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July 31, 2014

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Wary of health care reform, Gibbons weighs rejecting federal Medicaid funds

State could lose $1.7 billion, but conservatives argue subsidies to help poor buy policies would replace direct coverage

Gov. Jim Gibbons

Gov. Jim Gibbons

Medicaid: By the numbers

  • $1,783,000,000 federal dollars make up 61.4 percent of the $2.9 billion budgeted by Nevada for the Medicaid health insurance program in 2009-11.
  • The state contributes $868 million.
  • The remaining $256 million comes mainly from local governments.

Sun Coverage

In the latest in a series of conservative policy initiatives released by the Republican governor, Jim Gibbons is considering whether Nevada should drop out of the federal Medicaid program, one of the cornerstone safety net programs that provide health care to the poor, disabled and elderly and that cover thousands of Nevadans.

Health and Human Services Director Mike Willden was asked to “take a serious look” at opting out of the massive federal program this week. Triggering the interest is concern about the health care reform bill being debated in Congress, said Stacy Woodbury, Gibbons’ deputy chief of staff.

The state has estimated that the federal requirement to expand Medicaid under the bill will cost Nevada $636 million from 2014 to 2019, when the 100 percent federal subsidy in the health care reform bill expires.

Woodbury says that dropping Medicaid is not as dire as it sounds, citing a report from the Heritage Foundation, a conservative think tank.

Instead of being on Medicaid, in which the state pays a portion of the costs, the poor would be eligible for federal subsidies to buy private insurance on health care exchanges. Money that had been used to fund the state’s portion of Medicaid, $868 million over the next two years, would be used to pay health care premiums for the elderly, blind and disabled, said Woodbury, who emphasized that the governor’s staff is still just looking at the option.

But others said the shift from Medicaid to federal subsidies would leave thousands of poor people without health care access.

Judith Solomon, senior fellow at the liberal think tank Center on Budget and Policy Priorities, said subsidies wouldn’t cover 100 percent of the cost of private health insurance. That would mean poor families would have to pay a portion of the premiums.

Even a seemingly small amount — $440 a year for a family of four that makes $22,000 a year — has been shown to be a major obstacle to the poor getting treatment, Solomon said. That would mean thousands of poor people without insurance would seek health care in emergency rooms and hospitals, costing taxpayers and the insured more money in the long run, she said.

“Theoretically, Medicaid is a voluntary program,” she said. “States don’t have to participate. But there’s a reason every state does. It’s a very good deal for states.”

Health care advocates and Democrats attacked Gibbons’ latest plan, which comes after a flurry of conservative proposals by the governor, who faces a tough primary fight in June.

“When I see proposals like this, I wonder if Nevada wants to continue to be a state, or fall back to be a territory,” said Jon Sasser, advocacy coordinator for statewide legal services. He predicted an increase in deaths, seniors getting kicked out of nursing homes, hospitals possibly closing and an increase in low-weight babies because of the lack of prenatal care.

Assembly Speaker Barbara Buckley, D-Las Vegas, said she sees this as Gibbons’ “feverish attempt to bolster poll numbers, hopping from idea to idea, with no thought whatsoever, no appreciation of the consequences. It’s really quite sad.”

Asked about the possibility that the federal government could pay for poor people’s health insurance, Buckley said: “I have absolutely no faith that they have researched this idea or have any idea what they’re talking about.”

Still, conservatives rallied to Gibbons, as they did when he proposed a series of aggressive education reforms last week.

Geoffrey Lawrence, a fiscal analyst for the libertarian Nevada Policy Research Institute, said increasing Medicaid costs and mandates mean the federal government is dictating to states how to spend money. Almost 30 percent of the state’s general fund is spent on Medicaid, he said.

Opting out, Lawrence said, “is probably the best response to (health care reform) from the standpoint of state government.”

Edmund Haislmaier, a senior research fellow in health policy studies at the Heritage Foundation, said the report he co-wrote is predicated on the idea that state legislators would not opt out of Medicaid if it would leave massive amounts of people without health insurance.

“We assumed, for reasons of politics or being nice people, that state lawmakers would not go in this direction if they found it would significantly adversely affect people now dependent on the program,” Haislmaier said. He wrote the paper with Dennis Smith, who was the head of the federal Medicaid program under President George W. Bush.

The conclusion of the paper is that, “If all states withdraw from Medicaid, their collective savings would be $725 billion.”

Solomon, with the Center on Budget and Policy Priorities, pointed out that the Heritage Foundation memo had been around since Dec. 1, but as far as she was aware, no other state had taken it seriously.

Jon Summers, spokesman for Senate Majority Leader Harry Reid, D-Nev., called Gibbons’ plan a “shell game” in which the uninsured would go to emergency rooms for treatment that would be paid for by taxpayers.

Future health care reform aside, Reid is trying to secure an extra $95 million to go toward the state’s Medicaid costs in the 2009-11 budget cycle.

Sun reporter Marshall Allen contributed to this story.

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