Why the Federal Medicare and Medicaid Debate Impacts Sandy Springs

Now that the Republican and Democratic conventions have ended, it may seem difficult to relate the rhetoric of those events with our daily lives in Sandy Springs.  It should not be.  The discussions of Medicare reform at the federal level will have a tremendous impact on our local economy.  Whether you support the Romney/Ryan plan or the President’s, there should be no illusion that we are immune from either.

First, consider the City’s top employers based on a of the Sandy Springs Economic Advisory Committee: (1) Children’s Healthcare of Atlanta (5,422 employees); (2) Northside Hospital (4,241 employees); (3) IBM (2,483 employees); (4) St. Joseph’s Hospital (1,969 employees); (5) UPS (1,879 employees).  Three of the top five employers are in the business of providing nationally-recognized healthcare services. 

Next, consider the two largest payers of healthcare services in Georgia: Medicare and Medicaid.  Medicare is for the disabled and the elderly, and it is run exclusively by the federal government.  By contrast, Medicaid is a “partnership” between the state and federal government.  Both sides have some say in who qualifies for Medicaid, though it is traditionally for the aged, blind and disabled, and low income families (mostly women and children).  PeachCare for Kids is another type of Medicaid that covers children of families with income is at or below 235% of the federal poverty level ($26,250 for a single parent, and $54,167 for a family of four).  It too is controlled by the state and federal government.

These programs have differing impacts on our hospitals.  Children’s is Georgia’s largest provider to Medicaid patients.  This is due, in large part, to the PeachCare for Kids program, which covers over 200,000 children.  Medicaid also impacts Northside Hospital, given the large number of babies born to Medicaid-beneficiaries.  And both St. Josephs and Northside both treat a very significant number of Medicare patients through the senior population.

This all ties into the federal election.  The pick of Congressman Paul Ryan as Governor Romney’s Vice President has placed entitlement reform into the center of the national debate.  Entitlements like Medicare and Medicaid are unlike most federal programs: once someone qualifies for it, it cannot be taken away.  Medicare, Medicaid and other federal healthcare entitlements (not including Social Security) already make up 22% of the federal budget.  And Medicare is by far the fastest growing segment of the federal budget.  And Congress does not annually vote on Medicare and Medicaid budgets, they are essentially on auto-pilot: whatever the programs need, they will receive (again, because of the nature of entitlements). 

Most rational people on both sides of the political spectrum would agree that the current model is unsustainable and significant reform to both of these programs is required.  Most solutions necessarily call for reductions in spending – both for Medicare and the federal portion of Medicaid.  The presidential candidates’ approaches are remarkably distinct and would impact our hospitals differently.  On Medicaid, the Ryan plan calls for block grants to the states.  In exchange for almost total control over the Medicaid program, states would receive less federal money, and the federal government could better predict Medicaid expenses.  By contrast, President Obama would expand Medicaid dramatically, but have the federal government pick up most of the tab so long as Congress decides to keep paying.  Our federal government’s willingness to pay could (and likely must) change as the national debt now exceeds $16 billion, and that puts the State of Georgia at risk for more funds.  After the Supreme Court’s decision on the healthcare legislation, it is up to states to decide if they will accept the President’s invitation.  Governor Deal has signaled that he is currently saying “no,” given the deficits in Georgia’s existing Medicaid program and that it comprises about 22% of our State’s budget.

Medicare is also up for changes.  Current reimbursement rates are already at or below cost for many providers.  The President’s plan for Medicare exacerbates this problem by reducing payments to physicians and hospitals while keeping benefits the same.  This will lead to both doctors and hospitals refusing Medicare patients altogether.  The Ryan approach calls for reductions in benefits (e.g., eligible services) for those who are under age 65.  Obviously, this means some beneficiaries must find a way to pay for certain treatments, either with private insurance or with cash.

Sandy Springs’s providers can expect significant changes as a result of the election.  On Medicaid, much of the attention will shift to the Governor and General Assembly – either to design a new program with limited federal funds or to expand Medicaid and hope that the federal government keeps its promise to pay for most of it.  On Medicare, we face either reduced reimbursement rates and lower provider participation, or we may see less services covered.  Whichever path our nation chooses, we will feel it in Sandy Springs.  Citizens of our City should study the plans carefully, as this federal election could be one that has a greater impact on us than most previous ones.