Health News Florida
8:48 am
Wed January 23, 2013

Senators Tackle Medicaid Economics

Jonathan Gruber designed law that is the prototype of ACA.
Jonathan Gruber designed law that is the prototype of ACA.
Credit Forbes

State Senate committee hearings tend to be long on detail, short on excitement. But Tuesday saw an impassioned debate between two high-profile health economists with opposite views on the Patient Protection and Affordable Care Act (PPACA).

The Select Senate Committee on PPACA  heard dueling arguments from Massachusetts Institute of Technology professor Jonathan Gruber, who helped design a health plan in his state in 2006 that became the model for the 2010 federal law.

Appearing via Skype, Gruber told the senators that Florida –a state with an estimated 4 million uninsured -- will benefit enormously from the expansion of Medicaid for the poor and subsidies to help buy coverage  for those just a bit higher on the income ladder.

Gruber said the Massachusetts plan has succeeded in covering  all but 2 percent of that state’s residents without harming the  economy. In fact, he said,  Massachusetts’ economic growth has outperformed the nation as a whole ever since implementation of its law.

He said the public supports the plan now by a 2-to-1 margin. “It’s a great success,” Gruber said, adding: “Don’t believe the rhetoric” of those who predict the ACA will fail.

One of the critics, Michael Cannon of the libertarian Cato Institute, appeared in person to debate with the virtual Gruber. He argued that government “command and control” of the insurance market will hurt the economy and the quality of health care. Government is already too big and expensive, he said, and the PPACA will make it worse.

In 2014 the law will require large employers to cover their workers or pay a penalty and will require individuals to obtain coverage, with subsidies if they can’t afford it. Cannon’s theory is that states can make it difficult for the IRS to impose the penalties if they don’t do anything to help with the exchange

Cannon called on Florida, which led a legal attempt to have the law thrown out, to revive that role in contesting it wherever possible – in the courts or through passive resistance.

But Sen. Joe Negron, who as committee chair had invited the economists, told Cannon that resistance  is pointless since the law has been upheld by the Supreme Court and those who wanted to repeal the law were defeated in the November elections.

“This isn’t the forum for a pep rally either for or against the Affordable Care Act,” Negron said. “The situation we’re in, the law has passed, the Supreme Court has ruled it’s constitutional…I believe our responsibility is (to decide) what makes sense in Florida” on implementing the law.

Negron asked the economists to focus on helping the senators with the two questions they must decide between now and the end of the legislative session:

--Should  Florida expand its Medicaid program, as called for under the PPACA? (The Supreme Court ruled that states can decide.)

--Should the state build its own health insurance exchange or leave it to the federal government?

To the Medicaid question, Gruber said yes, definitely, while Cannon said absolutely not. The two disagreed on nearly everything about Medicaid.

But on one point, Gruber and Cannon agreed. In building the online shopping site, Florida would be wise to hold off and let the federal government assume the burden. Building such a complex structure is difficult and expensive , they said, and given that it must be ready by Oct. 1, it’s too late for Florida to create one anyway.

However, said Gruber, as soon as the construction is done, the state may want to jump in so that it has some say-so on how the marketplace will operate. Cannon, on the other hand, said the state should resist any cooperation with the federal exchange, to make it more difficult for the IRS to collect penalties from companies or  individuals who defy the mandate and refuse to buy coverage.

Cannon’s written thesis (included in the meeting packet) includes 13 reasons why Florida should resist creating a health exchange and eight reasons why it should not expand Medicaid.

By comparison, Gruber’s presentation was simple. He pointed to Massachusetts’ success and noted that the federal government is prepared to pay the lion’s share of the cost of expanding Medicaid: 100 percent for those in the expansion group for three years, tapering to 90 percent and remaining there.

One of the most interesting aspects of the hearing was the obvious effort that senators from both parties put into understanding the economic arguments and how they would translate into the lives of real people. (See video at about 65 minutes in).

Sen. Negron told Cannon that he too has libertarian attitudes and concerns about growth of government. But in the case of an uninsured family with a $25,000 income and a sick child, he asked, how can they obtain coverage if the state doesn’t expand Medicaid?

Cannon’s answer: Let the family buy less-costly insurance. Like what? Negron asked. Well, said Cannon, a less-comprehensive policy with a high deductible.

Negron:  How do they pay the out-of-pocket costs on that high deductible?

Cannon conceded the family would end up in debt in that case. “What we don’t have is a magic bullet to keep anyone from falling through the cracks,” he said.

In another back-and-forth, Negron asked Cannon why a conservative or Libertarian would urge states to let the federal government run the health exchange  rather than do it themselves. It seems contrary to their usual position on states’ rights, Negron said.

Cannon replied that federal health officials can overturn any decision a state may make.  “You do not have any meaningful control over your health insurance exchange,” he said.

“You’re saying it’s a state exchange in name only,” Negron concluded.

Most of the questions, though, were on Medicaid expansion. If the state decides to implement it, said Gruber, “Florida will no longer be a state where if you get sick you’ll go bankrupt.”

With the billions in federal funding available just for the asking, he said, “It’s too good a deal to pass up."

---Health News Florida, journalism for a healthy state, is a service of WUSF Public Media. Contact Carol Gentry at 813-974-8629 or 727-410-3266 or cgentry@wusf.org.