By Sven Larson, Ph.D.

Wyoming is beginning to adjust itself to the Obamacare reform, despite many uncertainties still remaining about the effects and contents of the reform. As part of the adjustment process the state is taking temporary federal grants that are supposed to pay for the transition into Obamacare:

Wyoming is applying for up to $4.1 million in federal grant money to temporarily offset insurance premium increases for state workers who retire early. And that’s just the start. More grant applications are likely to follow from Cheyenne, as Wyoming’s state government will seek to take advantage of a large pool of money being offered under the recently passed federal health care reform law. … The state is seeking to receive between $2.4 million and $4.1 million from the U.S. Department of Health and Human Services to temporarily reimburse the state’s Employees’ Group Insurance Division for insurance premium increases. … More grant opportunities are on the way, said Meredith Asay, a health care policy adviser for Gov. Dave Freudenthal. State agencies, she said, are considering several federal health care grant opportunities for projects ranging from subsidizing early childhood home visitation programs to building up state infrastructure to fight infectious disease outbreaks.

These grants are temporary, just like the ARRA “stimulus bill”. The danger is always that the state makes itself permanently dependent on temporary funds.

More important, the state is putting in motion a reform that will eventually eliminate private health insurance. Even if they formally exist even as Obamacare is implemented, private insurance plans will be forced to load up on benefits and to offer coverage to anyone under any circumstances. As a result premiums will make private plans unattainable to most people.

Given its size Wyoming is likely the first state to lose private competition on the health insurance market. That will remove private funding for health care providers, such as rural hospitals, whose dependency on Medicaid reimbursements will become critical to their survival. Small businesses with low-paid employees will dump their workers into Medicaid, which, together with an eventual public option, will force hospitals into a financial hole. Medicaid and public option reimbursements are considerably lower than average reimbursements from private insurance plans.

Whether or not this will lead to closings of rural hospitals remains to be seen. What is easy to predict is that as soon as a hospital becomes completely dependent on Medicaid-level reimbursements it will lay off medical staff and cut back on investments in new medical technology. The result will be longer waits for patients for increasingly sub-standard health care.

Tags: Health Care, Health Care Freedom Amendment, Health Care freedom of Choice Act, Healthcare

This entry was posted on Wednesday, July 7th, 2010 at 1:33 pm by Sven Larson, Ph.D and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.