This critique has been updated 4 times, most recently on April 3, 2018. Click here to jump to that update.
A PolitiFactoid.com Critique of...
What’s At Stake For States That Reject Medicaid Expansion
as reported by John Ydstie, NPR Morning Edition, Dec 11, 2013
(click here for the story at NPR.org)
When I heard Ydstie report this story, I could not help but wonder why these people are rarely held accountable for the nitty-gritty details behind their erroneous and/or slanted reporting. It really irritates me to hear that sort of thing, regardless of the source, but especially coming from news outfits that are supposed to be "impartial" and "reliable." We all know by now that there's almost no such thing. In any event, see below for PolitiFactoid.com's critique of this particular story. The critique appears in dark blue, indented type amid excerpts from Ydstie's report.
Story intro, read by Morning Edition host Steve Inskeep:
The Affordable Care Act has caused a huge jump in Medicaid enrollment. The federal government has offered billions of dollars annually for states to expand Medicaid coverage to everyone below the federal poverty line. But, more than 20 states rejected that offer. NPR's John Ydstie reports on the financial cost of rejection.
The story gets off to a bad start with this misleading introduction.
The ACA calls for states to expand Medicaid eligibility to 133% of the federal poverty level (FPL), not simply for “everyone below” the FPL. Inskeep’s intro indicates that states could accept billions in federal funds to expand Medicaid for everyone below the FPL, but in reality, states don’t have that option.
States have asked for that option, but the Obama administration has refused to waive this aspect of the ACA and allow states to limit the expansion, thereby requiring an all-or-nothing approach, i.e. all the way to 133% of FPL or not at all (in order to receive all that new enhanced federal funding). See item 26 on page 12 of this document.
Also, the ACA actually requires the income threshold be set at 138% FPL due to a 5% income disregard built into the law. States cannot limit the expansion to 100% of FPL and still receive all those new federal funds, but Inskeep’s intro makes it sound like they can.
Originally the Affordable Care Act required states to expand their Medicaid program. But the Supreme Court ruled that the federal government couldn't force states to do so, and many didn't, including Virginia. The state's governor, Bob McDonnell, didn't respond to NPR's request for an interview, but in a recent appearance on MSNBC, he explained his rationale.
McDonnell sound bite:
What we've said in Virginia is, 'We're not opposed to it philosophically,’ but until we have dramatic reform in the Medicaid system that's grown 16-hundred percent in 30 years, that it wouldn't be responsible to do that.
McDonnell also said that he fears the federal government will eventually reduce its funding and leave states holding the bag. The problem is that not expanding Medicaid creates a group of poor people who fall through the cracks, people like Katherine Coons who lives in St. Petersburg, Florida.
Coons sound bite #1:
I'm not able to get assistance through the state, and I'm not available to get assistance through the federal government to help pay for health care.
Ydstie leaves out an extremely important aspect about eligibility for subsidies through the ACA insurance exchanges. There’s a huge loophole for people to receive subsidies even if they might not qualify for a subsidy.
Here’s how it works: If your modified adjusted gross income (MAGI) is between 100% and 400% of the FPL, you’re eligible for subsidized private coverage through an ACA exchange. If your MAGI is less than 100% FPL, you’re not eligible for subsidized private coverage because the law assumes you’ll be eligible for Medicaid (as you would be if the ACA’s expansion requirement had not been struck down by the SCOTUS).
So, if your MAGI is less than 100% FPL and you’re not Medicaid eligible because you live in a state that hasn’t expanded, you’re just stuck out in the cold, right? That’s what Ydstie would have us believe.
However, the Obama administration has decided to implement the MAGI requirement in such a way that will allow people to make an “honest mistake” when estimating their MAGI for the coming year (say 101% of FPL), which will qualify them for subsidized private coverage. At the end of the year, if it turns out they didn’t actually qualify for the subsidy because their MAGI didn’t live up to the estimate, they will not be penalized in any way or be required to pay back the subsidy that they didn’t qualify for.
This is not a prediction or a matter of opinion – it is fact. See the story at Kaiser Health News, which contains the following excerpt:
Everyone applying for subsidies must estimate their 2014 income. For the poor, the difference between qualifying – or not – could be $1,000 or less a year. Since many rely on hourly or seasonal work, their incomes often fluctuate by a few thousand dollars each year. That's one reason why people often lose eligibility for Medicaid, the state federal insurance program for the poor.
While there are steep fines for knowingly lying on a government application for financial assistance, if someone merely miscalculates their income above the poverty level in 2014, and is later found to have made less than the poverty level, they won't have to pay any money back, according to the Treasury Department.
Why would Ydstie not report this? It has a direct bearing on the topic being addressed. However, it would undercut the point he was trying to make with the Coons example.
Coons is a 32-year-old college student. She and her husband, who works two part-time jobs, make too little money to get subsidies in the health care exchange and they don't qualify for Florida's Medicaid system, which doesn't provide health care to childless adults. Each state sets its own Medicaid eligibility requirements. Coons, who suffers from a serious endocrine system disease, says Florida's decision not to expand coverage is infuriating and unfair.
Coons sound bite #2:
It's so frustrating because I know it's all politics. It just feels like while they're playing – you know – political games, people like me are suffering.
At this point, Ydstie uses Coons' comment about politics as an invitation to turn the story into an attack on Republicans. (Why would he do that?) Ydstie highlights an alleged political motivation for Republicans to reject Medicaid expansion but gives only token mention to the possibility that other factors might have been involved, such as valid and compelling fiscal realities.
In fact, all the governors who refused the Medicaid expansion are Republicans. Sandy Praeger, the Republican insurance commissioner in Kansas, who supports the ACA and Medicaid expansion, says their decisions were political.
Praeger sound bite:
That became sort of the method of trying to, um, derail the Affordable Care Act, was just to not participate in any part of it.
Note how Ydstie puts words in Praeger's mouth. "Political" doesn't appear in her sound bite, neither directly nor by implication, but Ydstie used that word to describe her comment. Her sound bite indicates an intent to "derail" the ACA, but the sound bite says nothing about politics or motivation.
Why does Ydstie or anyone assume that an attempt to “derail” the ACA must be motivated by politics? As the ACA implementation rolls out, we’re seeing more and more signs that the law was simply a bad idea that should never have been enacted or implemented at all (click here and here and here and here for four sources among many examples). Maybe an attempt to derail the ACA is simply good public policy, not politics. Ydstie never mentions that.
Assuming Praeger did inject politics into the discussion, Ydstie gives us no context. Praeger seems to have taken leave of her Republican sensibilities when it comes to the ACA. See this story in The Wichita Eagle, which describes her image as "a GOP misfit out of step with her party." Ydstie gives us none of that context and he chose a Republican "misfit" to opine about the motives of fellow Republicans and the outcomes of their policies.
I wonder if Ydstie does that with Democrats.
Praeger says the governors are doing a disservice to poor people in need of health care and a disservice to their state budgets, and several studies support that conclusion, including one from the policy think tank Rand that focused on 14 states that have declined Medicaid expansion. Christine Eibner is one of the co-authors.
Eibner sound bite:
What we found is if those states don't expand Medicaid, there are going to be 3.6 million people fewer insured through the Affordable Care Act. But, additionally, those states are foregoing about $8.4 billion in federal transfer payments that would come in to support the Medicaid expansion.
The ACA requires the federal government to pay for 100% of the cost of Medicaid expansion in the first two years, with the federal share eventually falling to 90%. Eibner says that the Rand study shows that the federal dollars flowing into the states that expand Medicaid will boost their economies and that their state budgets will benefit as Medicaid replaces state-funded health care programs for the poor...
Several important points here:
- Eibner’s numbers are all estimates. Nothing guarantees that $8.4 billion in federal dollars would be spent in the states in question. Ydstie does not point that out, opting instead to allow Eibner’s statement to stand as if it’s factual. She does not represent it as an estimate; she says it as if it’s a fact.
- The Rand study might predict that federal dollars for expansion will boost state economies and benefit state budgets, but once again there’s no guarantee of that. In order for that to happen, the federal dollars have to actually be spent and lots of things would have to fall into place in certain optimistic ways.
The expansion of eligibility does not mean more health care services will be provided to the extent estimated, for many reasons. If the services are not provided, the states don’t receive the corresponding federal dollars. There’s no guarantee that millions of new Medicaid recipients will be able to find health care providers to take Medicaid. Current recipients already have a difficult time finding doctors who take Medicaid, even without the larger number of recipients who are about to begin competing for attention. An expanded program does not guarantee expanded services. Note: See Update #1.
- Even if you believe $8.4 billion in federal funds is being left on the table by non-expansion states, where do people think that money would come from? The federal government is already broke – very broke. The $8.4 billion increase in federal Medicaid expenditures would simply increase the government's deficit and debt. How would that be good? Why didn't Ydstie ask Eibner to comment on that?
- See Update #3.
...but Joe Antos is skeptical. He's an economist and health care specialist at the American Enterprise Institute. Antos argues increased federal taxation for Medicaid expansion will put a drag on the U.S. economy overall.
Antos sound bite #1:
Some states will see some growth because of the additional federal spending, but other states will see some shrinkage.
Before getting to Antos, Ydstie had spent 1 minute and 5 seconds to support the notion that states were making a fiscal mistake by not expanding Medicaid and cited a Rand research study to that effect. In giving time to the other side of that argument, Ydstie spent only 23 seconds, cited no research to offset the Rand research, and played an Antos sound bite that actually contains more words supporting the Rand research (12) than debating it (7).
Is this the best Ydstie could do to illustrate the other side of the argument? This looks like a poster-child example of a reporter making a token effort to tell the other side of the story only because he had to (in order to maintain the appearance of objectivity).
If you go to the AEI's web site and search for the ACA, you find dozens of studies and white papers that analyze the ACA's shortcomings in excrutiating detail. For some reason, Ydstie doesn't delve into any of that the way he does with studies that support the idea of expanding Medicaid under the ACA.
Another study sponsored by the Commonwealth Fund points out that taxpayers in states that reject Medicaid expansion will end up funding the program for other states. Sherry Glied, a public policy professor at NYU, is a co-author.
Glied sound bite:
Just because you decide not to participate in the Medicaid expansion doesn't mean that the taxpayers in your state don't pay for Medicaid expansion. Of course they do. They pay taxes to fund the federal share of Medicaid expansion in all the other states.
This notion that non-expansion states will pay for expansion in other states gets repeated over and over whenever expansion versus non-expansion comes up. However, this argument is true only in the most abstract sense, and in practical reality, it barely qualifies as being true. Even so, expansion advocates use it all the time, and most expansion detractors seem to have no defense against it. Below are a few reasons why this argument holds water in a technical sense, but not in a practical sense. (I'll use Virginia as an example of a non-expansion state, since Ydstie cited that state earlier in the story.)
- First, let's look at how the argument has some degree of technical truth. When the federal government's expenditures increase, taxpayers are on the hook for it. So, if the feds incur new expenses in Medicaid expansion states, taxpayers in non-expansion states theoretically bear a portion of that burden.
- Many hear this argument and see a siphon running from taxpayers in non-expansion states directly to Medicaid recipients in expansion states, sucking untold millions or billions of dollars in a steady flow, with non-expansion states getting none of the benefits. It sounds like Virginians are having to pay more – right here and right now – in order to pay these new Medicaid expenses in expansion states. In reality, however, Medicaid funding and the federal government's cash flow just don't work that way.
- Taxes are not being increased because of Medicaid expansion. Virginians are paying the same amount of federal taxes as they would without Medicaid expansion, regardless of which states expand. Virginians will not pay more taxes so that California (for example) can expand its Medicaid program. Federal taxes paid by Virginians go into the federal treasury. Aside from payroll taxes specifically directed to Social Security and Medicare, no portion of regular income tax paid by Virginians is automatically directed to fund anything in particular, Medicaid or otherwise. That's true for taxpayers in all states, regardless of Medicaid expansion.
- Given that, then how is the federal government paying for all these new expenditures in expansion states? We all know the government is broke. The government hasn't had a balanced budget since 2001. It pays for these new expenditures the same way it pays for any major expenses it cannot afford right away – by issuing Treasury bonds. Investors (lenders) buy U.S. Treasury bonds, usually with 30-year maturities, and collect interest on these investments/loans twice per year. The government uses the immediate revenue to pay immediate expenses that it otherwise would be unable to pay. This gets the U.S. into deficit spending.
- The federal government has amassed obscene amounts of deficit spending in recent years (over a trillion dollars per year), with a projected deficit in 2014 of
$744 billion $514 billion $486 billion. China and other investors (lenders) routinely purchase Treasury bonds and keep the U.S. Treasury afloat. As of December 2013, China held over $1.27 trillion worth of U.S. Treasury securities while Japan held over $1.18 trillion. Each month, the U.S. government pays some portion of Treasury bond interest plus principal on Treasury bonds issued between 10 and 30 years ago.
- Given this dynamic, it shouldn't be hard to understand that Virginians are not paying for the federal government's expenses for Medicaid expansion in the here-and-now. Those expenses are being financed by China and other central banks in the immediate sense. U.S. taxpayers will bear the burden of those expenses over the course of 10 to 30 years with basically no way to know who paid for what.
So, Sherry Glied's statement that taxpayers in non-expansion states "pay taxes to fund the federal share of Medicaid expansion in all the other states" is, at best, a misleading simplification or, when viewed more skeptically, just plain disingenuous.
- You also have to look at both sides of this coin. If taxpayers in Virginia are theoretically bearing a portion of the cost of Medicaid expansion in other states, then Virginia taxpayers are also being saved from having to bear the burden of additional federal Medicaid expenses in Virginia and other non-expansion states by virtue of those states' decisions not to expand. For every state that chooses not to expand, those states are keeping the federal government from having to borrow even more money from China to fund those expenses, which keeps Virginia taxpayers from having to bear the burden of those additional expenses. See how it cuts both ways?
Note: See Update #2 for data about how much money is being saved (for you, me, and everyone else) by states that have opted not to expand Medicaid.
- While we're on this subject, let's look at how Medicaid funding works. There is no definitive amount of federal dollars that are earmarked or set aside for any state Medicaid program. A specific amount of federal Medicaid dollars with Virginia's name on them are not just waiting there for Virginia to grab by expanding Medicaid eligibility. If Virginia does not spend its supposedly dedicated cache of federal Medicaid dollars, those imaginary dollars do not get sent to other states. Medicaid doesn’t work that way.
Medicaid is not a block grant program – it’s an entitlement. If you qualify for Medicaid and enroll in the program and receive Medicaid services, the program will pay for those services, but the federal government pays nothing until all that happens. The federal government matches state Medicaid spending under a certain ratio and will pay states based on how many services are eventually rendered. If the services are not rendered, the federal government pays nothing.
That’s true for all 50 states, with or without expansion under the ACA. One state's expenditures have absolutely no bearing on how many federal Medicaid dollars get spent in some other state. Virginia’s “unspent Medicaid dollars” are not sent to California if Virginia doesn’t expand. The amount of California’s federal Medicaid dollars will not vary even one cent because of Virginia’s decision to expand or not expand. Virginia’s decision not to expand simply means that fewer federal dollars will be spent overall.
One last thing about this quote from Sherry Glied: Ydstie fails to point out Glied’s close connections to the Obama administration!
On June 22, 2010, Glied was nominated by President Obama and confirmed by the U.S. Senate as Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services (HHS), and served in that capacity from July 2010 through August 2012. (See her bio at NYU.edu.) As we all know, HHS has been in charge of implementing the Affordable Care Act under the Obama administration since the law was enacted in March 2010. According to CBS News, Glied was "in the 'trenches' figuring out how the health care law would be implemented."
Now, only Glied knows whether her close ties to the Obama administration could have influenced the outcome of her research or motivated her to conduct the research in the first place. But, would she have been appointed by Obama without supporting the law and its expansion of Medicaid? Just wondering. Did Ydstie consider telling us about a potential conflict of interest? Just wondering. Perhaps he didn't look into her background. Or, maybe he did but then decided to keep that potentially compromising information to himself.
And the amount of money at stake is huge. It's almost two-and-a-half times the amount that goes to the states annually in federal highway dollars. Joe Antos agrees it's tempting for governors to take the free federal money, but he argues – given Washington's budget struggles – it's possible the federal contribution will eventually fall below 90%, putting a greater burden on the states. Still, he acknowledges the lack of participation by Republican governors is influenced by politics and the upcoming mid-term elections.
Antos sound bite #2:
After the next election, I think it will be very difficult for any governor to say, 'We're not going to take the money.'
I wonder what Antos said to make Ydstie report that Antos acknowledges Republican governors were influenced by “politics” when deciding not to expand Medicaid. If Antos had said something like that explicitly, wouldn’t Ydstie include that in the sound bite? Antos says nothing like that in the sound bite.
However, Ydstie did let us hear Antos say something that expansion proponents hope will become a self-fulfilling prophecy, but I’m not sure why Antos feels that way. For one thing, state legislatures are in charge of whether Medicaid eligibility gets expanded, not governors (which makes me wonder why Ydstie pinned the blame on governors, not legislatures, in the first place). Governors could veto bills to expand Medicaid eligibility, but they cannot expand Medicaid on their own.
For instance, in Florida, Republican governor Rick Scott called for Medicaid to be expanded under the ACA, but the state legislature refused. Washington’s mid-term elections are likely to have little, if any, impact on whether the Florida legislature changes its mind.
Also note how Ydstie describes the Medicaid expansion funds as “free federal money.” That paints a somewhat misleading picture of the ACA's projected impact on state Medicaid spending. For example, even with the 100% federal match in the first three years, economists for the state of Florida estimated in March 2013 that the state would have to spend at least $4.7 billion of its own funds to pay for the first 10 years of Medicaid expansion under the ACA (see this publication, page 16), including about $290.4 million in state-funded expenditures during the first three years. And that’s just one state. Ydstie fails to mention anything along those lines, for some reason.
For now, 21 states remain firmly opposed to Medicaid expansion, four are debating it, and 25 others and the District of Columbia have agreed to expand their Medicaid coverage. John Ydstie, NPR News, Washington.
With that, Ydstie concluded his report. Let's sum up:
Statements/notions/claims that support Medicaid expansion or criticize non-expansion: 12
Statements/notions/claims that caution against expansion: 3
Studies cited that support the idea of expansion: 2
Studies cited that don't support expansion: 0
Sound bites that support expansion or criticize non-expansion: 5.5 total from 5 people
Sound bites that caution against expansion: 1.5 total from 2 people (hover here)
Statements making Republicans look bad: 2
Statements making Democrats look bad: 0
Omission of directly-relevant facts that, if mentioned, would weaken Ydstie's report: 2