LB577: Nebraska’s Unaffordable Care Act

Governor Heineman has vocally opposed the expansion of Medicaid in Nebraska on the ground that it is unaffordable - formerly . At the risk of exposing the cynical side of my nature, it seems obvious to me that the governor’s stance on the issue inspired the proponents’ strategy to get LB577 passed. The strategy? To push Medicaid expansion as the fiscally prudent choice. It has the advantage of directly contradicting the governor, who is not as popular with Nebraska’s legislators as he is with Nebraskans as a whole.1  As a bonus, it makes it doubly difficult for the supermajority of state senators, who are supposedly fiscally-conservative Republicans, to resist the bill if it can be made to appear that it saves the state money.

But saying something is the affordable option doesn’t necessarily make it so. Especially if you have to ignore reality and/or engage in wishful thinking in order to make the fiscal argument.

Here are three MORE reasons why you shouldn’t believe what LB577′s supporters are saying about the ultimate price tag attached to expanding Medicaid in Nebraska.

Senator Kathy Campbell makes the White Queen look like a novice. She believes an infinite number of impossible things. Just look at her legislative record.

And what are they saying? The primary fiscal argument made by the 12 state senators who are the principal movers behind LB577 has been summarized as follows:

“Part of the theory for extending the program is that uninsured people are most likely to use  high cost emergency rooms for health care and wait until health crises before seeking help. Ultimately taxpayers and insurance premium payers pick up the tab anyway, but for high cost and inefficient care. The goal is to get them some kind of coverage and, if possible, preventive and regular health care to reduce costs.”

There are several problems with this argument. So many problems, in fact, it is safe to say that expanding Medicaid to cover Nebraskans who are currently uninsured will do little or nothing to realize cost savings.  It is more likely, in fact, to move the cost figures in the opposite direction.

First, the underlying assumption about uninsured people — that they are the group most likely to seek treatment for non-emergency conditions at hospital emergency centers — is inaccurate. Surveys in 2007, 2010, and 2011 published by the Centers for Disease Control (CDC) showed that about 20% of U.S. adults had used the emergency room in the past 12 months, with usage most common for those with public health insurance and living outside a metropolitan statistical area (MSA).2

Public health insurance MEANS Medicaid and Medicare, folks. So, tell me again: How is expanding Medicaid going to REDUCE the numbers of Nebraskans visiting emergency rooms for routine care and, as a result, achieve all those cost savings for the state’s taxpayers and private insurance premium payers?

Also, did you notice the comment about “living outside a metropolitan statistical area (MSA)”? Most of the State of Nebraska is outside an MSA. And even though those portions of the state tend to be sparsely-populated, state residents who currently participate in Medicaid are essentially evenly distributed between metro and rural counties, which is apparently an unusual statistical pattern. In short, Nebraska’s statistical profile of the “typical” Medicaid recipient is weighted more heavily than in most states toward those who are more likely to use the emergency room for non-emergency care (i.e., those who live outside an MSA).

Second, where will all these new Medicaid recipients find doctors to provide that “preventive and regular health care” the senators anticipate LB577 will secure for them? A few facts to digest:

So, there’s already a scarcity of doctors in Nebraska. Add to that the fact that many physicians are significantly less willing to accept new Medicaid patients than either Medicare or privately-insured patients.  The result? An increased number of Medicaid patients that have no access to a physician and who, consequently, tend to seek routine care at emergency rooms in the hospitals across Nebraska. Seems to me this is a step in the opposite direction to the one touted by LB577′s co-sponsors.  What say you?

Finally, there’s no disincentive that would cause Medicaid patients to avoid emergency rooms when their problem is not urgent. They don’t bear any of the additional costs associated with such “inefficient” care. With no skin in the game, it matters very little to them where they receive care, so long as they can avail themselves of it whenever they need or want it.

CONCLUSION:  If care provided to uninsured people is not the primary driver of rising costs for uncompensated care that hospitals provide and that all of the state’s taxpayers and private insurance premium payers are on the hook to pay for, what is?  In answer, I’m going to quote from an article written in 1993 in response to plans for Hillarycare:

“When government underpays, providers shift their costs to private insurers and cash customers.

“Mrs. Clinton never mentions how Medicare shifts costs to private payers. Instead, she points to cost-shifting created by unpaid treatment for the poor. But doctor and hospital bills have always recovered the cost of unpaid treatment. What’s new is cost shifting by government.

“From 1985 to 1989, unpaid hospital care grew slightly, from 5.5% to 6.0% of billing. But government underpayment shot from 0.6% to 5.0% — the same years private insurance premiums started skyrocketing.

Obviously, runaway private insurance costs are not caused by cost shifts from the uninsured poor. That shift has always existed, as a bad debt, and has remained fairly constant. Excessive medical cost inflation is caused by new and growing shifts from Medicare and Medicaid. Politicians have promised more than they can pay for with taxes. So they force private insurers to pick up the tab.

“Eventually, you and I pay anyhow. One big difference: if Medicaid and Medicare were fully funded by taxes, we could all see government’s failures. Shift the costs elsewhere, and private insurance looks like the villain.” (emphasis added)

It’s really amazing how long the answer has been known but remains unacknowledged and unaccepted by the Progressives among us.  They close their eyes, stuff their fingers in their ears, and loudly chant La-La-La as they march us toward universal, single-payer, government health care and, shortly thereafter, off the fiscal cliff.  The co-sponsors of LB577 are clearly the Kings — and Queens — of Wishful Thinking.

Author’s Note: This is the ninth in a series of articles about Nebraska’s Medicaid program, the Unicameral’s apparent intent to expand it, and the many reasons why expansion is an uncommonly bad idea. Although they don’t have to be read in order, here are links to the previously-published articles in the series:

Image Credit & Copyright Notice

Images in the post were found at the following links…

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Footnotes, References & Citations
  1. Some of the conflict has played out in the press.  Governor Heineman (archived link) did not take kindly to the Unicameral’s override of his veto of LB599, the bill to extend Medicaid coverage to pregnant illegal aliens.  In denouncing the override, Heineman recommended Nebraskans vote down a measure that would have given the state senators a pay raise, saying the senators did not deserve a raise because of their decision on LB599.  In response, Senator Bob Krist took to the pages of the Lincoln Journal Star to decry Heineman’s actions, claiming Heineman had essentially thrown the members of the legislature under the bus.
  2. According to the study using 2007 data, “So-called frequent fliers, a term emergency department (ED) personnel sometimes use to describe patients who are costly and frequent visitors to the ER, are far more apt to be enrolled in Medicaid than any other type of coverage. . . . According to the report, one in twenty (5.1 percent) of Medicaid enrollees visits the ER four or more times per year, whereas only 1 percent of people with private health coverage visit an ER that often. Medicaid enrollees are 2.5 times as likely as the uninsured to be frequent users of ERs.”  The 2010 study can be found here at table 89.  The 2011 study can be found here.

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