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More Reason for Cynicism about Medicaid Expansion

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More than 300,000 Virginians have something today they didn’t have last year — health insurance through Medicaid, observes Virginia Public Radio. What they don’t have is a primary care physician. Many are still seeking primary care treatment at hospital emergency rooms.

Admissions to the emergency room of Norfolk General Hospital have increased 7% this year. One hoped-for benefit of Medicaid expansion is that more patients would seek treatment outside the emergency room, one of the most expensive settings for medical treatment. Clearly, that benefit has not materialized. “There’s a whole behavior modification and teaching and education that needs to happen,” says Sentara Norfolk General President Carolyn Carpenter.

Yeah, that…. and there’s a Medicaid-patients-finding-a-doctor thing that needs to happen, too. Due to low reimbursement rates, many primary care physicians cap the number of Medicaid patients they treat.

One would think that Governor Ralph Northam, a physician, would appreciate this. But other than allowing more latitude for nurse practitioners to treat patients, I have seen no remedies proposed by Virginia’s ruling class to address the most significant of all barriers to health care. The inaction calls into question how serious people really are about expanding real health care coverage for the poor.

In retrospect, Medicaid expansion increasingly looks more like a gimmick designed to accomplish two goals: (1) generate a major new income stream for special interests in the health care sector, while (2) allowing the ruling class to pose as champions of the poor.

Virginia hospitals are now flush with Medicaid cash. An oft-touted benefit of expansion was that hospitals would reduce their losses from charity care and uncompensated care, which would allow them to… Well, it was never clear exactly what hospitals would do, but the results were implied to be socially beneficial. However, as recent news reports have highlighted at Mary Washington hospital and the University of Virginia health system, at least some hospitals have been pursuing collections as aggressively as ever. (Trust me, they aren’t the only ones.) Due to lengthy reporting delays, Virginians won’t know the impact of Medicaid expansion on hospital profitability for another couple of years, but I’ll hazard a guess — revenues and profits will surge.

Meanwhile, hospitals are helping finance Medicaid expansion (the bulk of the funds are coming from the federal government) through a tax on revenue. No word yet on how the industry is absorbing that tax. But I’ll hazard a guess — they’re passing on most of it to payers of private insurance.

Another beneficiary of Medicaid expansion is the medical insurance industry. Rather than rely upon the inefficient fee-for-service system, DMAS is outsourcing managed care programs to private insurers. Maybe those plans will provide enrollees superior access to primary care physicians, maybe they won’t. We’ll have to wait and see. But I’ll hazard a guess — emergency room visits will continue growing.

This commentary originally appeared in the September 18, 2019 edition of the online Bacon’s Rebellion.

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