Monday, September 26, 2011

Pith Answers All Lamar's Questions about Obamacare

Posted By on Mon, Sep 26, 2011 at 10:09 AM

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Sen. Lamar Alexander is demanding to know Obamacare’s cost to the states. His amendment to require a cost study almost cleared a Senate committee last week, losing on a tie vote. He cited former Gov. Bredesen’s famous “mother of all unfunded mandates” criticism that health care reform will saddle Tennessee with $1 billion in new costs over the first five years.

“Our public universities in America are in grave danger of losing their quality and stature at a time when our nation needs them to help create jobs, and this is directly related to federally mandated health care costs soaking up dollars that would otherwise go to the universities. We’re telling the states that you can’t cut Medicaid or make changes, and as a result, the only thing they’re able to cut is aid to community colleges and state universities. I think it’s important for us to know exactly the impact on that.”

Well, we’re here to help. If Alexander were a loyal Pith reader, as he most certainly should be, he would know Obamacare’s exact impact on Tennessee—or at least he’d know it as precisely as anyone.

We were curious about this last year right after Congress finally passed Obamacare. After a week of trying, we managed to pry a cost breakdown out of the Bredesen administration.

It turns out the big cost doesn’t come from newly eligible beneficiaries, as Alexander and other Obamacare critics would have us believe. That’s because the feds are paying almost all the cost of newly eligible beneficiaries—a fact you don’t hear much about in all the teeth-gnashing over health care reform.

Instead, the biggest cost by far—more than $900 million—comes from the addition of an estimated 50,000 beneficiaries who already are entitled to Medicaid but aren't on the rolls mainly because they don't know they're eligible. It's believed that publicity over national health insurance will lead them to sign up for Medicaid. The experts have given this a really charming name: the woodwork effect. The state will pay the usual one-third of their cost.

People signing up for a life-saving benefit that they’re actually already entitled to receive—that’s what Alexander is complaining about. Here's the question he should ask: If there are so many people out there entitled to Medicaid who don't know it, why isn't the state already trying to let them know? In the long run, that would save money by curtailing the number of uninsured who go without care until arriving at hospitals for the most expensive treatment.

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