Right now all eyes are on the election, but insofar as the state legislature is concerned the outcome has already been determined. The republicans will maintain control of both chambers, and Governor Abbott will remain in office. The only question is the final seat count in both chambers. To that end, it’s time to start thinking about what bills can be enacted next session with a bipartisan coalition. Although the two parties hold differing ideological viewpoints on Medicaid, expanding HIPP should have bipartisan support for expansion.
The HIPP program
Expanding the HIPP program is a rare instance of where a social service expenditure is directly fiscally beneficial to the state. The HIPP program is a special program that becomes available when someone in the family has Medicaid. Information on the program can be found here. The short version is when an individual obtains Medicaid the state Health and Human Services department does a cost/benefit analysis regarding Medicaid payments.
How does the state benefit? Medicaid is the payor of last resort, so any insurance coverage pays before Medicaid pays. HIPP is a separate benefit application that the Medicaid recipient can file once they obtain Medicaid. With this application, Medicaid determines whether it’s more cost effective to provide care without insurance, or if it’s more cost effective for Medicaid to pay for the health insurance premium and the out of pocket limit. HHS then acts in the most cost effective manner. The state benefits because 1) HHS only reimburses if that’s the more cost effective route, and 2) they reimburse after proof of payment is sent to HHS.
Expansion would be beneficial to both the state as well as the recipients in two areas. First, the application is an affirmative act taken by the Medicaid recipient. Without the application the analysis never occurs. HHS should be directed to do the analysis for every Medicaid recipient in order to cut costs. A second area of expansion is enlarging the number of Medicaid recipients who are eligible to participate in the program.
In order to be eligible for HIPP participation the Medicaid recipient’s insurance can only be through an employer insurance program. If the Medicaid recipient has insurance through the marketplace they are ineligible. Since Medicaid is need based most recipients who have private insurance do so via the Obamacare tax credit. However, once the recipient obtains Medicaid they are no longer eligible for the tax credit. As a result, they are better off dropping private insurance and relying on Medicaid to provide coverage. Expanding eligibility to marketplace plans will keep more recipients insured and lower state expenditures.
We live in highly toxic political times. This not only holds true on a republican versus democrat scale, but also in regard to intraparty fighting. However, expanding HIPP is one of the rare actions that checks the ideological box for all sides. The fiscal conservatives see the state reduce overall expenditures. Social conservatives and democrats see social services expanded to provide additional care to those in need. Politics sometimes makes strange bedfellows. This is one area that a bipartisan coalition could be cobbled together to serve the interest of both the needy as well as the state.
“Medicaid determines whether it’s more cost effective to provide care without insurance, or if it’s more cost effective for Medicaid to pay for the health insurance premium and the out of pocket limit. HHS then acts in the most cost effective manner.”
“Since Medicaid is need based most recipients who have private insurance do so via the Obamacare tax credit. However, once the recipient obtains Medicaid they are no longer eligible for the tax credit. As a result, they are better off dropping private insurance and relying on Medicaid to provide coverage. ”
Who is HHS trying to provide the most cost effective outcome to? The state? the individual?
I carry a large sack of skepticism around when I see an assertion that makes a case that government does a better job than the private sector for any given endeavor. In that second paragraph about being better off dropping private insurance and relying on Medicaid. I take that as being a financial incentive to rely on the state. Where does the state get the money?
Greg Degeyter says
It’s a dollars and cents analysis. The patient’s doctor orders treatment. The question analyzed is which is more expensive – Medicaid paying at the set reimbursement rate, or Medicaid paying for the health insurance premium and the out of pocket limit. Medicaid then chooses the least expensive option.
Insofar as the second point goes, like it or not human nature drives the Medicaid recipients to act in the most fiscally responsible manner. If it becomes less expensive for the recipient to drop private insurance and rely on Medicaid that’s what they are going to do. The way the law is once an individual receives Medicaid they lose the Obamacare tax credit. If the state would benefit from HIPP expanding to marketplace coverage then that’s the fiscally responsible course of action by the state.
Asking where the state gets the money is a red herring. This type of situation only applies when the individual is already receiving Medicaid.
Let me use my son as an example. He just turned one and only weighs 14 pounds because of his health issues. He has a finding of disabled from Social Security. If Medicaid/HIPP were to apply to him the question would be whether it’s less expensive for
1) Medicaid to pay for the 4 hospitalizations this year, the ongoing ECI intervention, the 9 hour surgery in May to remove his large intestine, the ongoing special formula since he is so underweight, the ongoing feeding pump use, the ongoing speech therapy to strengthen his mouth/throat muscles which have atrophied and prevent him being able to be bottle fed for fear of aspiration, the numerous physician follow up visits, etc.
2) HIPP to pay the health insurance premium and the $7,250 out of pocket limit.
In his case, the answer is self evident, option two would be less of a burden on the state, if HIPP/Medicaid applied. This is the type of analysis that needs to be done for every Medicaid recipient. Regardless of whether someone should be on Medicaid isn’t the issue. Once they are the state is obligated to pay and the analysis is a question of what can the state do to reduce expenditures.
Greg Degeyter says
Dan, here’s some figures for context.
The state portion of Medicaid responsibility is established in the Social Security Act, and Section 1905(b) of the Act specifies the formula for calculating state portion of responsibility.
In FY 2016 Texas was responsible for 42% (rounded) of the Medicaid expenditures. This ended up as $17 billion (rounded) in FY 2016.
While reasonable minds can disagree on the ideology aspects of Medicaid the state can’t force changes to the federal law. What the state can do is find ways to work within the federal law framework to lower the $17 billion expenditure.
Expanding HIPP is one way to do so.
The cost of the care is still on society whether it is paid by Medicaid or a health insurance company who has to raise rates due to the higher costs associated with paying for this care. Society saves nothing with this program, it’s just a question of do we pay more in taxes or more in insurance premiums.
This program will always cost more in the end because the health insurance company has to make a profit, so the costs have to be covered in addition to the profit required. This program will hurt the average citizen more than simple Medicaid hurts us.
The solution is to get rid of socialized medicine. We need to elect State Reps with the conservative Values to recognize that eliminating Medicaid is the answer to our healthcare woes.
Greg Degeyter says
Medicaid isn’t going anywhere, and Texas had to pay $17 billion in FY 2016. The question becomes how can the state still comply with the various federal laws and reduce that $17 billion?
The nation doesn’t want change to Medicaid. Kaiser Family Foundation polling data from February 2018 shows 74% of the public “views Medicaid favorably”, and 52% “believe the Medicaid program is working well.”
With those polling numbers any substantial change to the program would have a difficult path through the House. If changes could get through the House they would be dead on arrival in the Senste. Medicaid here to stay.
Arguing for change from an ideological reasoning standpoint isn’t going to be beneficial to the GOP. This issue is especially succeptible to the Heartless Republicans narrative because 70% of the population has a connection to someone who has been covered by Medicaid at some point. Ideological reasoning also further alienates the fiscal conservatives since the Republican subset of the polling data was 65% favorable opinion.
If you want to see the Ted Cruz/Empower Texas wing of the party wither away keep making the argument that the fiscal conservatives are the ones with conservative values. Thankfully, the aforementioned have the sense to understand the GOP is a big tent and work together with social conservatives.