Gov. Brian Kemp unveiled part 2 of his health reform plan recently. Consider it just that: a piece that complements the first part.
Last week I described the first reform, which addresses the Affordable Care Act by lowering prices and increasing choices for those buying insurance on their own. Now let’s turn to the second one, which adds a new way for impoverished Georgians to get Medicaid coverage.
This second reform would open Medicaid eligibility to the working poor: Georgians who work, train for a job or volunteer at least 80 hours a month but are below the poverty line. This year’s poverty line is $12,490 for a single person, or $25,750 for a family of four.
Rewarding work is not new. But Georgia’s plan also allows the state to pay an employee’s share of the insurance premium if his employer offers coverage.
Critics compare this second reform to the ACA’s Medicaid expansion. They claim full expansion would cover far more people for a similar amount of money, but their math is wrong.
Let’s get something straight at the outset: While proponents of Medicaid expansion ignore federal spending and focus on state costs, Georgians are federal taxpayers, too. That money counts. What’s more, with the deficit approaching $1 trillion, any new federal spending would be borrowed. We are not, as critics put it, “already paying for” Medicaid expansion while forgoing the benefit. We will pay for it later, with interest.
Now consider an estimate from the left-leaning Urban Institute that Medicaid expansion in Georgia in 2019 would require an additional $3 billion in federal tax dollars and $246 million in state tax dollars to reduce the ranks of the uninsured by 473,000. The annual cost per newly insured Georgian, then, would be about $6,894.
Kemp’s Medicaid and ACA reforms would address the same population. In 2022, the first year of both being operational, they would cost an additional $135.4 million in federal tax dollars and $216.7 million in state tax dollars, and reduce the number of uninsured by almost 80,000. That’s $4,411 per newly insured Georgian – less than two-thirds the per capita cost of Medicaid expansion, and almost $3 billion per year less total spending.
But even those figures understate the cost-effectiveness of the Kemp plans for two reasons. First, the state’s official estimate for the Medicaid reform is almost certainly too large: States are on the hook for any cost overruns from these reforms, so they tend to aim high. It’s hard to know exactly, but Georgia may have overestimated the cost by as much as $50 million.
Second, the only new cost associated with the ACA reform concerns the state’s “reinsurance” program, which would pick up the healthcare costs of those with the largest expenses. That means $149 million in state funding in 2022; the federal portion is already being spent and would be redirected to reinsurance.
But that $149 million doesn’t only help people gaining insurance through the ACA reform. In fact, the biggest beneficiaries are likely to be Georgians who earn too much money to receive insurance subsidies but are stuck paying the ACA’s higher premiums. Even if we distribute that $149 million evenly across all affected Georgians, the amount directly benefiting the newly insured would come out to just $11.5 million.
Seen that way, the federal cost for new enrollees under Kemp’s twin plans would still be $135.4 million, but the state cost might be a mere $79.2 million. That’s a cost per newly insured of just $2,689 – about 60 percent below the per capita cost of expanding Medicaid. If the Medicaid cost is indeed overstated by $50 million, the per capita cost falls to just $2,063 per year.
There are a couple of key takeaways beyond the lower costs. Unlike Medicaid expansion – which proponents merely describe as helping the working poor – these reforms actually target working Georgians. Unlike Medicaid expansion, these reforms help not only those who earn little but also middle-income workers.
Unlike Medicaid expansion, these reforms have a chance of working for Georgia.
• Kyle Wingfield is president and CEO of the Georgia Public Policy Foundation: www.georgiapolicy.org.