Report From Michigan: What State Residents Stand To Gain From Health Reform

Apr 19, 2010

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On their way to Washington last week, Tea Party activists stopped in Lansing, Michigan. And among the officials who addressed them was Mike Cox, the state’s Republican attorney general. Cox recently announced he would be among more than a dozen state officials filing lawsuits challenging the constitutionality of health care reform. And, at the rally, he whipped the conservative crowd into a frenzy: “Can’t you just see them running around (Washington) D.C. saying, ‘So much to spend, so much to spend, so little time to spend it’?”

Most legal experts seem to think the lawsuits won’t succeed. Among other things, it turns out that the U.S. fought a large war, about a hundred and fifty years ago, in order to settle the issue of state nullification. But if the officials filing these suits seem not to understand that history--or at least, not to care about it--their opposition to the Affordable Care Act, like their supporters’, seems genuine. If they had their way, their states really would reject the new health care law.

Particularly since many of these officials are running for even higher office, it’s worth asking: What would happen to their states if they succeeded?

Consider Michigan, where Cox is running for governor and where, it so happens, I live. Despite the state’s economic troubles, the percentage of residents without health insurance is actually lower than the national average. Still, it’s more than 1.1 million people--and there would be even more of them in the next few years if we were stuck with the health care system we have today.

But we’re not stuck with the health care system we have today. Reform is now law of the land. And, as a result, there won’t be an increase in uninsured. In fact, the number should fall—dramatically.

Thanks to the Affordable Care Act, the vast majority of the would-be uninsured should gain access to affordable insurance. Based on the official estimates, around 400,000 of them will get it through Medicaid, which the Act will expand. Most of the rest will get them through the new insurance exchanges--that is, the new regulated marketplaces through which individuals and small businesses will be able to purchase the same sort of coverage large businesses get.

The people shopping in the exchanges should have more choices than they do today and the choices will be, by and large, good ones: plans with comprehensive basic benefits, no exclusions or higher rates for pre-existing conditions and lower. Those who can’t afford even these reduced premiums will be eligible for generous tax credits, so that premiums never go higher than around 10 percent of income.

Does Michigan’s Cox prefer a world in which families making $45,000 a year miss out on thousands of dollars in tax credits? Where people with pre-existing medical conditions have to pay astronomical rates on coverage, if they can get insurance at all? Does he think those 400,000 people set to get Medicaid coverage would be better with no insurance? And, if so, has he taken this up with the professionals and hospitals struggling, every day, to provide charity care for these people?

To be sure, Cox and his supporters aren’t necessarily very worried about the uninsured. Recent polling suggests the Tea Party movement is relatively affluent and their protests certainly suggest their primary concern is that reform could diminish the insurance coverage they currently have. (They seem unaware that the market will likely diminish that coverage all on its own.)

The full name of the health care law is the Patient Protection and Affordable Care Act. And there’s a reason for that “Patient Protection” part: The law also bolsters coverage for those people who have it. It eliminates cost-sharing for preventative services. It imposes a binding appeals process for people who think insurers wrongly denied treatments. It forces insurers to spend more on patient care and less on overhead --and that’s not to mention the many people who pay for insurance now, but will pay less starting in 2014, thanks to the tax credits.

Perhaps Cox should explain to Michiganders why, in his view, they should keep paying out-of-pocket fees for regular checkups, why some insurers should continue to have unchallenged authority to overrule doctors on treatment and why it’s better if stockholders take a bigger chunk out of everybody’s premium dollars. And while Cox is at it, perhaps he can explain to senior citizens why they should continue to get stuck in the donut hole of Medicare Part D--the gap in prescription drug coverage that the Affordable Care Act would gradually close.

To be fair, it's not the coverage and access benefits that Cox and other state officials are talking about in their speeches. It's the threat of what "socialism" will do to medical care. It’s the burdens the new law will supposedly place on their states, businesses and citizens. But while plenty can go wrong as the new law comes on line--just watch how quickly insurers find loopholes in the regulations--most of the state officials’ complaints don't really hold up under scrutiny.

Just consider what they are saying about Medicaid. The federal government and states run Medicaid jointly, which means that if the program expands states will have to spend more money on it. But look more closely at the law: For the first ten years, according to the Congressional Budget Office, the federal government is going to cover 98 percent of the cost of the Medicaid expansion. The federal contribution declines after that, but only to 90 percent. So for every additional dollar the states put into Medicaid, they’re drawing in nine from Washington. Does Cox really want to turn down that money?

And, oh yes, the Affordable Care Act would do one other thing. It would put in place a whole series of cost-cutting measures designed to promote quality medicine and, over time, curb the year-to-year spikes in health insurance premiums. The law would encourage coordination among health care providers, begin to scrutinize treatments for comparative effectiveness and link hospital payments to performance, among other things.

Does Cox think Michiganders are better off when their physicians don’t consult with one another, when they pay more for inferior treatments and when Medicare continues to pay high reimbursements to hospitals that take the simple steps necessary for preventing infections around catheters? For that matter, does he think Michigan businesses--already struggling with health care costs--prefer a world in which the government doesn't start to reduce overall health care spending?

Of course, what’s true for Michigan is true for the rest of the country. The state officials leading the nullification campaign in places like Idaho, Minnesota, and South Carolina talk a lot about what their citizens stand to lose as the Affordable Care Act takes effect.

But the real loss will be if, somehow, the opposite were to happen--and the people living in those states were left dealing with the same dysfunctional health care system that exists today.