Political Roadblock: Georgia is the bizarro world of health insurance (etc.)

A rural hospital closes because of a financial hole just as state legislators introduce a bill designed to create yet another barrier to Medicaid resources that might have helped that hospital. Those same lawmakers want to pull the university system from the small cadre of non-profit navigators that are connecting individuals and families with needed health coverage on the new marketplace.

It’s part of a politically charged plan to remove state government from involvement with the Affordable Care Act (ACA, or Obamacare), the same state government whose employees are covered by the big private insurance company that is thriving on business from the aforementioned individuals and families on the aforementioned marketplace.

Welcome to the bizarro world of healthcare insurance reform in Georgia, where the large-scale implementation of the ACA has met with a schizophrenic range of actions and reactions. And the new age is only a few months old.

“This is part of a long build-up, and it got off to a very slow start, because of technical problems. But the marketplace seems to be sustainable and it looks like enrollment is getting on track, for a first year,” says health insurance expert Bill Custer, director of the Center for Human Services Research at Georgia State University.

“The point to make is, this is just the first year, and as one colleague told me, ‘it’s a marathon, not a sprint.’ This is year one of what’s going to be a pretty lengthy rollout.”

It may be the law, but some of the ACA’s toughest critics have been working hard to impede its progress in Georgia.

In 2012, when the U.S. Supreme Court gave states the option of not expanding Medicaid (expansion is a key component of the ACA), Gov. Nathan Deal quickly promised that Georgia wouldn’t play ball.

And during this year’s legislative session, lawmakers introduced several anti-ACA bills – one that would take the Medicaid expansion decision away from the governor and put in the hands of legislators (HB 990), and another, HB 707, designed to, “protect state resources from being conscripted by the federal government to implement the incompetent federal program known as Obamacare,” according to Rep. Jason Spencer (R-Woodbine), who introduced the bill and is a co-sponsor of HB 990.

“Most federal programs cannot get off the ground without some form of state assistance, very few are implemented on their own,” Spencer says. “Medicare is one that is, and Social Security, and we’ve seen those programs become bankrupt and difficult to fund. Most, like Medicaid and food stamps, require state machinery to be implemented, and the fed provides different grants and carrots to get states to play along.

“As a result, with those type of programs, states tend to lose sovereignty in the long run, and there are budget implications that states don’t consider when those programs first come down. So, the number one thing my bill does is prevent the use of state resources to advocate for that kind of program.”

Of course, neither Social Security nor Medicare is “bankrupt” (bankruptcy being virtually impossible, the way the system is currently set up), and Spencer’s bill may already be law by now. But it’s not like the state was doing much to help advance health care reform before.

 

Rural Meltdown

The Affordable Care Act requires the federal government to pay 100 percent of the costs of expanding Medicaid for three years. After that period, the fed pays 95 percent for a few years, gradually getting down to 90 percent from 2020 on.

“If you look at the dollars, the numbers, it’s a no brainer for Georgia. Georgia brings in a tremendous amount of federal money if they expand Medicaid,” says Bill Custer, who last year published a report, ‘The Economic Impact of Medicaid Expansion in Georgia,’ for the Healthcare Georgia Foundation.

Custer’s analysis found that if Georgia had participated, the additional $40.5 billion in Medicaid funds from 2014-2023 would support 70,343 jobs statewide.

Spencer argues, “Proponents of Medicaid expansion like to say it will create jobs, but these would not be revenue generating jobs.”

According to Custer’s study, the new jobs would create about $8.2 billion in annual economic impact, and yearly state/local tax revenues of $276.5 million.

“More than half the jobs created by new federal money would be in healthcare – physicians, nurse practitioners,” Custer says. “On the other hand, Georgia leaders have chosen not expand for political reasons, and we’ll have to see how that plays out.”

Some decisions at the state level haven’t played out very well over the long haul for Georgia’s rural hospitals, according to Jimmy Lewis, CEO of Hometown Health, LLC, an advocacy association for 56 small hospitals. He blames his membership’s plight on years of bipartisan neglect.

“The Medicaid expansion would be helpful, no doubt, but it is by no means the silver bullet to the problems we’ve been facing since 1999,” says Lewis. “Incremental cuts in Medicaid over more than 10 years are part of the problem. Rural hospitals are in serious financial trouble. We’re losing disproportionate share payments, and we have insufficient reimbursements.”

Hospitals that already treat a large percentage of low-income, underinsured patients (like many rural hospitals) were receiving disproportionate share payments from the federal government, to help cover those losses. Under ACA, those payments were to be reduced as Medicaid was expanded, the goal being universal coverage for patients. But of course, Georgia chose to forego expansion, leaving hundreds of thousands of citizens without coverage.

“We’re actually seeing an increase in uncompensated care instead of a decrease,” says Maggie Gill, president and CEO of Memorial Health Medical Center, a safety net hospital in Savannah. Typically, about 10 percent of the patients Memorial treats in a given month are uninsured.

They were at 12 percent in January, and had hired a director of social programs, “who will work with community advocates in helping promote the enrollment exchanges, taking a proactive role, making sure people who visit the hospital are appropriately connected with whatever resources exist.”

Gill says in one-on-one conversations with state leaders, she gets sympathy and verbal support for expanding Medicaid. “But from the state capitol, the answer I get is a firm ‘No.’”

It’s too late for an expansion to have much of an effect on the most troubled rural hospitals, says Lewis. Georgia is already ranked third from the bottom in U.S. in health care spending per capita, and according to Lewis, the state has cut about $14 billion in support since 1999.

Four hospitals in rural Georgia closed within the past two years, the most recent (at this writing), Lower Oconee Community Hospital in Glenwood, which announced in February, as Spencer was introducing his bill, that was shutting its doors due to financial pressures.

“Fifteen of our hospitals are in some degree of financial distress, and half a dozen are in dire straits,” says Lewis, who expects more closings before long.

 

A Little Relief

So, even as state leadership took partisan measures to hinder ACA consumption, there was a collective real-world sigh of relief from the thousands who had enrolled in a new health plan (often made more affordable through tax credits), while others greeted the new age by rolling up their sleeves and helping their fellow Georgians utilize the law of the land.

“We have our work cut out for us, but we’re getting there. We have about 139,000 Georgians who have enrolled in the marketplace so far,” says Cindy Zeldin, executive director of Georgians for a Healthy Future (GHF), part of a consortium called Connecting Georgians to Coverage, a network of 15 organizations that is helping consumers navigate the new healthcare landscape.

The University of Georgia was also helping consumers navigate the new marketplace, but Spencer’s bill would remove that layer of assistance, leaving the work to GHF and other non-profit agencies (Georgia also chose, early on, to pass up the opportunity to run the insurance marketplace here, letting the federal government do it).

“We hope and expect a huge surge in enrollment toward the deadline, which is pretty typical for any kind of open enrollment period,” Zeldin says.

That was in March. The deadline for open enrollment in Obamacare health plans was March 31 (the next enrollment period is Nov. 15 through Feb. 15, 2015). When the initial enrollment period began last October, the marketplace website, Healthcare.gov, suffered its infamous epic implosion.

The technical issues were ultimately addressed, and individual plan enrollment climbed as the deadline neared (if you don’t have coverage of some kind after the deadline, you may have to pay a fine, as well as all of your medical expenses).

“The first time I tried, in November, you’d get to a certain point and the web site would break down. The rollout was horrible, but the government never does anything smoothly, ever,” says Paul Rampulla, who owns a popular pizza tavern near Helen.

He and his wife had been on the state insurance plan when she worked at Unicoi State Park. But when the park privatized, she lost her insurance and they couldn’t find coverage because he had a history of kidney stone problems. So, they were uninsured for a year.

After his first failed attempt to enroll in the ACA, Rampulla went to Healthcare.gov again in December. This time it worked perfectly. He enrolled in a plan, got $170 in tax breaks. They’re paying a little more now than they were on Rachel’s state plan, but they’ve got comprehensive coverage that they didn’t have before, so if they want to start a family, they can afford it.

But even though he’s covered, Rampulla was facing another curveball. The Northeast Georgia Healthcare System, who all his caregivers are affiliated with, wasn’t accepting the ACA version of Blue Cross Blue Shield (as of March), even though they were accepting the state version of BCBS.

“I assume they’ll reach a deal, that this is a business thing. In the meantime, I’m looking for new doctors, new specialists. I hope it’s not politics, but you never know,” says Rampulla, who considers himself a Libertarian in most ways – the less government, the better. The health care issue is a different thing altogether, though.

“Denying care to people with pre-existing conditions was a major problem, and not just for me, but on a moral level,” Rampulla says. “At what point did our health care system become so driven by profit, so askew, that it could deny you the ability to get healthy? I don’t know if [the ACA] is the answer to all the problems in health care, but it’s been the answer to that one.”

Rampulla runs a small business, fewer than 20 employees. So, he’s not required to provide insurance under the ACA, and says his employees run the gamut – some are on a spouse’s plan, some are uninsured, some have or are trying to connect to the ACA. These are the kinds of workers GHF is trying to link with coverage.

The other priority for GHF has been Medicaid issue, but they’ve had no luck on that front. Medicaid expansion would cover about 650,000 additional residents.

“Instead, our healthcare system is in a difficult place, and I don’t know how that’s going to be resolved,” Zeldin says. “What we’ve seen from the legislature hasn’t been encouraging.”

A study by the RAND Corporation calculates premiums in the individual market are 6-10 percent higher in states that chose to forego the Medicaid expansion. Also, says Custer, businesses will be negatively affected.

“It means that businesses will pay transitional costs for employees who would otherwise be eligible for Medicaid,” Custer says. “This could be a significant cost to Georgia employers.”

As if employers didn’t already have enough anxiety over the ACA.

 

Brisk Business

Small businesses of fewer than 50 employees make up about 96 percent of all businesses in the U.S. This group of employers can connect their employees with coverage by enrolling in the Small Business Health Option Plans (SHOPs, designed specifically for individuals who work for these small firms, who are not required by the ACA to offer health insurance, but can earn tax breaks if they do).

Businesses with 50 or more full-time equivalent (FTE) workers will be required to start offering insurance, or face penalties, in 2016 (new regulations in the ACA have given them an extra year – this feature was previously scheduled to kick in January 2015).

Meanwhile, businesses with more than 100 FTE workers must comply with employee coverage rules beginning January 2015. This group includes Athens-based Community News Inc. (CNI), a company that publishes 33 newspapers in Georgia, Florida and the Carolinas.

“Right now, it’s hard to tell exactly what the impact of Obamacare will be,” says Mark Major, chief financial officer for CNI, which has about 260 full-time workers. In March he was preparing for renewal of the company plan, which starts May 1. But he does expect the ACA’s individual mandate will affect the numbers.

“We already offer insurance to everybody, but not everybody takes it,” Major says. “So we did an informal survey of the folks who don’t participate, told them, ‘I need to know if you’re gonna join the plan, now that you’re required by law to have insurance.’ Based on the feedback, I expect we’ll have about a 20 percent increase in plan participation.”

That’s just Major’s guestimate, but those are the kind of numbers that Morgan Kendrick likes to contemplate. As president of Blue Cross and Blue Shield (BCBS) of Georgia, he’s enjoying the opportunity the ACA is bringing his company, the only insurance firm operating in all 16 Geographic areas of Georgia.

“The rollout was clunky with its stops and starts, but enrollment is going about as anticipated, with whole worlds shifting, predominantly around the individual market,” Kendrick says.

As of March, BCBS of Georgia (which is owned by WellPoint) had insured about 15,000 Georgians through the marketplace, and about 2.7 million overall (they won the state employee plan contract, a huge and lucrative chunk of their business).

The uptick in ACA business has led to an increase in jobs here. The company added about 900 jobs last year, including 200 customer care representatives in the Columbus call center, just for the healthcare exchange (serving WellPoint companies in other states, as well as Georgia). About 700 people were hired, Kendrick says, “to serve the state of Georgia, and we’ve leased a new building in Columbus, a new capital investment of about $50 million, so we’ll have the opportunity to expand some more.”

So, he remains bullish, and why shouldn’t he be. The new law is helping to drive his company’s growth from a new ground floor.

“This is a big opportunity for us and we’re optimistic about it, understanding that this is a monumental shift in our industry, the biggest in a long time,” Kendrick says. “It’s almost like managing a startup company. No, [the ACA] wasn’t out-of-the-box perfect, but we’re managing through it, and it’s going to morph as it continues to roll out.”

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