40 Million Additional Americans Will Become Eligible For Medicaid Under New Health Care Reform Bill According To Research Analyst From Credit Suisse
December 7, 2009 - The Wall Street Transcript has just published Consumer Health Services Report offering a timely review of the Health Services sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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GREGORY K. NERSESSIAN, CFA, is Vice President and Senior Analyst in the equity research department at Credit Suisse, covering the managed care industry. Mr. Nersessian joined Credit Suisse in May 2006 after spending five years at Lehman Brothers, where he covered the managed care industry with primary coverage responsibilities for the Medicaid managed care and disease management industries.
Mr. Nersessian received his MBA from the Darden School of Business Administration at the University of Virginia in 2001, prior to which he worked as a Research Analyst for Dreyfus and in the Private Client Asset Management division of Chase Manhattan's Private Bank. Mr. Nersessian graduated from Georgetown University in 1994 and has held a CFA charter since 2005.
TWST: What about that 15 million? What kind of legislation is being generated or proposed? What do you think is a good solution to addressing their needs?
Mr. Nersessian: So let's break it up into the pieces. In terms of the way the legislation is structured right now, you start with the Medicaid piece, let's start there. The Medicaid piece, what's on the table right now, at least in the Senate Finance bill, which is getting the most attention, is expanding Medicaid coverage for everybody under 133% of the federal poverty level. That would be about $13,000 a year in 2009 for an individual, and about $25,000 to $26,000 for a family of four.
Now what's really misunderstood by a lot of people who don't follow health care very closely is that currently Medicaid is not open to everybody just based on their income level. Really to qualify for Medicaid today, you have to be below a certain income level and you have to qualify based on your demographic characteristics. In other words, in many states the only people who qualify for Medicaid today who are between the ages of 19 and 64 have to either have dependent children or a disability. Healthy, childless adults between the ages of 19 and 64 generally don't qualify for Medicaid; it doesn't matter how poor they are, unless the state has been granted a waiver to expand coverage to some childless adults at the low end of the income spectrum.
So what this proposal would do is open Medicaid eligibility to everybody under 133% of the poverty level. So there are about 19 million Americans today between zero and 133% of the poverty level who are uninsured, and Medicaid would essentially be the vehicle to covering that segment of the population.
The second wave would be for uninsured individuals and families that are above the 133%-income threshold, people between 133% of the poverty level and 300% of the property level. People in this income range would receive federal tax credits to go out and buy insurance in these health insurance exchanges. These are state-administered agencies where people can purchase a standardized set of benefits at a rate that's most likely been negotiated by a government entity, be it the state or the federal government. And so we estimate there are about 20 million Americans between 133% and 300% of the poverty level who would receive a tax subsidy to purchase insurance through the exchange.
So the rest, which is only about 5 million, would be the people over 300% of the poverty level who don't currently have health insurance. Arguably, they make enough money to buy it but choose not to, and those people would have to buy insurance going forward or face a penalty. They will be able to buy as an individual through the exchange but without a tax subsidy, or they would be able to buy it through their employer, if their employer offers coverage.
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