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These 2 Medicaid provisions prevent medical debts from ruining people’s lives

Alex Andrews recovers from surgery after he was shot in the throat by an unknown assailant.
Courtesy of Terri Jean

The morning of Donald Trump's inauguration, Alex Andrews was undergoing surgery at a hospital in West Virginia. An unknown assailant had shot him in the throat a day earlier as he prepared a snack in his kitchen. The bullet shattered the window and punctured his throat; the shrapnel lacerated his skull, chest, and stomach.

A helicopter airlifted Andrews from Athens, Ohio, to a hospital in nearby West Virginia, where he needed four surgeries. He was facing $500,000 in hospital bills.

Andrews, a 30-year-old tattoo artist, had no health insurance. Some months, his take-home pay was as little as $1,000. He was prepared to declare bankruptcy and sell his tattoo parlor.

But because he made so little money that he qualified for Medicaid, two little-known Affordable Care Act provisions kicked in. Andrews was able to get health coverage without months of waiting for Medicaid. And his coverage applied even before he’d signed up — including the day he was shot.

Those provisions, called presumptive eligibility and retroactive eligibility, just had their own near-death experience. The Senate Republican plan to replace Obamacare would have eliminated them, part of a bigger drive to cut and cap spending on the program.

The provisions are crucial to helping low-income people avoid massive medical bills, but they got little attention in the broader health care fight. And although the Senate bill fell apart, presumptive and retroactive eligibility are still in danger.

Congress later this year needs to reauthorize the Children’s Health Insurance Program (CHIP), a program for low-income children that is closely linked to Medicaid. Many lobbyists in Washington expect that if Republicans fail to pass a comprehensive health care bill, they will try to tuck some of its provisions into the CHIP reauthorization bill. These smaller changes to Medicaid would be obvious candidates.

The possible consequences of changing these provisions are huge

Presumptive and retroactive eligibility protected Andrews, who has a 6-year-old son, from financial devastation. They’ve done the same for other uninsured, low-income Americans who — like Andrews — didn't know they were eligible for Medicaid until an emergency came up and they got stuck with massive hospital bills.

Getting shot “may as well have been a death sentence," said Andrews, who ended up losing his left eye. (Police are still searching for the shooter.) "First, the guy shoots me, then he basically hands me half a million dollars in medical bills."

Andrews said he never signed up to get health insurance because he was young and rarely went to the doctor, and paying the federal penalty for not having insurance was cheaper than enrolling in a plan. And he didn't know he was eligible for free Medicaid coverage until a family friend contacted his mother and said he might qualify. The Affordable Care Act's Medicaid expansion extended the government-run health insurance to cover millions of low-income adults in states that agreed to do so.

Yet it could have taken months to get approved for Medicaid, and Andrews needed several urgent surgeries. That’s where presumptive and retroactive eligibility came in.

Presumptive eligibility means hospitals and health care providers can presume a patient is eligible for Medicaid based on what they say about their financial situation. They can enroll that person within days. The paperwork is reviewed later to make sure the person is really eligible. (Hospitals were long able to do this for children and pregnant women who qualify for Medicaid, but Obamacare expanded presumptive eligibility as part of the Medicaid expansion.)

The other provision, known as retroactive eligibility, predated Obamacare. It means that Medicaid covers medical bills incurred up to three months before a person enrolls.

The federal government doesn't publish data on how many Medicaid enrollees have used these provisions. But states argue that retroactive eligibility drives up Medicaid costs and squeezes their budgets. (The federal government pays most of the cost for people who enrolled in Medicaid through the Affordable Care Act’s expansion, but retroactive eligibility applies to everyone.)

If Congress tries to again to overhaul Medicaid when CHIP comes up for reauthorization, Republican lawmakers will likely target these provisions.

Medical bills often lead to financial ruin

Public health experts and patient advocates, meanwhile, are concerned that getting rid of presumptive and retroactive eligibility would push more people into bankruptcy.

"I am very worried that it's going to hurt the economic security of families," said Tricia Brooks at Georgetown University's Center for Children and Families, who says presumptive eligibility helped her sign up children in New Hampshire for the federal Children's Health Insurance Program. "It has a huge financial impact."

Ten years ago, massive health care bills were one of the main reasons people filed for personal bankruptcy. A often-cited Harvard study shows that about 62 percent of personal bankruptcies in the United States in 2007 were triggered by hefty medical bills or health problems. That includes people who suffered a debilitating illness and could no longer work, not just those who couldn't pay their bills.

A 2014 study from legal experts at Northeastern University found a more modest impact. A team of researchers contacted 100 bankruptcy filers and asked them the reason they decided to declare bankruptcy. They found that medical debt was the single largest factor, and about 25 percent cited medical bills as the main reason for their decision.

Since passage of the Affordable Care Act, far fewer people have been going bankrupt. Since 2010, personal bankruptcy filings have dropped about 50 percent, from 1.5 million in 2010 to about 770,000 in 2016, according to the American Bankruptcy Institute. There are several reasons for that, including an improving economy and a 2005 law that made it harder — and more expensive — for people to file for bankruptcy. But legal experts also believe that the spike in number of people who now have health insurance is partially responsible for the decline in bankruptcies.

An annual survey by the Centers for Disease Control and Prevention supports this views. Every year, they survey more than 400,000 households and ask people under the age of 65 if they had problems paying medical bills in the past 12 months. The change is striking. It dropped from 21.3 percent of households in the first survey (2011) to 16.2 percent in 2016.

One the verge of bankruptcy

Alex Andrews's mother, Terri Jean, remembers watching the presidential inauguration in a hospital waiting room as her son recovered in the intensive care unit from his third surgery. Her friend had just told her about the possibility that Andrews might be eligible for Medicaid under the Affordable Care Act. Watching the inauguration felt surreal.

"[Trump] was all about getting rid of Obamacare, and my kid is coming out of surgery," she said. "It felt very significant."

Ten days later, Andrews had health insurance through Medicaid because he was able to enroll through presumptive eligibility. But he still owed about $500,000 for the helicopter ride and surgeries he received before that. A few months later, he was approved for retroactive eligibility. The entire cost was covered.

Andrews is now back at work, even though his hands burn from the nerve damage and he only has one eye. He is currently looking for a neurosurgeon willing to remove the remaining shrapnel from his neck, which is causing the nerve damage. And he is about to get a prosthetic eye, which runs about $2,000. His insurance covers that too.

Coming so close to bankruptcy — and death — made him more resilient, he said. It also made him have faith in the system for the first time.

"I might not have been able to do my job ever again," he said. "All in the blink of an eye, 11 years after starting my business — all my pride and happiness could have just disappeared."