State’s increasing health care costs 
demand changes in Obamacare

The physics of a water balloon are fairly straightforward: You put pressure on one portion and that action deforms it in another. There is no steady state; change in one area creates change in another, sometimes in unintended directions.

Welcome to the American health care system as mandated by our federal government. This week, President Barack Obama again delayed implementation of part of the Affordable Care Act clearly to postpone fallout from this unpopular and unworkable program prior to the 2014 midterm elections.

While this is constitutionally troubling because a president treats legislative statute as though it were executive regulation, damage to health care is even now being done and shifts in its economic and fiscal components are already taking place. The balloon is deforming.

Colorado, as it has become too often, is at the forefront of some of these problems, most immediately in the growth of Medicaid recipients.

In trying to comply with the president’s signature health care legislation, Colorado recently passed measures to raise Medicaid eligibility to 133 percent of the federal poverty level, or $31,322 for a family of four or $15,282 for an individual.

When the health insurance exchanges created by this legislation opened in Colorado, that led, according to the Associated Press, to an additional 86,000 Medicaid enrollees as of Jan. 2.

The Colorado Department of Health Care Policy and Financing reports that in December, there were 772,954 Coloradans enrolled in Medicaid. In 2012 the Kaiser Family Trust survey found that 13 percent of the total population of Colorado was receiving Medicaid benefits.

Quoted in the Denver Business Journal, Joint Budget Committee member Rep. Cheri Gerou, R-Jefferson County, expressed concern that the growth of the Medicaid budget will crowd out other government programs, as the state has gone from spending approximately $1.2 billion in 2005 on Medicaid to $2.9 billion this year.

She also highlighted some depressing statistics: One of every three babies born in the state right now is on Medicaid, and Gerou expects Colorado to top 1 million total recipients by 2017.

Medicare is in no better shape. Although it’s entirely federally funded, it’s facing increasing numbers of those who qualify due to age,  and enrollment is also skyrocketing for those qualifying due to disability claims. The probability that either of these programs can survive at their present rate of revenue collection or physician/hospital reimbursement seems practically hopeless.

Such changes clearly impact the Colorado economy by reducing the disposable income of providers and their suppliers.

With Medicare, Congress is also attempting to sculpt a more permanent fix to a yearly problem that, if not patched over, results in a 24 percent reduction in the reimbursement rate to physicians. Fox News reported that the measure under consideration to prevent this would increase patient premiums a half percent and cost approximately $121 billion over the next decade.

Even with this fix, it seems likely the costs of the present level of care will outstrip the ability of the federal government to reimburse medical providers at a level to which their business model anticipates.

Providers who attempt to participate in the future Medicare program will ultimately be forced into reducing services and access to the newest and most expensive treatments or compensation to themselves and their staffs.

The dwindling number of individuals seeking to become doctors demonstrates the Hobson’s choice this presents for those needing to subject themselves to tremendous debt and the opportunity cost by remaining in the educational environment for many years.

Colorado struggles with the inability to raise revenues through taxation without voter approval, due to the Taxpayers Bill Of Rights. This ratcheting effect could easily bring Colorado face to face with difficult choices earlier than even more spendthrift and fiscally unsound states, such as California and Illinois.

This means that Colorado’s Legislature, as well as its federal representatives, should be demanding changes in Obamacare that would allow the state, at a minimum, more flexibility in determining Medicaid eligibility. They should also seek, as former State Treasurer Mark Hillman has suggested, to have states receive the federal share of Medicaid as a block grant, with the ability to incubate programs more suitable to each state.

More federalism might keep the balloon from bursting — at least for a while.

Rick Wagner writes more on politics at his blog, The War on Wrong.


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