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2020.10.30.In WV Obamacare is a Matter of Economic Stability

Mountain State Spotlight

In West Virginia, Obamacare is about more than public health. It’s a matter of economic stability.

Protesters in Charleston, West Virginia in 2016. Photo provided by WVAHC.

In West Virginia, public health and economics are especially intertwined.

Since the Affordable Care Act (also known as Obamacare) was enacted in 2010, the law has funded treatment for substance use disorders, expanded black lung benefits and  provided health insurance to 20 million Americans who were previously uninsured.

But in West Virginia, the law has also brought billions of federal dollars into the state.

Now, a lawsuit arguing the ACA is unconstitutional could take those dollars — and jobs — away. 

Since the law’s passage, the ACA has faced strong opposition from Republican leaders who have worked to undo what many consider the most pivotal success of the Obama administration. They’ve succeeded, in some ways. 

In 2017, Congress eliminated the ACA’s individual mandate, which required everyone to have insurance or face a financial penalty. Now, 18 state attorneys general, including West Virginia’s Patrick Morrisey, are arguing that without the individual mandate, the entire law is unconstitutional and can’t stand. The U.S. Supreme Court will hear oral arguments in the lawsuit on Nov. 10.

With the fate of the ACA in the air once again, a massive global health crisis, a new U.S. Supreme Court justice, Amy Coney Barrett, and a national election just days away, conversations about access to health care remain at center stage.

But in West Virginia, the impact of the potential reversal extends well beyond the health of its residents.

The health care sector is one of the most prominent employers in the state, and it doesn’t just create jobs for medical workers. It also employs custodians, cooks and administrators, among other positions. Hospitals, which are often the largest employer in small communities, contract with local businesses, operate outpatient clinics and employ individual physicians who provide care out of independent offices. 

The state’s Medicaid program, which was expanded under the ACA, is a prominent funder.

“… Medicaid is one of the few state government spending opportunities that is guaranteed to pull in money from outside the state and directly benefit the local economy,”  the West Virginia Department of Health and Human Resources declares in a written overview of the program on the department’s website. “Medicaid spending acts as a tremendous financial boon for the state.”

West Virginia receives billions of dollars from the federal government through health care programs like Medicaid each year. The money accounts for more than 75% of all of the state’s federal funds. And since the ACA was enacted and Medicaid was expanded, the state has received hundreds of millions of additional dollars annually.

Mountain State Spotlight asked experts what the potential elimination could mean for our economy. 

Here’s what they had to say.

The dollars are irreplaceable

In January 2014, through the Affordable Care Act, then-Gov. Earl Ray Tomblin made West Virginia one of the first states in the country to expand  its Medicaid program. More people were able to apply for the benefit — which provides health insurance to low-income West Virginians — as requirements to qualify were loosened. 

Enrollment numbers suggest that in the first three years of the expansion, at least  160,000 more adults in West Virginia gained health insurance. And initially, it came at almost no additional cost to the state. 

Between 2014 and 2017, the federal government covered 100% of the cost of care associated with the expansion, though West Virginia did pay an administrative fee of about 1%. That means that at least 160,000 West Virginians were able to access health care — and the state accessed those health care dollars — without significantly tapping into the state budget. 

In later years, the federal match rate decreased, but the money coming in was still major.

“We received a very generous federal matching rate,” said Lindsay Allen, a professor of health policy at West Virginia University. “I don’t think people understand how much money we get.”

For every dollar now spent on Medicaid expansion, the federal government pays 90 cents and the state chips in 10. That’s a big deal for West Virginians.

Allen said the expansion plays a particularly important role in West Virginia because the population is disproportionately unhealthy and has the second lowest per capita income rate in the country. Prior to the ACA, thousands of West Virginians were uninsured. And if the law were to be eliminated in its entirety, the federal match for Medicaid expansion would be eliminated, too.

To keep the program running, the state would have to pay an additional 90% in costs. That’s hundreds of millions of dollars per year. A report on Medicaid Expansion presented by the West Virginia Department of Health and Human Resources estimated the program brings in $520 million annually.  It’s not something West Virginia could afford to support.

“Only the federal government has the resources to really make a program like this happen,” Allen said. “There are very serious ripple effects to getting rid of people’s health care.”

Lost funding results in lost services

The benefit of the ACA isn’t just to West Virginians who now have access to health care, but to the state’s public health infrastructure, too.

Although the reimbursement rates for patients on Medicaid are lower than those of patients with private insurance, experts said Medicaid expansion was essential to supporting hospital finances.

“I don’t want to discount the complaints about low Medicaid reimbursement rates,” said Dr. Adrian Diaz, a research fellow at the Institute for Healthcare Policy and Innovation at the University of Michigan. “But getting reimbursed by Medicaid is better than not being reimbursed at all.”

Dr. Adrian Diaz (photo provided).

According to Diaz, the expansion of Medicaid has resulted in significantly lower amounts being spent by hospitals on uncompensated care and millions earned in additional revenue. 

That makes a big difference. 

Dr. Benjamin Sommers, a physician, health economist and a professor at Harvard University’s School of Public Health, said an alarming number of hospitals have struggled financially over the last 10 years.

But Sommers said studies show hospitals in states that expanded Medicaid were less likely to close than those in states that didn’t.

“The ACA reduced the chances of closure, especially in rural areas where there were a large number of uninsured adults before the Medicaid expansion,” Sommers said.

Between 2010 and 2019, 119 rural hospitals closed, according to data from the Cecil G. Sheps Center for Health Services Research at the University of North Carolina. Texas, which lost 21 rural hospitals, led that list, followed by 14 closures in Tennessee. 

Neither state expanded Medicaid. 

But even hospitals in states that did expand the program are struggling. In West Virginia, three hospitals closed in the last 18 months, alone. A fourth ended inpatient services, but maintained emergency operations.

To make things worse, Sommers said, the pandemic has contributed to the financial collapse of the health care industry.

Dr. Ben Sommers (photo provided).

“Typically we say that hospitals and health care are recession-proof. While people cut back on spending during a normal recession, they generally still see their doctors and go to hospitals when they get sick,” said Sommers. “This time, that’s not the case.”

When the pandemic hit, hospitals and medical providers had to close offices and shut down high-revenue services like surgeries and treatments that weren’t considered emergency care. COVID-19 also impacted the number of people willing to seek non-emergency treatment. Patient volumes are lower. It’s all hurting the bottom line.

“This has been a very health care-focused economic downturn,” Sommers said. “To then eliminate the ACA would be the final nail in the coffin.”

When hospitals close, communities lose jobs

In many circumstances, hospital closures result in lost access to critical care for local communities. The consequences of closures or reductions in services can be a matter of life or death for people who live nearby.

But closures can also result in mass-unemployment and accelerated financial decline.

A 2019 review of employment figures by a financial news company found that hospitals or health care adjacent companies were the top employers in 17 states, including West Virginia, and a 2017 study by the West Virginia Center for Budget and Policy estimated the elimination of the ACA would result in the loss of at least 16,000 jobs in West Virginia.

In both urban and rural areas, local hospital systems play a critical role in economics, by creating jobs and contributing millions in taxes.

“Big sweeping changes to hospital finances have spillover effects that have broader economic impacts,” Sommers said.

Photo provided by WVAHC

West Virginians have already felt those impacts.

The closure of a hospital in Wheeling in 2019 resulted in the third largest layoff by a single employer in the last 10 years, according to data from layoff notices submitted to the state. More than 700 people lost their jobs.

Earlier this year, a Marion County hospital closed, and  more than 500 jobs were lost. Local officials worried that the absence of medical care would cause further economic instability and hurt attempts  to attract new residents.

“You can’t have a county without a hospital and expect people to move in,” said Delegate Michael Angelucci, a Marion County Democrat, when the hospital closed in March.

Jessie Ice, the executive director of West Virginians for Affordable Health Care, added that when people lose jobs, they often lose health insurance, too. 

She said were the ACA to be repealed, the number of uninsured would compound.

“That we’re talking about the possibility of taking away the health insurance of thousands of West Virginians in the middle of a pandemic is sadly our current reality,” Ice said.

She went on to say that there’s irony that the current effort to repeal the law is being headed by the state’s attorney general. Ice said the attorney general is supposed to protect the interests of the people.

“For somebody in that position to want to dismantle a policy that has helped so many of their fellow West Virginians doesn’t make a whole lot of sense,” Ice said. “The law is imperfect, but I would urge rather than repeal the ACA, let’s work to improve it. Not many states have benefited more from the ACA than West Virginia.”

Morrisey did not respond to an interview request, but his press secretary Curtis Johnson provided a statement via email.

“It is important to keep in mind that no one has lost coverage to date. Any assertion to the contrary is a myth pushed for political gain,” wrote Johnson. “No one will be left behind as many believe the Supreme Court will remove only the unconstitutional parts of Obamacare, thus furthering the Attorney General’s mission to lower the skyrocketing premium costs of Obamacare and strike down the unconstitutional individual mandate.”

But the individual mandate has already been eliminated. The lawsuit Morrisey has signed onto is arguing that the ACA is invalid in its entirety.

Morrisey’s office did not respond to questions posed about a plan to replace federal funds should the law be eliminated. But the issue has proved a dominant one in the race for state attorney general, as Morrisey’s Democratic challenger, Sam Petsonk, has made the preservation of the ACA central to his campaign.

Morrisey and Petsonk will face off on the ballot on Nov. 3., but the fate of the ACA will be determined after, when the U.S. Supreme Court rules on the case after hearing oral  arguments on Nov. 10.

Correction: This story initially attributed the elimination of the individual mandate to the judicial, rather than the legislative, branch.

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2020.10.30.In WV Obamacare is a Matter of Economic Stability
2020.10.30.In WV Obamacare is a Matter of Economic Stability