The Real Poison Pill for Obamacare

By Kai Wright Nov 17, 2014

This article accompanies a yearlong series that has aired on WNYC News, in which Colorlines Editor-at-Large Kai Wright followed the Affordable Care Act’s first year in Newark, N.J. His reporting was supported by the Investigative Fund at the Nation Institute.

Zahir Sowell embodies both the promise and the peril of the Affordable Care Act.

He’s a 30-year-old, lifelong resident of Newark, New Jersey’s South Ward. That’s the black core of one of America’s most famously black cities. Not coincidentally, it’s also among the nation’s most well-established pockets of endemic poverty, and with concentrated poverty comes concentrated illness. Newark consistently ranks among the least healthy places in New Jersey, with some of the highest rates of premature death; one in four residents lacked health coverage last year. Sowell was among them.

"In March 2013, I was sick and I had went to the hospital," he told me late this summer. He was unemployed at the time he got sick. "I had to be in there like eight days. That’s when they started my charity care."

Eight days is a substantial hospital bill, and "charity care" is the way millions of poor and uninsured people have traditionally paid that kind of bill. Under charity care, hospitals and community health centers eat some or all of the costs and public funds partially reimburse them. Nobody likes this system. It’s unpredictable for patients, burdensome for providers, costly for tax payers and counterproductive for everyone, since it discourages the sort of preventive and ongoing care that could keep poor people healthy in the first place. In the Affordable Care Act’s first year, it appears to have removed millions of people like Sowell from this charity care limbo.

The law is best understood as the country’s most ambitious anti-poverty effort since the Earned Income Tax Credit launched in the 1970s, and arguably since Lyndon Johnson’s War on Poverty. The existing data doesn’t tell us how many people who are newly insured via Obamacare were previously uninsured, but Medicaid has grown by more than 8 million people in the past year. And among the 7.3 million people who bought plans through Obamacare’s insurance exchanges, eight out of 10 qualified for tax credits to bring down the price.

So there’s no debating the law’s success at its first goal–lowering the cost of insurance and getting more people into coverage. It will take years to learn if that success brings about the longer range goal of lowering the cost of care, not to mention making people more healthy. But Sowell’s experience illustrates the real distance between these two markers in the long, slow walk of health reform. He newly qualified for Medicaid this year, thanks to Obamacare. When I spoke with him in September, however, he’d been waiting six months to get a Medicaid card–so he could actually go get the care he’d been promised.

Here’s the problem: While Obamacare may be the most ambitious anti-poverty initiative we’ve seen in generations, its success depends upon an anti-poverty infrastructure that’s in collapse. After generations of divestment from and political hostility toward public programs that help poor people, it’s not at all clear that state and local governments can actually deliver on the Affordable Care Act’s potential. Newark’s Division of Welfare is a sadly apt example.

"They won’t answer the phone," Sowell complains. "They won’t return your messages. Half the people, if you call, they messages is full, so you can’t leave a message." He’s among more than a quarter million New Jerseyans who had signed up for Medicaid as of this summer–a whopping 20 percent growth. At one point, more than 70,000 of them were stuck in a backlog, waiting for final approval to actually go see a doctor. "It’s ridiculous! I can’t say it no other way."

As a rule, case managers in Newark tell clients they should show up at the Division of Welfare in person; nobody’s phone call gets answered. That means lining up as early as 7 a.m. in order to be done by late afternoon. One afternoon late this summer, I polled roughly a dozen people leaving the welfare office in downtown Newark. Most of them had been there since early morning, none had resolved the question they’d come to answer. For his part, Sowell has been forced back into charity care for the ongoing treatment he needs after last year’s hospitalization.

This situation should come as no surprise. Statewide, New Jersey’s caseload for public benefits–including Medicaid, food stamps and cash assistance–shot up roughly 80 percent between 2007 and 2012. The recession pressured the system to a degree not seen in generations. Yet staffing for county welfare offices remained flat. By 2012, according to a study commissioned by the union that represents workers at New Jersey’s county welfare offices, all but three of the state’s 21 counties failed to meet minimum staffing requirements set by the state itself. As a consequence, the state’s backlog of food stamp applications has grown so long and so persistent that the federal government is now poised to withhold funding for the program.

"Right now is the absolute worst it’s ever been," says David Weiner, who’s led the county welfare workers’ union since 1980. "And I’ve seen some bad stuff over all those years, but this is the worst."

Medicaid expansion unfolded over the top of this mess. The federal government is paying the full cost of the coverage itself until 2020, and 90 percent of it thereafter. But neither the state nor the counties have come to the table with resources to manage the program’s growth.

This is a cautionary tale for jurisdictions far beyond Newark.

New Jersey Gov. Chris Christie was the rare Republican executive who embraced Medicaid’s expansion on the front end. But an increasing crop of GOP leaders are looking for ways to copy his approach–namely, vehemently rejecting Obamacare overall, but taking the federal money for their Medicaid programs. Few are expected to shore up the broader infrastructure of their states’ economic opportunity initiatives. Rather, the leading voices among them are seeking approval to shift the program’s costs onto the poor people it’s supposed to help–like Indiana Gov. Mike Pence’s plan to charge Medicaid enrollees premiums and penalize them if they fail to pay. 

All of which suggests that Obamacare’s success will depend upon a fight it was crafted to avoid. Congress scrapped the popular idea of a so-called public option in the insurance market, and ignored altogether the idea of a single-payer system, because a direct battle over publicly run or financed health care seemed un-winnable. Instead, reform-minded legislators tried to bring it about by degree, nudging up the ceiling for Medicaid eligibility and parceling out tax credits to buy private insurance. But the legality of the tax credits is now before the Supreme Court, and Medicaid’s growth will work only if local communities can force state and county officials to reinvest in public programs broadly. We’re still battling over public health care, we’re just doing it in the margins.