Photo by Darla Carter

A national research and policy institute issued two reports Wednesday on the potentially negative effects of overhauling Medicaid, from making it harder for people to stay covered to increasing the financial burden of “uncompensated care,” which refers to services that neither an insurer nor patient reimburses hospitals or other health care providers for.

Several states, including Kentucky, are planning or considering putting into place Medicaid demonstration projects, or section 1115 waivers, that would take coverage away if people don’t meet certain requirements, according to the Center on Budget and Policy Priorities in Washington, D.C., which issued the reports.

As part of Kentucky’s waiver, which is also known as the Kentucky HEALTH program, certain Medicaid recipients in the state will have to put in about 20 hours a week of what the state calls “community engagement,” such as going to work or volunteering, for a total of 80 hours a month. The requirement starts in northern Kentucky’s Campbell County in July and reaches Louisville in October.

There also will be premium payments for some, and a rewards account to earn virtual dollars to pay for routine dental and vision services.

Some state officials have said Kentucky HEALTH, which is being challenged in court, will lead to better jobs and better health for Medicaid recipients.

But the center says proposals like Kentucky HEALTH “undermine Medicaid’s goals by making it harder for people to stay covered and thereby reducing access to care.”

The report goes on to say that “these proposals will have additional — and likely unintended — adverse effects due to their complexity, which poses major implementation challenges for states and major challenges for eligible individuals seeking to maintain their coverage.”

States seeking to implement the waivers will have to undertake a variety of difficult tasks from substantially modifying their eligibility systems to training and/or hiring more caseworkers to make determinations about exemptions and other new rules, according to the report.

“The new policies in the waivers will mean more in-person contact, phone calls and back-and-forth paper work, which eligibility staff don’t have the capacity for,” co-author Jennifer Wagner said in a conference call.

The center also notes that there are lots of things for Medicaid recipients to understand, from what activities will qualify them for meeting the work requirement to how to report compliance. They’ll also need to know the criteria for exemptions, how to get documentation that they are exempt and properly submit it.

“Regardless of how much states spend, a large share of enrollees in states with approved waivers are at risk of losing coverage due to their own confusion and state errors,” the report notes. “Vulnerable beneficiaries such as those with physical disabilities, mental health needs, and substance use disorders or other challenges like homelessness face especially high risks.”

There’s also the matter of the high costs of implementing the proposals. For example, the report states that Kentucky plans to spend $186 million in state fiscal year 2018 and an additional $187 million in 2019 to institute its federally approved waiver.

“While states and the federal government may ultimately save money on net from the new policies, savings will come entirely from people losing coverage and access to care,” the center contends. “Effectively, these proposals divert some state and federal resources from paying for health care to paying for new bureaucracy.”

The report also points out that “while federal matching funds are available for system changes and increased staffing, no federal funds are available to provide transportation, child care, or job training to help people find jobs and meet the new requirements.”

In a second report, the center focuses on the potential of Medicaid waivers to stop progress that’s been made in decreasing uncompensated care costs since the implementation of the Affordable Care Act’s major coverage provisions.

The report notes that uncompensated care costs as the share of hospital operating expenses fell significantly nationwide between 2013 and 2015.

“From 2013 to 2015, the nationwide uninsured rate fell 35 percent, and nationwide hospital uncompensated care costs fell by about 30 percent as a share of hospital budgets — a $12 billion drop in 2015 dollars,” the report notes.

In the 10 Medicaid expansion states where uninsured rates dropped most, uncompensated care decreased 57 percent on average, according to the center. Kentucky is among those states.

Kentucky’s uncompensated care costs as a share of hospital operating costs declined from 4.6 percent in 2013 to 1.6 percent in 2015, a 65 percent decline representing a savings of $403 million for the hospitals during a time when Kentucky’s uninsured rate dropped by 58 percent, according to the report.

However, “because they would reverse a significant share of the coverage gains achieved under the ACA’s Medicaid expansion, approved and pending Medicaid waiver proposals … threaten to reverse a meaningful share of the recent drop in uncompensated care costs,” the report says.

” … By Kentucky’s own estimates, the waiver will ultimately reverse about 15 percent of the Medicaid coverage gains achieved through expansion, potentially reversing a similar share of uncompensated care declines.”

Insider reached out to state officials for comment on the reports but did not immediately hear back.

Dustin Pugel

But Dustin Pugel of the Kentucky Center for Economic Policy, which receives some funding and technical assistance from the Center on Budget and Policy Priorities, applauded the two reports from the D.C. center.

Pugel, a policy analyst, fears the impact Kentucky HEALTH will have on the state’s economy as well as the potential for people to lose coverage or get locked out for a time.

“There’s an enormous amount of hassle and there’s a lot of ways to slip up,” Pugel said, noting that Kentucky HEALTH could lead to about 97,000 fewer adults on Medicaid by the fifth year.

Darla Carter is a hometown girl who recently joined the staff of Insider Louisville to mostly cover health. She previously served as a longtime health and fitness writer for The Courier-Journal, where she also worked for the Metro, Neighborhoods and Features departments. Prior to that, the award-winning journalist wrote for newspapers elsewhere in Kentucky and Tennessee, covering a range of topics, from education to courts. She's a graduate of Western Kentucky University, where she studied journalism and philosophy, and is the proud mom of two young children.


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