February 18. 2014 5:20PM

Charles Arlinghaus: The Medicaid compromise is not as advertised


The Senate Medicaid expansion plan was released this week so we could all see the details and find out that the spin and the reality of the program are not quite the same.

Let's start by dismissing the assertion that this program is somehow a unique New Hampshire approach. That just isn't so. Iowa passed this same Medicaid expansion plan last May and a few states have had similar ideas in the interim. The New Hampshire version differs in slight ways, none of which make it better.

Notably, Iowa passed a more detailed version of a plan and did not expand Medicaid until the federal government had approved the necessary waivers from federal rules. Making coverage contingent on waiver approval was an incentive for the federal government to act more quickly and to approve at least some changes that had previously been considered unlikely.

In contrast, New Hampshire intends to ask for a waiver — with important details to be filled in at a later date — but in the interim will adopt the same expansion plan the governor proposed as early as last July.

In Iowa's negotiations with the federal government, the feds needed to approve changes they were not predisposed towards, or else no one would be covered. In New Hampshire's negotiations, we will adopt a plan that some lead sponsors don't like but the federal government really likes, and then we will ask the feds to approve changes they like a lot less. You can see why an experienced negotiator might not expect good results from our negotiate-from-weakness strategy.

The bill does say that if the federal overseers of Medicaid don't approve the changes we want, then after two years of coverage the program would technically expire and need to be reauthorized or else 50,000-80,000 people would have their Medicaid coverage taken away from them.

No rational person honestly believes this expiration is anything but procedural. No Legislature elected in recent memory of whatever partisan flavor could ever bring itself to cancel pre-existing benefits, especially health benefits, for such an enormous population. It will never happen, and everyone knows that, including federal regulators.

Public statements from sponsors describe the plan as having significant personal responsibility measures (like premiums and copays). But the plan doesn't actually. The Iowa prototype included significant changes that required waivers, some of which were not allowed in the end.

In contrast, New Hampshire suggests copays be included "to the greatest extent practicable." Practicable is never defined, and we know in advance that state regulators are strongly opposed to just about every copay except one or two in nominal amounts. That makes them not practicable in their opinion. The bill pays lip service with the practical effect of no changes, which helps explain why strong opponents of copays and cost-sharing are cosponsoring the bill.

Some of the bill's authors have implied that the new entitlement comes with a work requirement — recipients will be required to actively seek employment. Whatever their hope, it isn't what the bill does. The actual bill merely says recipients "shall be referred to the Department of Employment Security." Those who are currently unemployed will be given the phone number of the state's unemployment office. That is not exactly a work requirement.

Further, sponsors routinely describe the bill as providing a benefit to 50,000 people. That's just plain wrong. The bill makes an estimated additional 100,650 people eligible. The analysis of a year ago suggested that 83 percent of the half of the eligible population without insurance would take the free coverage (I use their higher estimate because we are now spending millions recruiting people to coverage, which seems likely to be more effective than when we spent nothing).

That analysis estimated that only 12,000 of the newly eligible people with existing private coverage would cancel their current plan and switch to Medicaid. But the offer now is for them to keep their existing coverage and merely have the state pay all their premiums and copays — hardly invasive or inconvenient. A better estimate is that 80 percent of that population will permit the state to send them free money.

When sponsors say 50,000, replace that number with 80,000 and increase their cost estimates by 60 percent. I presume cost estimates, not yet available, will emerge sometime before senators vote.

So the Senate is poised to pass a plan to increase the state's Medicaid population from 135,000 to 215,000 with no cost sharing requirements of note, and to abandon any negotiating strength by adopting the federal government and governor's preferred position as the default program beginning immediately.

Some people are better at compromise than others.

Charles M. Arlinghaus is president of the Josiah Bartlett Center, a free-market think tank in Concord.