Why businesses should care about Medicaid
For years, businesses owners and managers have cited the rising cost of health care and health insurance as the top challenge facing their business, after the health of the economy. And for years, the Business and Industry Association of New Hampshire has tried to do its part to address this critical business issue through a number of policy initiatives, including supporting transparency of health-care cost and quality information, fighting health-care insurance mandates and expansions of coverage, and advocating for adequate Medicaid reimbursement to health-care providers.What does Medicaid funding have to do with the cost of private health insurance and why should business owners pay attention to how the state funds Medicaid?The Medicaid program provides insurance-like coverage for low-income children, pregnant women, disabled and elderly individuals. Currently, there are about 120,000 individuals enrolled in Medicaid in New Hampshire. The program has a total budget of about $1.6 billion, the second-largest state budget item after education. Medicaid is a 50-50 federal-state partnership - the federal government matches each state's Medicaid expenses dollar for dollar.In New Hampshire, providers receive much less than the cost of caring for Medicaid patients, in some cases less than 50 cents per dollar of care. When providers receive less than 100 percent of the cost of treating Medicaid patients, they must make up the cost of caring for these individuals another way. Often a provider will charge more for commercially insured individuals, which in turn increases the cost of their care and the claims paid by their insurer. This is where a cost-shift occurs and why business must pay attention.Cost-shifting simply means that providers shift the under-compensated portion of the cost of providing care to some groups of individuals (Medicaid patients, Medicare patients, uninsured patients) to other payers - principally those buying commercial insurance. And business is the largest purchaser of commercial insurance.The New Hampshire Center for Public Policy Studies estimates that as much as 25 percent of an insurance premium is the result of cost-shifting.In other words, a business owner's cost of providing insurance to employees is 25 percent higher because of under-reimbursement from public payers and charity care provided to uninsured individuals.This is a significant and growing expense for business. The BIA recognizes that our health-care system is complex, and there are many factors that contribute to high costs and unaffordable insurance premiums. Nonetheless, cost-shifting is one of them and inevitably leads to higher business expenses.The state can help control cost-shifting. It can do so by ensuring that hospitals and community health centers are adequately reimbursed for the cost of treating Medicaid patients and the uninsured. Legislators can have a direct impact on health insurance rates for businesses by adequately reimbursing providers for Medicaid services.Although it won't eliminate the cost-shifting problem, nor does it solve the issue of affordability as a whole, it will have a positive impact on businesses struggling to maintain a health insurance benefit for their employees.We realize legislators are grappling with a huge budget deficit and will have to make many tough decisions. We also remember the pledge from majority party leadership early in the legislative session to create a better climate for business.And while we are heartened by the unlikely scenario of business tax increases anytime soon, we nonetheless respectfully remind legislators to consider carefully the impact that reducing funding for Medicaid and uncompensated care to New Hampshire's health-care providers will have on New Hampshire businesses - the state's job creators who are paying the bulk of the health insurance bill for their employees.Jim Roche is president of the Business and Industry Association.