On the day before April Fool’s Day, Armstrong v. Exceptional Child Center buried any illusion that Medicaid Expansion will improve access to health care. In a 5-4 decision, the U.S. Supreme Court barred doctors, dentists and pharmacists from suing states for allegedly curtailing reimbursements for care they provide to Medicaid patients. Although the ruling doesn’t directly impact Medicaid’s promise to provide quality care for the poor, fulfilling that promise requires a wide and accessible network of physicians. By this metric, Medicaid hasn’t fulfilled its pledge for years and the Supreme Court just made it official.
Even at an enormous and growing cost, this government program has consistently shown its inability to provide quality healthcare. Yet despite its dismal track record, Wyoming legislators may attempt to expand Medicaid again next year.
In Armstrong v. Exceptional Child Center, the plaintiffs alleged that the state of Idaho violated its pledge to provide Medicaid in a manner which:
“assure[s] that payments are consistent with efficiency, economy and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan.”
In 2005, Idaho’s legislature passed a law that increased Medicaid’s reimbursement rate for doctors, but the state lacked the funds to pay the new rates. When the legislature failed to raise rates as promised, the Exceptional Child Center and another home health-care provider sued the state for failing to comply with Medicaid’s pledge to make payments that are consistent with quality of care.
Justice Antonin Scalia wrote the majority decision, stating: “It is difficult to imagine a requirement broader and less specific” than Medicaid for state payment plans. Given that this pledge is so vague, Justice Scalia and four other justices said that only the Department of Health and Human Services (HHS) could decide which state Medicaid program met these criteria, through the traditional regulatory review process.
The justices also feared that if they decided in favor of the Exceptional Child Center, they would create a precedent, allowing doctors and hospitals to sue whenever they felt that the program’s payments were insufficient.
As it turns out, the plaintiffs were right about Medicaid’s reimbursement rates. Idaho’s Medicaid program pays hospitals just 88 percent of what Medicare pays. And Medicare typically pays hospitals only 80 percent of what private insurers pay. With every passing year that Medicaid reduces payments, fewer and fewer doctors have been willing to take Medicaid patients.
Making the situation worse, HHS steadily expanded the list of procedures that states must pay for through Medicaid and loosened eligibility for the program—can you say Medicaid expansion? As Medicaid’s financial obligations skyrocketed, states have been forced to slash their payments to doctors and hospitals.
In Wyoming, Medicaid’s rising obligations have begun crowding-out other items in the state budget. Since 2009 the cost of Medicaid rose by 4 percent, yet money in the General Fund that finances Medicaid has only increased by 1 percent. Even after rejecting Medicaid Expansion, Medicaid will continue to consume a growing share of the budget at the expense of education and vital public services.
After the Supreme Court’s ruling reaffirmed HHS as the sole judge of state compliance with Medicaid’s charter, doctors and patients now have far less legal standing to oppose future cuts in the program’s reimbursements. And states will have significantly more leeway to reduce reimbursements as the program’s costs continue to grow.
Armstrong v. Exceptional Child Center offers a valuable lesson to Wyoming; goods and services that governments provide are entirely contingent upon the capacity of taxpayers to pay for them. And when governments run out of taxpayer dollars, they renege on their promises.