Jim Tallon: Breaking a Fifty-Year Compact

Release Date: 05.19.2017

New York has overwhelmingly embraced the Affordable Care Act, taking advantage of subsidies for the purchase of individual insurance coverage through New York State of Health; expanding our Medicaid program with the aid of enhanced federal support; and creating the Essential Health Plan, offering insurance with nominal premiums to more than 600,000 people, including 250,000 legally resident immigrants who had previously been covered at State cost.

By any measure, this has been a success story. The proportion of state residents without insurance has plummeted from 13 percent to the single-digit range, the culmination of several decades of effort to reduce the numbers of uninsured.

On May 4, the House of Representatives passed a new version of the American Health Care act, which would replace the Affordable Care Act. This bill would not only cause significant disruption in New York of individual insurance markets and the Essential Health Plan, and increase costs for those with pre-existing conditions, but would also make broad—and damaging—structural changes to the Medicaid program, which in New York covers almost a third of the state’s population.

A FUNDAMENTAL SHIFT
At its core, Medicaid performs four connected, critical functions. First, in any given month, it provides payment for the basic health needs of 6 million low-income New Yorkers. Second, it covers 1.3 million elderly and disabled people with a wide range of chronic or disabling conditions. Third, it supplements the costs of Medicare for 850,000 beneficiaries and is the de facto payer for nursing home and other long-term care services. And fourth, it gives direct subsidies to the institutions that make up the health care safety net.

The American Health Care Act would repeal additional financial support for approved coverage expansions and, more importantly, cap the growth of Medicaid expenditures in future years. At its heart it upends the federal-state sharing of Medicaid costs that has guided the program for more than 50 years.


The approach taken by the American Health Care Act
breaks apart the federal-state compact in effect since 1965
and challenges all we have tried to accomplish
in New York’s health care.


The hundreds of billions of dollars the plan would reportedly save in federal Medicaid expenditures over the next decade in fact represents a shift in costs: to state budgets, to health care providers, or to beneficiaries in the form of reduced services.

For New York, the proposed legislation provides a particularly tough challenge, one with potentially broad, and meaningful, effects on our entire health care system. Over the decades the State has combined Medicaid’s robust insurance coverage with efforts to advance both quality and cost discipline in the delivery of services—moving from highly regulating the commercial insurance industry, through all-payer rate setting and managed health care, and into the current push for value-based payments.

Since the administration of Nelson Rockefeller, successive governors have continued their bipartisan policy initiatives, with legislative support and often with waivers of federal Medicaid rules.

IMPACT BEYOND MEDICAID
While other states have used Medicaid primarily to expand coverage, New York has leveraged the program not only to provide access to care for millions but also to guide the use of resources and control health care cost growth. Whether in low-income communities or elsewhere, Medicaid has become an integral part of the structure of service delivery.

In New York it would mean an estimated million people losing coverage, the inability to support health care providers, and the loss of the policy construct linking coverage to quality and cost control—all threats with ramifications far outweighing any budget impact.

The approach taken by the American Health Care Act breaks apart the federal-state compact that has been in effect since 1965. Altering that underlying shared responsibility undermines the basic concept of federalism on which Medicaid was constructed.

This change would also challenge all we have tried to accomplish in New York’s health care over the last 50 years. Along with hurting poor people and those with significant health care needs, it would weaken our entire health care system. As the U.S. Senate now considers this bill, the health of many New Yorkers, and other Americans, hangs in the balance.

An earlier version of this commentary was published in UHF's Spring 2017 Blueprint newsletter. This updated version reflects the recent passage, by the House of Representatives, of the AHCA.

 

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