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July 21 2014

Medicaid Contraction: New York Patients Losing Coverage

Patrice J. Lee

Blue Cross Blue Shield of Western New York is turning away 53,000 New Yorkers with Medicaid coverage. These recipients will have to find a new insurance provider this fall because the insurer says the losses it has incurred in covering these patients has been too costly.

This comes at an inopportune time. ObamaCare offered all 50 states the opportunity to expand access to Medicaid for their residents. New York accepted the offer bringing coverage to an additional over 300,000 New Yorkers. Now where those covered go?

Blue Cross Blue Shield is one of the largest Medicaid providers in the state. This move will force Medicaid patients to take their plans to one of the other providers in the region, which will put added (cost) pressure on them as well. The question is what they will do in response?

In a twist, Blue Cross claims that ObamaCare is not a factor in the decision, saying this part of this business has been failing for years. Others in the industry aren’t convinced.

Buffalo News reports:

“We have incurred losses in excess of $40 million over the past three years in these programs,” Don Ingalls, the insurer’s vice president of state and federal relations, said in the memo. “We have a 20+ year history of supporting these programs and members; however, we cannot continue to do so as the losses ultimately have been funded by other lines of business.”

The move means that Medicaid managed care recipients in Erie, Chautauqua, Cattaraugus, Orleans, Wyoming and Allegany counties will have to move to another insurance provider by Oct. 31. BlueCross BlueShield said it would notify Medicaid clients of the withdrawal by the end of August, giving them two months to make the switch.

The move means those other insurers will have to pick up those former BlueCross BlueShield subscribers – a move that Rep. Chris Collins, R-Clarence, said could be prohibitively expensive.

“My fear would be that the other carriers follow suit,” Collins said.

And while Obamacare, which took effect last fall, vastly expands the number of New Yorkers on Medicaid, Swift said: “This really is not driven by the Affordable Care Act.” Over many years, “we’ve tried many different avenues to remediate the business.”

But Collins, a consistent critic of Obamacare, said he wasn’t so sure.

“I would argue that BlueCross BlueShield now has a lot more clients on Medicaid because of Obamacare, so they would lose a lot more money,” he said. “I don’t see how they could say that this doesn’t have a connection to Obamacare.”

There’s a valid concern that other insurers will face. Medicaid may have been an expensive program before, but added pressure from new enrollees under ObamaCare may drive other insurers out of the Medicaid business.

Blue Cross is dancing around the Medicaid expansion issue – perhaps for political reasons. You can’t dance around the unintended consequences of adding more patients who can’t afford health insurance on their own, to a system already struggling to remain solvent.

Ensuring that Americans have access to healthcare is a noble goal of the un-Affordable Care Act. But was the best solution putting the tab on the government dime?

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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