses, the wealthy and insurance and drug companies get $600 billion in new tax breaks. They now will have to answer for it to their constituents,” says Leslie Dach, director for the campaign.

Furthermore, Dach’s group accuses Senate Republicans of trying to rush the bill to passage even though it allows insurance companies to reinstate lifetime and yearly caps on coverage, enable insurers to profit from more premiums rather than return money to consumers, impose an “age tax” on people between 50 and 64 and convert Medicaid to a program with a “per capita cap.”

Where is Tennessee?

Right now, nowhere.

The state Legislature balked at Gov. Bill Haslam’s Insure Tennessee plan two years ago, a proposal to tap into $1 billion annually paid to the federal government and use it to expand free-market coverage to about 290,000 people caught in a gap between Medicaid and Obamacare. One of the ideas was to set up health savings accounts, a great plan unless you need a $50,000 knee surgery.

House Speaker Beth Harwell then convened a 3-Star Healthy Task Force, which came up with a plan to phase in coverage, starting with those suffering from mental health problems, then taking in the working poor. It would have done about the same thing as Insure Tennessee but sits on the shelf waiting for Congress.

Haslam, who remains wildly popular in Tennessee but not so much among conservative legislators, says it is “premature” to decide whether the state would opt out of covering pre-existing conditions if given the opportunity.

“First of all, they have to pass a bill in Congress, which I still think is going to be an uphill battle, to be honest with you. Second, I can’t see us opting out, even if they did, totally opting out of covering people with pre-existing conditions,” Haslam says. “I’ve been asking for more flexibility, but I don’t see Tennessee doing that. Again, that’s all speculation because we’re a long way, I think, from Congress passing a new health care bill.”

But while Republicans legislators are hoping to receive federal block grants for Medicaid coverage, most are playing a waiting game, taking a page from President Donald Trump’s idea to let Obamacare implode.

Democrats, on the other hand, say the Legislature needs to take action to shore up insurance markets. During the 2017 session, hardly anyone mentioned insurance except the people screaming every Monday in the State Capitol.

“We did almost nothing to address the stability of insurance markets across the state, which are increasingly being undermined at the federal level. We have left undone for yet another year the Medicaid expansion, which strands about 200,000 people across the state in a place where they cannot afford insurance,” explains Nashville state Sen. Jeff Yarbro, who chairs the Senate Democratic Caucus.

State Rep. Craig Fitzhugh, House Democratic Caucus leader, accuses the Legislature of letting more than $3 billion for health-care coverage slip through its fingers.

Republicans, who hold supermajorities in the Senate and House, aren’t listening, saying Tennessee can’t afford to expand coverage.

Yet if Congress passes the American Healthcare Act, they might not have any choice but to come up with billions more for Medicaid coverage. As Schneider says, it’ll either be raise taxes, cut coverage or cut payments to providers.

Luckily, Tennessee had a strong budget year, building its rainy day and TennCare reserve fund to a record $1 billion. Otherwise, it would be in even worse shape on the insurance front, as the majority of lawmakers pray for an end to Obamacare.

The analysis

During 3-Star Healthy Task Force meetings, some lawmakers asked about a plan to increase services at state health departments. The idea went nowhere. But that could be the state’s best bet for strengthening rural health care and making use of its resources.

Sure, it would have to spend money to hire physicians, nurses and staff. But is it better to do that or to continue having people stream into emergency rooms across the state and use them to treat the common cold, something the Affordable Care Act didn’t stop because too many people opted to pay the tax penalty rather than premiums.

If half of the state’s rural children and nearly 40 percent of its urban or Metropolitan children are on Medicaid, the state could funnel that money into its own health departments to pay the costs.

This may seem elementary and would require some investment, but it could set Tennessee apart from the rest of the nation and put it on the road to independence.

If our Legislature really despises the federal government, as so many lawmakers say, it should take control of the state’s health care treatment and use that money to help people get the care they deserve.

Then, they might not need so much catastrophic coverage when they make the downhill slide into old age.

But when you’re constantly running for election, it’s much easier to blame the feds than to set out on a plan to save Tennessee.

Sam Stockard can be reached at sstockard44@gmail.com.

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