A Message From Jan

Rep. Jan Jones Authors House Bill 990

Below are remarks Rep. Jones prepared to present HB 990 on the floor of the Georgia House of Representatives and to respond to questions. 

Governor Deal signed HB 990 on April 29, 2014.

HB 990 Talking Points


HB 990 is a straight-forward one paragraph proposal that would require a vote of the legislature prior to any increase of the income threshold to expand Medicaid eligibility, which was mandated under the Affordable Care Act or ACA, commonly known as Obamacare, until the U.S. Supreme Court struck down that provision.  

The intent is to protect Georgia from the long term and significant consequences of such a decision on the budget, on its citizens and the state economy. Debate and careful decision-making should be exercised by the House and Senate before Medicaid is expanded. 

In addition to straining our state budget and the delivery of healthcare to our most vulnerable citizens, expansion would establish disincentives for businesses to create higher paying jobs and for individuals to seize opportunities for prosperity and success, part and parcel of the American Dream.

Let me say, Georgia is a generous state to the vulnerable and needy.  Individuals, churches, businesses, non-profits and governments give relief to the less fortunate with their time, donations and tax dollars.

In addition to funding $3 billion annually in healthcare services through Medicaid to one-in-six Georgians, including paying for 60% of births, our state funds another $2 billion for services for the aged, developmentally disabled, addictive diseases, behavioral and mental health and public health.  Georgia citizens pay $500 each in state funding for Medicaid and other programs for the vulnerable or $2000 per family of four.  That is very generous.

Last year, Governor Deal wisely rejected Medicaid expansion and has made it clear he doesn’t intend to change his mind in his second term.  What many of us in this chamber did not appreciate until ObamaCare is that Georgia is one of only a few states that rely solely on the Governor to make that decision.  If not for their state legislatures, Florida’s Republican governor and Virginia’s new Democrat governor would have already expanded Medicaid. 

HB 990 is important for the long term and to make clear to Washington D.C. – our governor and our legislature demand more flexibility in solving our state’s healthcare problems, not one-size-fits no-one, expensive mandates that take us back down the path of old style welfare, a model that was rejected almost 20 years ago.

Mr. Speaker, I could conclude my explanation of the measure here and yield for questions, but I expect we will have a discussion of the merits of the expansion of Medicaid, so I will take a few minutes to expound upon HB 990 and its implications on that topic.

1. Georgia cannot afford to expand Medicaid on many levels, but cost is the most obvious
·    HB 990 provides an additional safeguard for the Georgia taxpayer. According to the Office of Planning and Budgeting, even without expanding Medicaid, ObamaCare will increase state Medicaid costs by $145 million in FY 2015 from increased enrollment and service mandates and increase the State Health Benefit Plan costs by $226 million for mandates alone. The total cost of Medicaid to the state under ObamaCare is projected to cost an additional $4.5 billion over ten years of which $2.8 billion would come specifically from an increase in the income threshold alone. 100% federal funding is a myth.

·    Expansion would require either cuts to other areas of the budget or increases in tax revenue. K-12 education, our colleges and universities, Medicaid and other services to the vulnerable and needy account for 80% of our state budget.

·    Medicaid in Georgia has increased in cost 40% in 10 years before expansion and ObamaCare, far outstripping the inflation rate or general state budget growth.  

·    Congress can always reduce the federal portion 90/10% match.  It is illogical and unlikely to leave the match for the expanded population at a 90/10 match when the match for the more needy – those currently enrolled in Medicaid - is 65/35      

In fact, President Obama has already included “blended” federal contribution rates in his previous budget proposals.  “Blended” is a euphemism for shifting costs to the states, which would be catastrophic for our state should Georgia expand Medicaid.

2.  HB 990 fits within our state’s tradition of budgetary decision-making.
·    HB 990 is not a new concept: current law requires legislative approval for federal waivers for significant Medicaid reform (Section 1115 waiver). HB 990 expands that existing concept to include income threshold eligibility increases.
·    The Georgia House of Representatives voted overwhelmingly to approve SB 572 in 2006, which instituted the legislative approval requirement for Medicaid reform. It passed 139-15, and every member of the Democratic caucus voted for it.

·    The Constitution places taxing and spending power with the House of Representatives. Medicaid represents approximately one-in-six dollars in the state general budget, and it is within our Constitutional tradition that the popularly elected legislature should have a vote on such a substantial policy change.

·    3. Medicaid expansion would harm the most vulnerable

·    Georgia Medicaid currently serves 1.7 million of our state’s more vulnerable people - the aged, blind, disabled, pregnant women, new mothers, and children.

o    Medicaid expansion would add up to an estimated 650,000 new recipients, 38% more. They would be primarily able bodied adults without dependent children under age 65.  I say “able bodied” because the disabled population on Medicaid is not means-tested.

·    The current Medicaid program is in a precarious state and providers consistently argue that Georgia Medicaid pays too little to cover costs, and advocate for rate increases.

·    Additionally, for many specialty and sub-specialty professions, current Medicaid enrollees have limited access to care, especially for pediatric care. There are 9,961 of individuals on waiting lists for Medicaid waiver services and 29 counties with shortages of primary care physicians in the Medicaid network. Already, at least one-third of doctors do not take new Medicaid patients.

·    Additionally, because married income is counted, but income from co-habiting adults is treated separately, expansion would reward low income Georgians for not marrying, including those with children between them.   


4. Medicaid expansion would “crowd out” private coverage
The most conservative estimate I have seen shows for every 1.4 new Medicaid enrollee in expansion, only 1 would have been previously uninsured.  In other words, 30% of new enrollees would drop existing insurance to enroll. While these individuals will still have “coverage,” they will not decrease the ranks of the uninsured.

·    5. The “donor” state argument for expansion is baseless
Contrary to what the president believes, borrowing money from China through greater debt to expand government spending is not economic development.  We’ve heard the argument, “Well, if we don’t grab these federal dollars, our tax money will go to Medicaid expansion in other states.”  Might sound logical, too bad it is 100 percent false.
 
Medicaid is an entitlement program, and therefore there is no fixed amount of federal Medicaid spending to be reallocated from state to state.  Unlike certain infrastructure grants, states that choose to participate do not have the opportunity to receive extra dollars when other states decline to participate.  Every dollar we refuse to spend on Medicaid expansion is one dollar less that we have to borrow from China, not one dollar more that goes to another state.  Our refusal to expand Medicaid does in fact help to reduce the growth in federal spending, which is yet another reason why every state should do the same.

Doubling down on faulty, unsustainable federal programs is what got this country into its current fiscal mess.

·    6. Once you let the genie out of the bottle, you had better like the genie

Some have suggested that if Medicaid expansion proves unworkable, we can always roll the eligibility back.  First, when was the last time Georgia took benefits away from more than half a million people? There is a practical difficulty, if not impossibility, of taking benefits away.

This ignores the federal government’s history of imposing maintenance of effort mandates on states, such as the more recent president’s stimulus spending.  The history of government welfare programs is overwhelmingly biased towards expansion; hence, President Reagan’s quote about a government program being the closest thing to eternal life we will see on earth.  Federal government programs almost always, if not always, end up being more expensive than originally planned, and the federal government is already mortgaged to the hilt.

This is likely a one-time, irrevocable decision.  Once the genie is out of the bottle, we will not be able to put it back in.  That is why it is so important that the legislature have a say in this.

CLOSE

Georgia faces even more significant financial challenges in healthcare in the future.  Specifically, there are the aging Baby Boomers.  Georgia’s Medicaid program already pays for over 75% of the $1 billion in nursing home care expense in the state.  These costs will rise at an accelerating rate as the largest population group ages.  Our severe physician shortage will be difficult enough to address with 40% of counties lacking a pediatrician or general surgeon and half without an OB/GYN.

Expanding Medicaid will exacerbate our current problems before we even get to tomorrow’s.  HB 990 does not purport to offer a solution, but rather resists making it worse, and certainly, our state could make great progress if given the opportunity by Washington D.C. to devise our own solutions.  

I’ll close by letting you get to know Brendan Mahoney whose experience was tweeted out by a senior White House communications director (Tara McGuinness) who focuses on outreach for ObamaCare.

Brendan is a 30-year-old, third year law student at the University of Connecticut.  He’s actually been insured for the past three years – in 2011 and 2012 by paying for a $2400-a-year school-sponsored health plan and in 2013 through a high-deductible, low-premium plan that cost about $39 a month through a UnitedHealthcare subsidiary.  But Brandan wanted to see what ObamaCare had to offer.

After going on the federal exchange, he obtained insurance through ObamaCare with an even lower premium than the $39 he was currently paying.  How low? Zero.  After filling out the application online, he discovered he was eligible for Medicaid.  In 2014, ObamaCare transformed a future lawyer who was already paying for insurance into a welfare case.

With that, Mr. Speaker, I’d be happy to answer questions if there are any.

Q and A

WHAT WILL HAPPEN TO THE UNINSURED POOR IF WE DON’T EXPAND?

As many as 30 percent will continue with their current coverage.  Some will leave their part time or entry level jobs and move to jobs with insurance or purchase their own.  

·    And whether you agree with the federal exchange subsidies or not, many can obtain coverage and subsidies now, those between 100 and 138% of the Federal Poverty Rate, through the federal health insurance marketplace.

But I can say this, means-tested, job trapping Medicaid expansion is not the solution for the rest.

Five in six new enrollees would be between the ages of 19 – 54, prime working years for most Americans and 90% would not have dependent children.  An able-bodied adult, working full-time at 40 hours per week for 50 weeks per year at a job paying $8 per hour would earn $16,000 annually, just placing that individual above the 138 percent Federal Poverty Level cutoff for Medicaid eligibility. Sadly, Medicaid expansion will exacerbate the existing poverty trap by providing benefits to adults able to work.  And by the way, Georgia offers PeachCare to children with family incomes up to $46,000 yearly for a family of 3 and $55,000 for a family of 4.

Rather than perpetuating a law that includes perverse incentives that discourage work, Congress and the President should reform America’s tax and welfare system to encourage initiative and hard work.  Expand work requirements for able-bodied adults.  Reaffirm the importance of marriage by eliminating marriage penaties in all entitlement programs and restore Medicaid’s focus on the neediest citizens.

·    RURAL HOSPITAL CLOSURES
But, let’s talk about the rural hospital issue briefly, because it is a good example of how Obamacare is presented as the solution to a problem that it is actually making worse. We have heard a lot recently about the lamentable hospital closures in four rural communities.
o    Charlton Medical Ctr. – Folkston
o    Stewart-Webster Hospital - Richland
o    Calhoun Memorial - Arlington
o    Lower Oconee Community Hospital – Wheeler Cty.

These closures are tragedies for these communities and present real hardships for those Georgians who now have to travel great distances to access care.

To suggest that expanding Medicaid is the silver bullet that will solve this problem is a false promise.  Just as there is no single cause to the issue of rural hospital closures, there is no single solution.

3 of the 4 closures occurred prior to any opportunity for expanded Medicaid, and the 4th occurred less than two months after expansion could have happened, so to suggest that not expanding Medicaid is responsible for these closures would strain credulity. Rather, another facet of Obamacare has directly contributed to the financial strain that faces Georgia hospitals – declining Medicare payments  and Disproportionate Share Hospital cuts by the feds.

The federal government is leaving rural hospitals to wither on the vine, in part because of ObamaCare.

Heritage data analysis shows that over time, Medicaid spending will accelerate and dwarf any projected uncompensated care savings.  These savings are also contingent on states enacting legislation to further reduce uncompensated care funds DSH payments on top of the $18 billion of federal cuts enacted under ObamaCare.

A quick look at recent Georgia history demonstrates the General Assembly has been supportive of rural healthcare.  

Currently, rural hospitals receive state-authorized tax-favored status and are reimbursed at higher rates through the Critical Access Hospital designation.  In the budget this House just passed, we included additional support for medical education in rural areas, provided funds for emergency air ambulance transport for the critically injured, increased loan repayment awards for doctors to practice in underserved areas, and increased funding for the trauma system.  These are Georgia specific solutions for Georgia problems and represent the fruits of the hard work of governing – not at all like one size fits all solutions from Washington, D.C.

The solution involves jobs and economic development for these communities, not dumping more people into a strained system.  I reject the suggestion that we must accept this Obamacare money to fill the hole that Obamacare punched in the local hospital’s balance sheet.

JOBS
I do not support treating a government-funded healthcare program as a wildly inefficient jobs program.  The Medicaid expansion would simply transfer economic decisions on how to spend money in the private sector to Washington D.C.

In fact, expanding Medicaid would reinforce and increase the job losses estimated by the Congressional Budget Office due to individuals working less hours and for lower wages to qualify for Medicaid or federal exchange subsidies.  Additionally, businesses will have a government-induced incentive to create more entry level, lower paying jobs and for fewer hours so their employees qualify for Medicaid, thus relieving them from assuming the federal mandate to provide insurance.


FINAL REMARKS AFTER DEBATE CONCLUDED
On matters of great consequence that require state intervention, financial and otherwise, the Georgia General Assembly should be at the table.  HB 990 pulls up a chair for the legislature.

HB 990 would create a much more arduous path for Georgia to increase the income threshold to expand Medicaid.  More thought and consideration, more transparency and more popular representation in decision-making is a good thing.
 
Expansion would change Medicaid’s historical nature in Georgia from a safety net for the vulnerable to a means-tested entitlement that would establish disincentives for higher paying, full-time jobs, disincentives for marriage, and burden the state budget increasingly over time and long after each one of us are sitting in this chamber is gone.

Georgia should preserve its ability to cut taxes, invest in roads, invest in safety and invest in education.  Expanding the program would make it harder to invest in programs that will grow the private sector, not the government sector, and reduce our tax burden. 

Given the results of several studies, which at the very least raise serious doubts about whether expanding Medicaid will result in the promised health benefits, states should be given the flexibility to design their own programs for their own populations rather than implementing a one-size-fits-no-one Washington mandate.  The Obama administration has denied multiple requests by states to target expansion, impose stricter anti-crowd out policies, require more robust cost sharing, allow feasibility on benefit design or the use of premium assistance, or otherwise mitigate an unnecessary displacement from the private sector to the public sector.  We should design our policies so that more people are pulling the cart than riding in the cart.  We should measure success by reducing the number of people on public assistance, not more.  We need policies that grow the economy, not simply redistribute a shrinking pie.

For these reasons, I ask that you join me in voting for HB 990 and allow the legislature to assume its responsibility on this very important issue.  With that, Mr. Speaker, I yield the well.

Posted by Beth in Uncategorized on 3/5/2014