Reconciliation Bill Tosses New York a Fiscal Hand Grenade

Obamacare on Steroids – Destiny: New York State

While New York Democrats are celebrating Obamacare, someone has not read the fine print when it comes to Medicaid.

THE FOUNDRY

“New York Governor David Paterson, for one, has pronounced himself pleased with Speaker Pelosi’s solution and Democrats in New York’s congressional delegation are patting themselves on the back for securing this promised ‘improvement’ to the Senate bill.

However, New York’s taxpayers and state legislators — as well as those in a some other states, most notably California — might be interested to learn that the Speaker’s bill also tosses them a Medicaid fiscal hand grenade with a five-year fuse attached.

Specifically, section 1202 of the reconciliation bill requires state Medicaid programs to pay primary care doctors rates for Medicaid patients that are equal to Medicare rates for two years in 2013 and 2014. This mandated physician pay hike would apply to services provided to all Medicaid patients, not just the ‘expansion population….’

So what is the problem? Well, for a lot of states section 1202 will not be a problem, but for some — especially New York — it triggers a countdown to a state budget fight in five years.

To understand how and why that is so, one first needs to recognize a dirty little secret about Medicaid. Namely, the states that have expanded Medicaid eligibility to more of their populations have limited the cost of those expansions by slashing Medicaid physician payment rates. Of course, physicians in those states risk going broke if they see too many patients whose Medicaid reimbursement is less than the doctor’s costs, so most of them refuse to participate in Medicaid. The result is that those states have both the largest Medicaid rolls (as a percentage of the state’s total population) and the worst access to care and quality of care for Medicaid patients.

Put another way, some states like New York have already implemented in their Medicaid programs the classic leftist health care con job of offering more people government health insurance coverage that not only doesn’t increase, but actually decreases, their access to medical care.

The most recent available data from 2006 show that over one-quarter of New York’s population (27 percent), or more than 5.1 million individuals, are covered by Medicaid, but New York’s Medicaid program pays primary care doctors only 36 percent of the rates that they get for providing the same services to Medicare patients.

So, when section 1202 takes effect in 2013, primary care physicians in New York will suddenly get paid nearly three times as much as they previously did for treating Medicaid patients. That will certainly be good for doctors. It will also be good news for Medicaid patients, as it will make it more likely for them to actually get medical care.

But then what happens twenty-four months later on January 1, 2015 when the federal funding to cover the extra cost of that pay hike, goes away? Will New York physicians simply accept a return to the status quo ante with an effective 64 percent cut in their Medicaid rates, and will Medicaid enrollees simply accept the reduced access to care that such a physician payment cut will entail? Not likely.

New York’s normal federal match rate for Medicaid spending is 50 percent. So if New York lawmakers are to keep in place after 2014 the physician payment increase imposed by section 1202, they are going to have to get their own — already overtaxed — state taxpayers to cough up half the extra cost.”

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