Medicaid Expansion: Statement by AAPS AZ Chapter

AAPS is opposed to the Affordable Care Act (ACA) because it is an unconstitutional program that forces citizens to pay money to private entities, ostensibly for a public purpose, and to support programs to which they have a moral objection, or else pay an extra “tax.”

ACA will drive up the cost of insurance and medical care; reduce the availability of care, intrude into the patient-physician relationship, and damage the economy.

States could prevent the implementation of ACA by declining to set up Exchanges or to expand Medicaid. We are disappointed that Gov Brewer, despite her expressed opposition to ACA, now supports a Medicaid expansion, and respectfully ask her to reconsider.

Instead, Governor Brewer and Arizona legislators should consider innovative and proven solutions that empower patients instead of bureaucrats and cut waste such as the Volunteer Physician Health Care Act under consideration in New Jersey.  This act is based on a real life charity care clinic where the cost per patient visit is $13 compared to $160 at a federally funded facility.

It’s like a game of Prisoner’s Dilemma: If all (or enough) states “cooperate,” meaningful reforms could be achieved. However, if too many “defect,” those who remain true to their principles will be disadvantaged (i.e. get less federal money) compared to those who defect.

The Medicaid expansion has been compared to the gift of a baby elephant plus hay for a few years. The Governor believes that if the federal government reneges on promised support, we can undo our decision. That would probably be as hard as shooting an elephant. But we would be dealing with real human beings who are now dependent on the program.

Tax revenues intended to pay for medical care for the poor are instead a cash cow to pad the salaries of administrators, managed-care companies, and hospital executives.

Looking at the 2010 Care1st Health Plan combined statement for Arizona and California, revenue was $651 million, expenses for “healthcare services” were $554 million, taxable income was $24 million, and “selling, general and administrative expenses” were $69 million. While it is not known exactly what is included in “healthcare services,” it is clear that at least $100 million in taxpayer funds went to just one plan for things other than patient care. (AAPS News, January 2013).

Betsey Bayless, the CEO and president of Maricopa Integrated Health System (MIHS) earlier in 2013 received “a hefty $125,000 raise. Her base salary soared 33% overnight, from $375,003 to $500,000 — excluding benefits.” (Seeing RedAZ Blog).

While the Arizona Medical Association has endorsed the expansion of AHCCCS, there is no evidence that the majority of physicians support it or, more importantly, would be willing to provide the promised medical services. Many physicians decline to participate because of:

  • Costly, burdensome administrative demands
  • Difficulty in getting patients the services they need
  • Ever-increasing threats of audits or even prosecution because of errors that are called “waste, fraud, or abuse”
  • Payment that does not cover their costs.

Many eligible patients also decline to enroll, but may be forced to do so to avoid the mandate/penalty/“tax.” This may swell the rolls owing to the “woodwork effect.” Some persons may even be enrolled automatically. Reasons for nonenrollment include:

  • The burdensome process of enrolling, and repeatedly re-enrolling
  • The difficulty in finding a doctor
  • Covert rationing by managed care of services that are “covered” but not approved
  • The estate recovery process that means that enrollees age 55 or older are receiving a collateralized loan that can be recovered from their assets after death

Materials supplied by AHCCCS make it plain that the estate may have to pay back the total provided to the AHCCCS program contractor even if that is much greater than the value of any services that were received. This is comparable to a 100% “death tax” on the middle class and poor with no threshold.

Questions that legislators need to answer include:

  • While many Arizona hospitals may need funds, hospitals receive only about 25 % of the funds that go to AHCCCS. Why not fund hospitals directly, without AHCCCS overhead?
  • The AHCCCS expansion is claimed to create jobs. What jobs? And how many jobs will be lost from taxes, crowding out private insurance, loss of facilities owing to AHCCCS regulatory costs and poor payment, and so on? Is the model for predicting jobs different from the one that inaccurately predicted that ARRA (the “stimulus”) would bring unemployment below 6%?
  • Is the bed tax a tax or not? How can it be a “tax” to meet requirements for attracting federal dollars, and “not a tax” for meeting requirements for raising taxes? If it is argued that hospitals aren’t really paying the tax because more dollars come back from Washington than are sent, how does this dollar multiplier work despite the administrative losses? And do the same people get the revenue as paid the tax? If hospitals don’t pass along the tax to patients, where does the money to pay it come from?
  • Should the State of Arizona engage in systems gaming and word play to extract more dollars from federal taxpayers? Is this a form of fraud? Aren’t accounting gimmicks like the bed tax likely to be prohibited in the future?
  • If the State of Arizona supports the principle of systems gaming to get more tax dollars back than it puts in, it can hardly complain if other states beat us at the game. How can we be sure that we will stay ahead and be a tax recipient rather than tax donor, especially given this Administration’s history of actions damaging to Arizona? Why should we send any optional taxes, on the gamble of getting a bigger return?
  • People who earn a little too much lose their Medicaid benefits, the equivalent of a greater than 100% marginal tax rate. How does this affect work incentive and tax compliance?

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