March 27, 2025 • 25 mins
In part 1 of this two part episode, Stacey Richter speaks with James Gelfand, President and CEO of the ERISA Industry Committee (ERIC), about the potential effects of proposed Medicaid cuts on plan sponsors and their members.
They explore ways plan sponsors can prepare for the changes, including Medicaid's four major areas of possible cuts: reducing waste, fraud, and abuse; implementing work requirements; reeling in provider taxes; and addressing the 'Cornhusker Kickback' from the ACA.
The conversation also delves into how state governments and hospitals might respond to these cuts and suggests actions for plan sponsors to mitigate potential impacts. The episode is part one of a two-part series, with the second episode covering Medicare site neutral payments and HSA reforms.
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05:22 What’s happening with Medicaid cuts?
06:47 What are the four main things congress is actually looking at in cutting Medicaid?
09:12 What is the Cornhusker Kickback?
16:46 What should plan sponsors be doing right now to prepare for these potential Medicaid cuts?
20:04 What’s going to happen to hospitals with these proposed Medicaid cuts?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Episode 469.
"The Impact On Plan Sponsors of MedicaidCuts." Today I speak with James Gelfand.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:23):
Relentlessly Seeking Value.
I was talking to Cora Opsahl the otherday, and the topic of Medicaid came up,
mostly how the current Medicaid goingson will impact plan sponsors, if at all.
But if so, what would a savvy plansponsor be doing in this moment
to not get caught flat footed?
(00:43):
So, and I will admit there were martinisinvolved, there was speculation between
Cora and I and hypotheses offered.
But at one point Cora said, you know,if you're going to talk about this
on the podcast, who you really shouldbe speaking with is James Gelfand,
president and CEO of the ERISA IndustryCommittee, otherwise known as ERIC.
(01:05):
So yeah, I'm good like this.
And today I am welcoming James Gelfandto the pod for this this double episode.
What is in store for you, you may bewondering, and why with a double episode?
Well, let me put it to you straight.
When I tracked down James Gelfand,we started chatting about the
possible ways this show could go.
(01:25):
James said, Just as important as ormaybe more important for plan sponsors
than the Medicaid goings on are what'shappening with Medicare site neutral
payments and also with updates to HSAhealth savings account legislation.
And here we are with ourtwo part episode today.
I briefly toyed with jamming it allinto one show, but then decided it
(01:48):
would be, yeah, just a little too long.
You can let me know what youthink, though, should you have
commentary on this decision ofmine to break it into two shows.
James thought you could handle itall in one, just saying, by the way.
This first show will be the down lowon what's happening with Medicaid cuts.
And I'm so thankful to Jamesfor straightening out a lot
(02:08):
of question marks for me.
For example, the Cornhusker Kickback.
You familiar with this?
I was not.
But this Cornhusker Kickback kindof plays center stage role in the
current Medicaid possibly cuts.
So yeah, listen to the showto get up to speed on that.
And also James Gelfand's opinion onhow much and how proposed Medicaid
(02:28):
cuts may impact employers in waysthat may be more or less obvious.
For example, how many of an employer'smembers are actually on Medicaid?
Also, if states have to pay morefor Medicaid, will they raise the
corporate tax to cover their newMedicaid costs currently being
funded by the federal government?
Another impact on plan sponsors,hospitals, who could very easily
(02:53):
and probably will use this asa quite opportunistic reason or
as an excuse, depending on thehospital, to raise their prices.
And that matters because 50percentish of most plan sponsors
spend these days is on hospitals.
Listened to the shows with,my goodness, there are many.
Vivian Ho, PhD, most recently.
Marilyn Bartlett also talked about theimpact of hospital prices on plan spend.
(03:16):
Cora Opsahl, of course.
Yeah, that's a good trifecta for youthere if you want a place to start.
There's an article, by the way, aboutthe hospital slash plan sponsor slash
Medicaid dynamic in Modern Healthcarethe other day that quotes Shawn Greminger
and Elizabeth Mitchell, and both of themare quoted as saying, don't even think
(03:38):
about it, major consolidated hospitals.
The title of the article ispretty blunt to that end.
It's called "Medicaid Cuts CannotIncrease Hospital Rates, Employers Warn".
Big caveat I just want to throw inhere is that the situation is fluid.
This show with James Gelfandwas recorded the first week of
March 2025, and it representedwhat was going on at that time.
(03:59):
A lot of this conversation is greathistorical background information,
however, which will be no matterwhat happens, it is extremely
relevant, again, no matter howreality winds up unfolding, but yeah.
Lots of forces at play thatcould impact the outcomes here
so do check on the latest.
James Gelfand, as aforementioned, ispresident and CEO of the ERISA Industry
(04:23):
Committee, otherwise known as ERIC.
ERIC represents the largest self insuredemployers advocating for comprehensive
benefits and health care policiesthat impact millions of employees.
James Gelfand brings nearly twodecades of experience in health care
advocacy, having worked at the Chamberof Commerce and on Capitol Hill.
When you are done listening to thisshow, do queue up part two of this
(04:45):
particular double episode where wetalk site neutral payments and honest
billing practices there, and then alsoHSA, health savings account reform.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
James Gelfand, welcome toRelentless Health Value.
Thanks for having me today.
In the other part of this episode, we aregoing to talk about or have talked about
(05:07):
depending on the order in which you, thelistener, are going about this endeavor.
But we talked about site neutral Medicarepayments and also HSA reforms, both what's
up and then also your advice so plansponsors don't get caught flat footed.
Right now, however, let'spivot and chat about Medicaid.
This is a significant sourceof consternation for many, to
(05:29):
put it in the absolute mildestterms, including plan sponsors.
Maybe you could take it from the top here.
What's up with Medicaid?
There's quite a bit of workbeing done on the federal level
right now on a big tax package.
I'm sure you followed some of the newscoverage about it, a lot of which is
focused on cutting the Medicaid system.
Let's just dig in a little bitbecause I think that probably most
(05:52):
listeners are familiar with the eighthundred and it was eight hundred and
eighty billion dollars number, right?
And you know, I think you often don'trealize that like sixty four percent of
babies born in this country are being paidfor by medicaid, and there's a significant
number of elderly folks in nursing homes.
Also, SNFs that are beingpaid for by Medicaid.
But what are things that aren'tknown that should be known?
(06:15):
The 880 billion number isdefinitely very intimidating.
And when you see chyrons on thenews saying 880 billion, and
millions and millions of peopleare going to lose Medicaid, they'll
be out in the street, you know,it's obviously extremely jarring.
But if you listen to what Congress isreally talking about to the changes
(06:36):
that they're really exploring in theMedicaid program, they're not anywhere
near as perhaps exciting or horrifying,depending on which side of the aisle
you sit on, for instance, I thinkthe four major categories of Medicaid
changes that I think that they'reseriously looking at, you know, number
one is waste, fraud and abuse, right?
So they're going after improperpayments that never should have
(06:57):
taken place in the first place.
Okay, so FWA, Fraud, Waste and Abuse,and there's going to be some there
but, yeah, not $880 billion in savings.
So what else we got?
Number two is work requirements forable bodied adults in the Medicaid
program, which again, already beentried in certain states, didn't
(07:20):
really rock the boat all that much.
I think they tried them in Georgia.
I think there were over 100,000 people,like 120,000 people or something like
that, that were eligible for Medicaid.
And only like 5,000 made it throughthe gauntlet to actually get Medicaid.
Many of the people who didn't may haveactually been working, you know, like they
(07:42):
couldn't take off time of work to go sitin the office or whatever to figure out
how to, or they weren't literate enough,whatever, to actually make it through all
the different steps to get on Medicaid.
So there was this just like wentfrom 120,000 people to 5,000, right?
So I guess they saved money, but ofthe dollars that were subsequently
spent, admin costs were super high.
(08:04):
I think admin costs were actually twothirds of the spend at that point.
So yeah, I don't know if that isrepresentative of how other work
requirement programs would go, but okay.
I mean, I guess they save money.
So work requirements.
Number three has to do withthese so called provider taxes.
This is a scheme.
(08:24):
In fact, the Paragon Institutecalls it Medicaid money laundering.
But it's a scheme by which hospitals,providers, and state governments work
together to essentially defraud thetaxpayers and the federal government
to draw down way more money thanthey should be drawing down from
the federal government by chargingfake taxes to hospitals and then
(08:45):
giving the hospitals the money back.
So they're looking at reelingthat in to some extent.
And again, it's, it's beenregulated a little bit.
The Obama administration actuallywent after this a little bit.
So they're going to just try toget a little bit stricter on that.
Wow.
Okay.
So reeling back so called providertaxes, that's number three.
And then number four is dealingwith the so called Cornhusker
(09:06):
Kickback from the ACA.
And I don't know if your viewers arefamiliar with the Cornhusker Kickback.
Yeah.
Talk to me about the Cornhusker Kickback.
Right.
So when the Affordable Care Act wasfirst being debated in 2009 and 2010,
the big question was, okay, we haveall agreed we're going to expand
(09:26):
Medicaid to up to 130 somethingpercent of the federal poverty level.
Every state's going to haveto expand this this number.
So this is what Medicaid expansion means.
Expanding eligibility to Medicaidcoverage over the federal poverty
limit, FPL, or whatever it wasin the state before, up to 130ish
(09:52):
percent of the federal poverty level.
And, you know, it was going to beonly Democrats voting for the bill
and they had exactly 60 senators.
So they had to make every single senatorcomfortable with voting for the bill.
The senator at the time fromNebraska was a Democrat named Nelson.
And he said, well, I'm not going tovote for the bill if Nebraska is going
(10:13):
to have to pay the cost of all thesenew people who are going to be added
to the Medicaid program in our state.
And so the Senate Majority Leader at thetime, Harry Reid from Nevada, he said,
okay, well, what we're going to do iswe're going to say for Nebraska, in your
state, all these so called newly eligibleMedicaid enrollees, the federal government
(10:34):
will pay all the costs of those guys.
So you won't have to pay for that.
It'll be free for Nebraska.
Now what do you think happened?
Well, of course, all the othersenators representing all the
other states say, wait a minute.
What about us?
Why should our states have to pay?
And in the news, people started talkingabout this special deal with Nebraska.
They were calling itthe Cornhusker Kickback.
So in the end, what they didin the ACA was they changed it.
(10:58):
And they said, instead of just Nebraska,every state that expands Medicaid,
The federal government is going topay almost all of the costs of the
new people who are added to Medicaidand started at almost 100 percent and
it tamps down to like 90 percent butyou've still got the federal government
paying basically all of the costs.
Meanwhile, for traditional Medicaidenrollings, so this is disabled people,
(11:23):
this is poor women and children forthose people in many states, the state
has to pay as much as half or even moreof the cost of those Medicaid enrollees.
And so one of the things that Ithink Congress is going to look at is
they're going to say, you know what,that Cornhusker Kickback, we got to
reel this in some, we got to get thefederal taxpayers off the hook for
(11:44):
some of these costs and say to thestates, you need to treat these new
enrollees the same way that you treatthe rest of your Medicaid enrollees.
Okay.
So this is the fourth Medicaid cutway to save money that is being
reviewed to get rid of the federalgovernment paying for what you said
is called the Cornhusker Kickback.
(12:05):
So if I'm understanding this, first ofall, you had a whole bunch of states
that had expanded, they had pretty bigmedicaids even before the ACA, correct?
So, we're only talking about the statesthat expanded Medicaid subsequently
and the enrollees that enrolledsubsequently so that they were part of
(12:27):
the expansion, not part of whoever thatstate would have covered, that state
Medicaid would have covered anyway.
That's right.
I have not heard anyone in Congresstalking about reducing payments
from the federal government forpeople who are outside of that
so called expansion population.
And the expansion population is, I'msure every state is different, but
(12:50):
there's some federal poverty level numberthere like, Oh, if you're a hundred
percent of the federal poverty level,then the Medicaid expansion, it takes
in people who are like a hundred and
It's 101 through 138.
Traditional Medicaidcovers anybody who is.
At or below the federal poverty level,but the expansion covers people up to 138.
(13:13):
Right.
Essentially, the expansion populationare people who made too much money
to be on Medicaid before ACA, butdidn't make enough money to qualify
for the marketplace subsidiesthat are available to people who
purchase through an ACA exchange.
That's what's on the chopping block.
So for those people, the stateswould be expected to pay something
(13:36):
closer to what they pay for allthe rest of the Medicaid enrollees.
Which, as you said, is half or so.
In many states, it'ssomewhere around that.
I think it's probably also worth notingthat a lot of states are going to be
deeply unhappy about this, becausethis means that they're going to have
to devote part of their budget totowards filling this gap, and they're
going to have to make tough decisions.
(13:57):
And so a number of states haveattempted to call this bluff.
And one of the ways they did it is someof these states actually passed so called
trigger laws and the trigger law says,if the federal government stops paying
all the costs of these people, then we'regoing to stop paying for them at all.
And we're going to kick them off Medicaid.
Ha ha ha.
We dare you, federal government,you know, come and give us a try.
But do you really think that the statesare just going to let that happen?
(14:20):
Well, I mean, it's, it's certainlya bluff that has some consequences.
So I guess it's, um, yeah, thisis a dramatic unfolding tale
here, it sounds like to me.
Yes, I think so.
The reality is that you're going to havesome shuffling that's going to take place.
You're going to have, in some cases, theshuffling is going to be dollars where
(14:40):
the states are going to have to shufflecertain money that they were spending on
other things instead into the Medicaidprogram, which is bloated and expensive,
but we're not looking at reforming it.
We're just changing some of that around.
And in some cases, you're going tohave shuffling where people who were on
Medicaid because it was the best dealfor them are going to say, you know what?
Maybe I want to enroll inan employer sponsored plan.
(15:01):
Or maybe I want to enrollon my spouse's plan.
Or maybe I am 24 and I want to goon to my parents plan, et cetera.
So you're going to have people shufflingbetween the different insurance
options that may be available to them.
It sounds like if I'm just kind ofrecapping this and then I definitely want
to get to Does this impact plan sponsors?
This all?
Mm. It sounds like it mostly affectsthose who are above the federal poverty
(15:25):
limit, but under 138 percent of it.
So it's that cohort in statesthat are part of this Cornhusker
arrangement that they expandedMedicaid after the ACA, right?
So it's those states and that sliceof individuals in those states,
unless there's some state that put thetriggers in there where they're just
(15:48):
gonna hope that, I guess, other peopleare very, very concerned about people
in their state enough that, yeah.
My guess, for those trigger laws isgoing to be that a state very quickly
make a change here and put somethingmore moderate and they're going to
reconvene their legislatures and gettogether and they're going to say,
okay, well, listen, we obviously don'twant these hundreds of thousands of
(16:09):
people to have no health insurance.
So we're going to shufflearound some the money.
Maybe we will go up to 138%.
Maybe, you know, we'll make somechanges there, or maybe we will
otherwise, you know, reform our Medicaidprogram to drive some savings out
of it and then reinvest that moneyto cover the expansion population.
It always strikes me as odd when I hearstates thinking that others outside
(16:33):
of their own state can be counted onto care about making sure that people
in their state have access to medicalcare and will stand up and shell out
for it more than those in the state.
I don't know.
So if I'm a plan sponsor,what am I doing right now?
We went through four ways thatMedicaid may be cut or savings derived.
(16:54):
If I'm a plan sponsor, whatam I doing about all of this?
Well, so the two key things that wehave to try to figure out to answer
that question are number one, arethere plan sponsors that have a ton of
people who are on Medicaid right now?
And I'm sure you've heard forinstance, big box stores.
Or gig economy type employers, some veryspecific industries are certainly accused
(17:20):
of having a large Medicaid population.
Is that true?
I don't know the answer to that.
I know that in the wake of theACA, a lot more employers started
offering comprehensive benefitsto their part time population.
Most employers, because of theemployer mandate under ACA, which says
that for employees who are offeredcoverage, they can only be required
(17:43):
to pay a certain percentage of theirincome towards that health insurance.
If they have to pay greater than thatpercentage, the employer actually
gets a pretty hefty fine from the IRS.
So most large employers, I think haveupdated their health benefits since 2014
when all of this came into an effect.
So that's the question number one.
(18:05):
How big is the Medicaid population,the working Medicaid population?
Question number two is dependingon changes that take place in
the Medicaid population, how arestates and how are healthcare
providers going to react, right?
Are states going to turn around andsay, well, I'm, you know, increasing
the state corporate income tax inorder to offset the increased costs
(18:26):
we're going to have for Medicaid.
Or hospitals going to say, oh, well, youknow, we think that we're going to lose
some patients from Medicaid and they'regoing to now be uninsured, but they're
still going to come to our emergency room.
So, therefore, we'rejacking up our prices.
I guess that's not even really a question.
Is it Stacey?
They're definitely going tosay that and do that, but is it
grounded in reality in any way?
(18:47):
And that's going to affectemployers because we're going to
potentially be left footing thebill and filling some of that gap.
Let's just quickly review.
The first thing that you said, thefirst question to be had here is whether
there are sectors of the economy orplan sponsors who actually have a lot
(19:08):
of their workers who are on Medicaid.
And I, you know, just personally,I have been sent pictures of the
bulletin board in the lunchroom.
And there's a how to enrollin Medicaid poster that's
hanging on the bulletin board.
But to your exact point, like howmany of any given company's workers
are actually on Medicaid that nowmay not have access to Medicaid?
(19:30):
Because I would think that it's goingto be exactly those people in the
101 to 138 category there, right?
Like, because they're, they are working.
So if they get caught off of Medicaid,then that might be something for a
plan sponsor to consider that theymay wind up actually having a lot more
people on their plans or uninsured.
I mean, all of that does, I couldcertainly see have consequences, but
(19:54):
the magnitude of those consequencesare really going to depend on what
percentage of workers any given plansponsor may have in that category.
So I think that was thefirst point that you made.
Then the what is going to happenwith hospitals mainly, right?
Because if you wind up getting peoplewho are now newly uninsured, let's
just say, where you just did a wholeshow on how emergency room volume is
(20:18):
going way up and how it is increasinglyhappening that plan members patients
are using the emergency room for nonemergent things like primary care or
whatever, and it is a very expensivecare setting in order to get this.
But if it's an uninsured member, thenthe hospital is going to serve those
(20:38):
patients, then they're going to say theyhave all this uncompensated care, and
then they're going to turn around andtell the local planned sponsors in that
particular area that will obviously ourprices have to go up, and it is very tough
as Al Lewis says to negotiate emergencyroom prices, etc. So it could be a thing.
In fact, there was just a wholearticle in Modern Healthcare the other
day, and this is the title of thearticle, "Medicaid cuts cannot increase
(21:01):
hospital rates, employers warn".
So the point that you are makingis the hospitals are going to try,
that's what they're going to do.
So if I am a savvy plan sponsor,what am I doing right now?
So to address the first issue, what Iwould do if I was a plan sponsor would
be to do an audit of my employees.
(21:22):
And determine those who theoreticallywere they single, right, because you
don't know their modified adjustedgross income, their family income.
But, thinking of them as singleindividuals who currently are not
enrolled in your employer sponsoredhealth benefit who could potentially
decide to switch to enroll.
And are you prepared forthat influx of employees?
(21:46):
How might it affect your risk pool?
How might it affect your,your annual budgeting, right?
So.
It's a guessing game, I know,but you could at least be a
little bit prepared for it.
If you figure out what is the maximumpotential population that I have that
could potentially suddenly migrate intomy employer sponsored benefit plan.
So that would be step number one.
In terms of how you're going to dealwith the hospitals as they, you know,
(22:10):
wailing and gnashing of teeth commences.
You know, I think the first thingyou need to do is to talk to your TPA
and say, hold the line, stand firm.
If there is a conflict between thestate government and the federal
government and the hospitals, becausethey don't like the numbers that
are coming down, that's up to them.
But we're already paying twiceor more what Medicare pays
(22:34):
for the very same services.
Paying, the highest rates in the world.
This can't continue.
We're not going to sit hereand be the ones to hold the bag
when this is all said and done.
One of the things I do just want tomention here is the other wrinkle is that
obviously not all hospitals are the same.
So you've got major consolidatedhospitals with billions of
(22:55):
dollars in their endowment funds.
They have trusts that areliterally billions of dollars.
And then you've got hospitals that areactually essential safety net hospitals
who are actually struggling and mayactually be on the precipice of going out.
And um, there is a document that'sflying around that shows at risk
(23:18):
hospitals and how many thereare in every state, et cetera.
Right.
So I do also think that from theemployer standpoint, it might be
something to do to take stock of whetherthere are essential hospitals like
that, you know, safety nets that arenot part of these major consolidated
entities that have tons of money.
So I think everything that you'resaying is, is definitely applies there.
(23:41):
But if those indies either, ifthey get themselves into financial
straits and go out, they are actuallyprobably the most cost effective
places for plan members to go.
So if they go out, then all of asudden you wind up with the cost
of consolidation and the priceincreases that go along with that.
Have you thought about that at all?
Is that relevant
?In loss of competition, obviously, it's going to be very negative for plan
(24:05):
enrollees as well as for plan sponsors.
I think that it's overblown.
I have yet to meet a hospital thathasn't said that they're on the cusp
of bankruptcy, even if there sitting on$10 billion endowments and they've got
it 14 new wings being built and it'sa giant crystal skyscraper, you know.
They're all talking about how they'reconstantly about to go out of business.
It's very tiresome, but therecertainly are those hospitals
(24:27):
that are actually at risk.
They're actually rural hospitals.
By the way, rural hospital doesn't meananything anymore, at least not the way
that we think about it at the federalgovernment level, because now all of these
city hospitals have claimed to be rural.
But, there is this small subset ofhospitals who legitimately need help.
And that's on states and on the federalgovernment to find ways to help them,
(24:50):
but you can't hold the entire Medicaidsystem hostage and the entire federal
government and the entire tax code hostagebecause we're worried about this problem.
Where we don't really knowwhat the scope of it is.
So to those hospitals that areactually in those dire straits.
Our hearts go out to you and wedon't want you to fail, right?
Employers don't want those hospitalsto fail, but at the same time, we
(25:12):
have to find a way to help themthat doesn't destroy the rest of
the system with unsustainable costs.
James Gelfand, if anyone is interestedin learning more about your work or
about ERIC, where would you direct them?
Check out our website on eric.org.
James Gelfand, thank you so much forbeing on Relentless Health Value today.
Thank you for having me.
This is Shawn Gremminger, Presidentand CEO of the National Alliance
(25:33):
of Healthcare Purchaser Coalitions.
If you like this podcast, Istrongly recommend subscribing
and leaving a review.
Episode 469.
"The Impact On Plan Sponsors of MedicaidCuts." Today I speak with James Gelfand.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:23):
Relentlessly Seeking Value.
I was talking to Cora Opsahl the otherday, and the topic of Medicaid came up,
mostly how the current Medicaid goingson will impact plan sponsors, if at all.
But if so, what would a savvy plansponsor be doing in this moment
to not get caught flat footed?
(00:43):
So, and I will admit there were martinisinvolved, there was speculation between
Cora and I and hypotheses offered.
But at one point Cora said, you know,if you're going to talk about this
on the podcast, who you really shouldbe speaking with is James Gelfand,
president and CEO of the ERISA IndustryCommittee, otherwise known as ERIC.
(01:05):
So yeah, I'm good like this.
And today I am welcoming James Gelfandto the pod for this this double episode.
What is in store for you, you may bewondering, and why with a double episode?
Well, let me put it to you straight.
When I tracked down James Gelfand,we started chatting about the
possible ways this show could go.
(01:25):
James said, Just as important as ormaybe more important for plan sponsors
than the Medicaid goings on are what'shappening with Medicare site neutral
payments and also with updates to HSAhealth savings account legislation.
And here we are with ourtwo part episode today.
I briefly toyed with jamming it allinto one show, but then decided it
(01:48):
would be, yeah, just a little too long.
You can let me know what youthink, though, should you have
commentary on this decision ofmine to break it into two shows.
James thought you could handle itall in one, just saying, by the way.
This first show will be the down lowon what's happening with Medicaid cuts.
And I'm so thankful to Jamesfor straightening out a lot
(02:08):
of question marks for me.
For example, the Cornhusker Kickback.
You familiar with this?
I was not.
But this Cornhusker Kickback kindof plays center stage role in the
current Medicaid possibly cuts.
So yeah, listen to the showto get up to speed on that.
And also James Gelfand's opinion onhow much and how proposed Medicaid
(02:28):
cuts may impact employers in waysthat may be more or less obvious.
For example, how many of an employer'smembers are actually on Medicaid?
Also, if states have to pay morefor Medicaid, will they raise the
corporate tax to cover their newMedicaid costs currently being
funded by the federal government?
Another impact on plan sponsors,hospitals, who could very easily
(02:53):
and probably will use this asa quite opportunistic reason or
as an excuse, depending on thehospital, to raise their prices.
And that matters because 50percentish of most plan sponsors
spend these days is on hospitals.
Listened to the shows with,my goodness, there are many.
Vivian Ho, PhD, most recently.
Marilyn Bartlett also talked about theimpact of hospital prices on plan spend.
(03:16):
Cora Opsahl, of course.
Yeah, that's a good trifecta for youthere if you want a place to start.
There's an article, by the way, aboutthe hospital slash plan sponsor slash
Medicaid dynamic in Modern Healthcarethe other day that quotes Shawn Greminger
and Elizabeth Mitchell, and both of themare quoted as saying, don't even think
(03:38):
about it, major consolidated hospitals.
The title of the article ispretty blunt to that end.
It's called "Medicaid Cuts CannotIncrease Hospital Rates, Employers Warn".
Big caveat I just want to throw inhere is that the situation is fluid.
This show with James Gelfandwas recorded the first week of
March 2025, and it representedwhat was going on at that time.
(03:59):
A lot of this conversation is greathistorical background information,
however, which will be no matterwhat happens, it is extremely
relevant, again, no matter howreality winds up unfolding, but yeah.
Lots of forces at play thatcould impact the outcomes here
so do check on the latest.
James Gelfand, as aforementioned, ispresident and CEO of the ERISA Industry
(04:23):
Committee, otherwise known as ERIC.
ERIC represents the largest self insuredemployers advocating for comprehensive
benefits and health care policiesthat impact millions of employees.
James Gelfand brings nearly twodecades of experience in health care
advocacy, having worked at the Chamberof Commerce and on Capitol Hill.
When you are done listening to thisshow, do queue up part two of this
(04:45):
particular double episode where wetalk site neutral payments and honest
billing practices there, and then alsoHSA, health savings account reform.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
James Gelfand, welcome toRelentless Health Value.
Thanks for having me today.
In the other part of this episode, we aregoing to talk about or have talked about
(05:07):
depending on the order in which you, thelistener, are going about this endeavor.
But we talked about site neutral Medicarepayments and also HSA reforms, both what's
up and then also your advice so plansponsors don't get caught flat footed.
Right now, however, let'spivot and chat about Medicaid.
This is a significant sourceof consternation for many, to
(05:29):
put it in the absolute mildestterms, including plan sponsors.
Maybe you could take it from the top here.
What's up with Medicaid?
There's quite a bit of workbeing done on the federal level
right now on a big tax package.
I'm sure you followed some of the newscoverage about it, a lot of which is
focused on cutting the Medicaid system.
Let's just dig in a little bitbecause I think that probably most
(05:52):
listeners are familiar with the eighthundred and it was eight hundred and
eighty billion dollars number, right?
And you know, I think you often don'trealize that like sixty four percent of
babies born in this country are being paidfor by medicaid, and there's a significant
number of elderly folks in nursing homes.
Also, SNFs that are beingpaid for by Medicaid.
But what are things that aren'tknown that should be known?
(06:15):
The 880 billion number isdefinitely very intimidating.
And when you see chyrons on thenews saying 880 billion, and
millions and millions of peopleare going to lose Medicaid, they'll
be out in the street, you know,it's obviously extremely jarring.
But if you listen to what Congress isreally talking about to the changes
(06:36):
that they're really exploring in theMedicaid program, they're not anywhere
near as perhaps exciting or horrifying,depending on which side of the aisle
you sit on, for instance, I thinkthe four major categories of Medicaid
changes that I think that they'reseriously looking at, you know, number
one is waste, fraud and abuse, right?
So they're going after improperpayments that never should have
(06:57):
taken place in the first place.
Okay, so FWA, Fraud, Waste and Abuse,and there's going to be some there
but, yeah, not $880 billion in savings.
So what else we got?
Number two is work requirements forable bodied adults in the Medicaid
program, which again, already beentried in certain states, didn't
(07:20):
really rock the boat all that much.
I think they tried them in Georgia.
I think there were over 100,000 people,like 120,000 people or something like
that, that were eligible for Medicaid.
And only like 5,000 made it throughthe gauntlet to actually get Medicaid.
Many of the people who didn't may haveactually been working, you know, like they
(07:42):
couldn't take off time of work to go sitin the office or whatever to figure out
how to, or they weren't literate enough,whatever, to actually make it through all
the different steps to get on Medicaid.
So there was this just like wentfrom 120,000 people to 5,000, right?
So I guess they saved money, but ofthe dollars that were subsequently
spent, admin costs were super high.
(08:04):
I think admin costs were actually twothirds of the spend at that point.
So yeah, I don't know if that isrepresentative of how other work
requirement programs would go, but okay.
I mean, I guess they save money.
So work requirements.
Number three has to do withthese so called provider taxes.
This is a scheme.
(08:24):
In fact, the Paragon Institutecalls it Medicaid money laundering.
But it's a scheme by which hospitals,providers, and state governments work
together to essentially defraud thetaxpayers and the federal government
to draw down way more money thanthey should be drawing down from
the federal government by chargingfake taxes to hospitals and then
(08:45):
giving the hospitals the money back.
So they're looking at reelingthat in to some extent.
And again, it's, it's beenregulated a little bit.
The Obama administration actuallywent after this a little bit.
So they're going to just try toget a little bit stricter on that.
Wow.
Okay.
So reeling back so called providertaxes, that's number three.
And then number four is dealingwith the so called Cornhusker
(09:06):
Kickback from the ACA.
And I don't know if your viewers arefamiliar with the Cornhusker Kickback.
Yeah.
Talk to me about the Cornhusker Kickback.
Right.
So when the Affordable Care Act wasfirst being debated in 2009 and 2010,
the big question was, okay, we haveall agreed we're going to expand
(09:26):
Medicaid to up to 130 somethingpercent of the federal poverty level.
Every state's going to haveto expand this this number.
So this is what Medicaid expansion means.
Expanding eligibility to Medicaidcoverage over the federal poverty
limit, FPL, or whatever it wasin the state before, up to 130ish
(09:52):
percent of the federal poverty level.
And, you know, it was going to beonly Democrats voting for the bill
and they had exactly 60 senators.
So they had to make every single senatorcomfortable with voting for the bill.
The senator at the time fromNebraska was a Democrat named Nelson.
And he said, well, I'm not going tovote for the bill if Nebraska is going
(10:13):
to have to pay the cost of all thesenew people who are going to be added
to the Medicaid program in our state.
And so the Senate Majority Leader at thetime, Harry Reid from Nevada, he said,
okay, well, what we're going to do iswe're going to say for Nebraska, in your
state, all these so called newly eligibleMedicaid enrollees, the federal government
(10:34):
will pay all the costs of those guys.
So you won't have to pay for that.
It'll be free for Nebraska.
Now what do you think happened?
Well, of course, all the othersenators representing all the
other states say, wait a minute.
What about us?
Why should our states have to pay?
And in the news, people started talkingabout this special deal with Nebraska.
They were calling itthe Cornhusker Kickback.
So in the end, what they didin the ACA was they changed it.
(10:58):
And they said, instead of just Nebraska,every state that expands Medicaid,
The federal government is going topay almost all of the costs of the
new people who are added to Medicaidand started at almost 100 percent and
it tamps down to like 90 percent butyou've still got the federal government
paying basically all of the costs.
Meanwhile, for traditional Medicaidenrollings, so this is disabled people,
(11:23):
this is poor women and children forthose people in many states, the state
has to pay as much as half or even moreof the cost of those Medicaid enrollees.
And so one of the things that Ithink Congress is going to look at is
they're going to say, you know what,that Cornhusker Kickback, we got to
reel this in some, we got to get thefederal taxpayers off the hook for
(11:44):
some of these costs and say to thestates, you need to treat these new
enrollees the same way that you treatthe rest of your Medicaid enrollees.
Okay.
So this is the fourth Medicaid cutway to save money that is being
reviewed to get rid of the federalgovernment paying for what you said
is called the Cornhusker Kickback.
(12:05):
So if I'm understanding this, first ofall, you had a whole bunch of states
that had expanded, they had pretty bigmedicaids even before the ACA, correct?
So, we're only talking about the statesthat expanded Medicaid subsequently
and the enrollees that enrolledsubsequently so that they were part of
(12:27):
the expansion, not part of whoever thatstate would have covered, that state
Medicaid would have covered anyway.
That's right.
I have not heard anyone in Congresstalking about reducing payments
from the federal government forpeople who are outside of that
so called expansion population.
And the expansion population is, I'msure every state is different, but
(12:50):
there's some federal poverty level numberthere like, Oh, if you're a hundred
percent of the federal poverty level,then the Medicaid expansion, it takes
in people who are like a hundred and
It's 101 through 138.
Traditional Medicaidcovers anybody who is.
At or below the federal poverty level,but the expansion covers people up to 138.
(13:13):
Right.
Essentially, the expansion populationare people who made too much money
to be on Medicaid before ACA, butdidn't make enough money to qualify
for the marketplace subsidiesthat are available to people who
purchase through an ACA exchange.
That's what's on the chopping block.
So for those people, the stateswould be expected to pay something
(13:36):
closer to what they pay for allthe rest of the Medicaid enrollees.
Which, as you said, is half or so.
In many states, it'ssomewhere around that.
I think it's probably also worth notingthat a lot of states are going to be
deeply unhappy about this, becausethis means that they're going to have
to devote part of their budget totowards filling this gap, and they're
going to have to make tough decisions.
(13:57):
And so a number of states haveattempted to call this bluff.
And one of the ways they did it is someof these states actually passed so called
trigger laws and the trigger law says,if the federal government stops paying
all the costs of these people, then we'regoing to stop paying for them at all.
And we're going to kick them off Medicaid.
Ha ha ha.
We dare you, federal government,you know, come and give us a try.
But do you really think that the statesare just going to let that happen?
(14:20):
Well, I mean, it's, it's certainlya bluff that has some consequences.
So I guess it's, um, yeah, thisis a dramatic unfolding tale
here, it sounds like to me.
Yes, I think so.
The reality is that you're going to havesome shuffling that's going to take place.
You're going to have, in some cases, theshuffling is going to be dollars where
(14:40):
the states are going to have to shufflecertain money that they were spending on
other things instead into the Medicaidprogram, which is bloated and expensive,
but we're not looking at reforming it.
We're just changing some of that around.
And in some cases, you're going tohave shuffling where people who were on
Medicaid because it was the best dealfor them are going to say, you know what?
Maybe I want to enroll inan employer sponsored plan.
(15:01):
Or maybe I want to enrollon my spouse's plan.
Or maybe I am 24 and I want to goon to my parents plan, et cetera.
So you're going to have people shufflingbetween the different insurance
options that may be available to them.
It sounds like if I'm just kind ofrecapping this and then I definitely want
to get to Does this impact plan sponsors?
This all?
Mm. It sounds like it mostly affectsthose who are above the federal poverty
(15:25):
limit, but under 138 percent of it.
So it's that cohort in statesthat are part of this Cornhusker
arrangement that they expandedMedicaid after the ACA, right?
So it's those states and that sliceof individuals in those states,
unless there's some state that put thetriggers in there where they're just
(15:48):
gonna hope that, I guess, other peopleare very, very concerned about people
in their state enough that, yeah.
My guess, for those trigger laws isgoing to be that a state very quickly
make a change here and put somethingmore moderate and they're going to
reconvene their legislatures and gettogether and they're going to say,
okay, well, listen, we obviously don'twant these hundreds of thousands of
(16:09):
people to have no health insurance.
So we're going to shufflearound some the money.
Maybe we will go up to 138%.
Maybe, you know, we'll make somechanges there, or maybe we will
otherwise, you know, reform our Medicaidprogram to drive some savings out
of it and then reinvest that moneyto cover the expansion population.
It always strikes me as odd when I hearstates thinking that others outside
(16:33):
of their own state can be counted onto care about making sure that people
in their state have access to medicalcare and will stand up and shell out
for it more than those in the state.
I don't know.
So if I'm a plan sponsor,what am I doing right now?
We went through four ways thatMedicaid may be cut or savings derived.
(16:54):
If I'm a plan sponsor, whatam I doing about all of this?
Well, so the two key things that wehave to try to figure out to answer
that question are number one, arethere plan sponsors that have a ton of
people who are on Medicaid right now?
And I'm sure you've heard forinstance, big box stores.
Or gig economy type employers, some veryspecific industries are certainly accused
(17:20):
of having a large Medicaid population.
Is that true?
I don't know the answer to that.
I know that in the wake of theACA, a lot more employers started
offering comprehensive benefitsto their part time population.
Most employers, because of theemployer mandate under ACA, which says
that for employees who are offeredcoverage, they can only be required
(17:43):
to pay a certain percentage of theirincome towards that health insurance.
If they have to pay greater than thatpercentage, the employer actually
gets a pretty hefty fine from the IRS.
So most large employers, I think haveupdated their health benefits since 2014
when all of this came into an effect.
So that's the question number one.
(18:05):
How big is the Medicaid population,the working Medicaid population?
Question number two is dependingon changes that take place in
the Medicaid population, how arestates and how are healthcare
providers going to react, right?
Are states going to turn around andsay, well, I'm, you know, increasing
the state corporate income tax inorder to offset the increased costs
(18:26):
we're going to have for Medicaid.
Or hospitals going to say, oh, well, youknow, we think that we're going to lose
some patients from Medicaid and they'regoing to now be uninsured, but they're
still going to come to our emergency room.
So, therefore, we'rejacking up our prices.
I guess that's not even really a question.
Is it Stacey?
They're definitely going tosay that and do that, but is it
grounded in reality in any way?
(18:47):
And that's going to affectemployers because we're going to
potentially be left footing thebill and filling some of that gap.
Let's just quickly review.
The first thing that you said, thefirst question to be had here is whether
there are sectors of the economy orplan sponsors who actually have a lot
(19:08):
of their workers who are on Medicaid.
And I, you know, just personally,I have been sent pictures of the
bulletin board in the lunchroom.
And there's a how to enrollin Medicaid poster that's
hanging on the bulletin board.
But to your exact point, like howmany of any given company's workers
are actually on Medicaid that nowmay not have access to Medicaid?
(19:30):
Because I would think that it's goingto be exactly those people in the
101 to 138 category there, right?
Like, because they're, they are working.
So if they get caught off of Medicaid,then that might be something for a
plan sponsor to consider that theymay wind up actually having a lot more
people on their plans or uninsured.
I mean, all of that does, I couldcertainly see have consequences, but
(19:54):
the magnitude of those consequencesare really going to depend on what
percentage of workers any given plansponsor may have in that category.
So I think that was thefirst point that you made.
Then the what is going to happenwith hospitals mainly, right?
Because if you wind up getting peoplewho are now newly uninsured, let's
just say, where you just did a wholeshow on how emergency room volume is
(20:18):
going way up and how it is increasinglyhappening that plan members patients
are using the emergency room for nonemergent things like primary care or
whatever, and it is a very expensivecare setting in order to get this.
But if it's an uninsured member, thenthe hospital is going to serve those
(20:38):
patients, then they're going to say theyhave all this uncompensated care, and
then they're going to turn around andtell the local planned sponsors in that
particular area that will obviously ourprices have to go up, and it is very tough
as Al Lewis says to negotiate emergencyroom prices, etc. So it could be a thing.
In fact, there was just a wholearticle in Modern Healthcare the other
day, and this is the title of thearticle, "Medicaid cuts cannot increase
(21:01):
hospital rates, employers warn".
So the point that you are makingis the hospitals are going to try,
that's what they're going to do.
So if I am a savvy plan sponsor,what am I doing right now?
So to address the first issue, what Iwould do if I was a plan sponsor would
be to do an audit of my employees.
(21:22):
And determine those who theoreticallywere they single, right, because you
don't know their modified adjustedgross income, their family income.
But, thinking of them as singleindividuals who currently are not
enrolled in your employer sponsoredhealth benefit who could potentially
decide to switch to enroll.
And are you prepared forthat influx of employees?
(21:46):
How might it affect your risk pool?
How might it affect your,your annual budgeting, right?
So.
It's a guessing game, I know,but you could at least be a
little bit prepared for it.
If you figure out what is the maximumpotential population that I have that
could potentially suddenly migrate intomy employer sponsored benefit plan.
So that would be step number one.
In terms of how you're going to dealwith the hospitals as they, you know,
(22:10):
wailing and gnashing of teeth commences.
You know, I think the first thingyou need to do is to talk to your TPA
and say, hold the line, stand firm.
If there is a conflict between thestate government and the federal
government and the hospitals, becausethey don't like the numbers that
are coming down, that's up to them.
But we're already paying twiceor more what Medicare pays
(22:34):
for the very same services.
Paying, the highest rates in the world.
This can't continue.
We're not going to sit hereand be the ones to hold the bag
when this is all said and done.
One of the things I do just want tomention here is the other wrinkle is that
obviously not all hospitals are the same.
So you've got major consolidatedhospitals with billions of
(22:55):
dollars in their endowment funds.
They have trusts that areliterally billions of dollars.
And then you've got hospitals that areactually essential safety net hospitals
who are actually struggling and mayactually be on the precipice of going out.
And um, there is a document that'sflying around that shows at risk
(23:18):
hospitals and how many thereare in every state, et cetera.
Right.
So I do also think that from theemployer standpoint, it might be
something to do to take stock of whetherthere are essential hospitals like
that, you know, safety nets that arenot part of these major consolidated
entities that have tons of money.
So I think everything that you'resaying is, is definitely applies there.
(23:41):
But if those indies either, ifthey get themselves into financial
straits and go out, they are actuallyprobably the most cost effective
places for plan members to go.
So if they go out, then all of asudden you wind up with the cost
of consolidation and the priceincreases that go along with that.
Have you thought about that at all?
Is that relevant
?In loss of competition, obviously, it's going to be very negative for plan
(24:05):
enrollees as well as for plan sponsors.
I think that it's overblown.
I have yet to meet a hospital thathasn't said that they're on the cusp
of bankruptcy, even if there sitting on$10 billion endowments and they've got
it 14 new wings being built and it'sa giant crystal skyscraper, you know.
They're all talking about how they'reconstantly about to go out of business.
It's very tiresome, but therecertainly are those hospitals
(24:27):
that are actually at risk.
They're actually rural hospitals.
By the way, rural hospital doesn't meananything anymore, at least not the way
that we think about it at the federalgovernment level, because now all of these
city hospitals have claimed to be rural.
But, there is this small subset ofhospitals who legitimately need help.
And that's on states and on the federalgovernment to find ways to help them,
(24:50):
but you can't hold the entire Medicaidsystem hostage and the entire federal
government and the entire tax code hostagebecause we're worried about this problem.
Where we don't really knowwhat the scope of it is.
So to those hospitals that areactually in those dire straits.
Our hearts go out to you and wedon't want you to fail, right?
Employers don't want those hospitalsto fail, but at the same time, we
(25:12):
have to find a way to help themthat doesn't destroy the rest of
the system with unsustainable costs.
James Gelfand, if anyone is interestedin learning more about your work or
about ERIC, where would you direct them?
Check out our website on eric.org.
James Gelfand, thank you so much forbeing on Relentless Health Value today.
Thank you for having me.
This is Shawn Gremminger, Presidentand CEO of the National Alliance
(25:33):
of Healthcare Purchaser Coalitions.
If you like this podcast, Istrongly recommend subscribing
and leaving a review.
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