2018-02-22 / Editorial

The difference between insurances

Legislative Lowdown
by Rep. Martin Grohman

Medicaid is the single largest provider of health insurance in the United States and it is available nationwide. It is jointly delivered by the federal government and the state of Maine. In return for meeting basic levels of coverage, the federal government pays for about two-thirds of the cost and state budgets make up the balance. The program, which was created in 1965, has always covered the elderly, the disabled and low-income children – but not childless adults.

Medicaid covers a lot of the same medical services a traditional health insurance plan would. It is not free; many doctor visits require copays, just like private insurance, but hospital care and doctor visits are paid for with low or no copays.

Many people in Maine have Medicaid coverage. In fact, every state is required to provide coverage to poor children, pregnant women and people with disabilities. Medicaid also provides health care to older Mainers on a low income, including those that require long-term care.

If you have a medical condition or take expensive prescriptions, the program can help greatly in your time of need. You may apply for Medicaid at any time – you don’t have to wait for an open enrollment period. Even if you think you don’t qualify, if you have children, they might be eligible, so it is good to apply.

Federal law called the Affordable Care Act enabled access to Medicaid to more people, expanding coverage to childless adults and raising the income eligibility threshold a little higher, which is why we call it “expansion.” However, a U.S. Supreme Court decision made state-level adoption of this expanded coverage optional, and Maine has only recently chosen, by voter referendum, to begin covering more people.

Medicaid and Medicare are different. Medicare is paid for by a payroll tax deduction and is only for those older than 62 or severely disabled. Medicare can be thought of as hospital insurance – it’s a backstop against extreme medical costs, but covers less day-to-day medical needs. And unlike Medicaid, which is a joint federal/state program paid for with general revenue dollars from both sources, Medicare is a purely federal program with no state involvement. Unlike Medicaid, paid for by general revenue at both the state and federal level, Medicare has a specific funding source from a payroll tax deduction. You can see the line item FICA on your paycheck; it stands for Federal Insurance Contributions Act. FICA also includes your Social Security contribution.

However, here in Maine the distinction between these programs is somewhat more confusing because we call Medicaid “MaineCare.” It is possible to have both types of coverage, so you can qualify for both Medicare and MaineCare (Medicaid). In any case, there’s one thing we know about people’s health care behavior: they don’t get the care they need if they can’t afford it.

I hope you have found this background useful. Now, for the controversial part. Since the Legislature could not come to agreement on expanding Medicaid, voters recently took matters into their own hands in the 2017 off-year election, requiring the governor and Legislature to implement it. However, no mechanism to pay for it was indicated. At the beginning, it will cost an estimated $15 million out of a $7 billion state budget. It’s a small percentage, but still a very significant amount of money. On the positive side, this can be considered a kind of down payment on greater access to health care, since it will unlock federal funding to cover the roughly 80,000 Mainers who do not have any health coverage whatsoever.

We do know there will be benefits. Without insurance, people can’t pay their bills. For example, if a childless 20-something without health insurance breaks his leg badly while skiing and goes to the emergency room, there’s a bill for the surgery, the doctor, the anesthesia — the bundle of care can add up to $15,000. If that patient can’t cover the cost, the hospital pays for it. There is no federal or state program that makes up that difference. Instead, the hospital recoups that cost by making surgery, doctors and anesthesia more expensive for those who break their legs and do have private, state or employer funded health insurance. Those with insurance cover costs for those without it. It’s like if you insure your car in a dangerous area. Even though you are a good driver, your rates go up.

Since increasing private insurance rates affect practically everyone, it can be argued that extending at least some form of basic Medicaid coverage to everyone, including childless adults, is a good idea, financially. On the flip side, many people feel that childless adults should be able to take care of matters themselves, finding a better job that offers insurance or otherwise covering their own health care needs.

This matter will be before the Legislature soon. It essentially comes down to whether we should use money from the state’s Rainy Day fund as a down payment to kick off Medicaid expansion. This program will most likely pay for itself once it is underway, by increasing reimbursement rates to hospitals. This will slow the increase in costs of private health insurance, creating savings for the state, which provides health insurance for its 11,800 employees. This will also create savings, or at least a slower increase in cost, for other employers that provide health insurance.

Two weeks ago, I asked for your feedback on a student loan refinancing program that I am sponsoring for Gov. Paul LePage. I received a large amount of feedback (most of it positive). This was very helpful to me, and was very helpful in carrying forth policy in Augusta. This week, I’d like to do the same thing again, on this question of health care. Do you think using some dollars from the state’s revenues to kick off Medicaid expansion is a good idea? Why or why not?

Rep. Martin Grohman of Biddeford is an Independent State Representative serving his second term in the Maine Legislature and is a member of the Criminal Justice and Public Safety Committee. Outside the legislature, he hosts a podcast for Maine entrepreneurs called The Grow Maine Show and is chair of the Biddeford Solid Waste & Recycling Commission. Sign up for legislative updates at www.growmaine.com, facebook.com/repgrohman or call Marty at home at 283-1476.

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