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Local Alternatives to Medicaid Expansion

Commentary

This article originally appeared in Your Houston News on July 31, 2013.

One of the main arguments for Medicaid expansion during the recent Legislative session was that it would reduce uncompensated care, which is the cost incurred by hospitals when they treat people who don’t have insurance, as they are required to do under federal law.

In Texas, those costs add up to billions every year. Reducing uncompensated care is a legitimate policy goal, but there are far better ways to accomplish it than by expanding a dysfunctional Medicaid program that is gradually consuming the state budget.

Proponents of expansion insisted that if the uninsured were enrolled in Medicaid, they would seek out routine care from a physician instead of going to costly emergency rooms. But the experience of other states with earlier Medicaid expansions undermines this argument. Instead of decreasing uncompensated care, Medicaid expansion increased those costs dramatically.

In the late 1990s and early 2000s, a handful of states including Arizona, Maine, Oregon, Utah, and Delaware expanded their Medicaid programs to include parents and childless adults—nearly the same population that will be covered by the ObamaCare Medicaid expansion. State officials claimed that emergency room use would decline along with uncompensated care costs as more people were added to the Medicaid rolls.

But an analysis by the Foundation for Government Accountability found that in each of these states, uncompensated care costs increased. In Maine, uncompensated care totaled $41 million in 2000, but had risen to $196 million by 2011. In Arizona, uncompensated care rose by an average of 9 percent each year after the expansion took effect.

Instead of forcing the uninsured into a broken Medicaid program that provides poor access and sub-standard health outcomes, Texas should focus on providing care for the uninsured in the right setting—a doctor’s office, not an emergency room.

There are programs in Texas already accomplishing this on the county level—and seeing better health outcomes and lower costs. Bexar County founded the CareLink program in 1997 for low-income uninsured and indigent patients who don’t qualify for Medicaid. By enrolling in the program, patients gain comprehensive access to care from a provider in the University Health System. In return, they agree to pay for a portion of their care, with the amount determined on a sliding scale based on income.

By requiring patients to contribute to the cost of their care, the program aligns incentives in ways that Medicaid cannot, because of strict federal rules. As a result, CareLink has been an overwhelming success. The program collects about $18 million in patient payments per year. Before CareLink, the county only received about $1 million from uninsured patients.

Most importantly, CareLink keeps the uninsured out of the emergency room by providing them with a medical home for routine care. Studies have shown that CareLink patients have a lower rate of emergency room use for non-emergency reasons than Medicaid patients and those on private insurance. The University Health System in Bexar County spends half as much money on each CareLink patient as it does on both commercial and Medicaid patients.

For rural and suburban counties, the model to follow is Project Access in Collin County. The program, only two years old, provides care for low-income residents by enlisting volunteer service from physicians and specialists, encouraged by their county medical society. Eight hospitals in the county contribute $25,000 each and make their facilities available to program enrollees. In return, they see a significant reduction in emergency room visits from the uninsured.

The solution to the problem of uncompensated care costs is not to expand a broken and unwieldy Medicaid program that offers the state no flexibility to implement meaningful reforms. Expansion has not worked in the past, and it will not work in the future.

Instead, Texas should look for answers in county-based programs that are already implementing innovative solutions. As Texans, we know best how to take care of our uninsured, and we are proving it on the local level.

Arlene Wohlgemuth is the Executive Director and Director for the Center for Health Care Policy with the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. She may be reached at arlene@texaspolicy.com.