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Corrections Agencies Use Obamacare to Pay for Prisoners’ Medical Care

by Christopher Zoukis and Matt Clarke

The Affordable Care Act (ACA), President Obama’s signature piece of legislation, has resulted in an unintended windfall: a means to shift the cost of expensive hospital care for state and local prisoners to the federal government. In addition, creative uses of the ACA’s new Medicaid rule will likely result in further savings to the states, by allowing low-income prisoners and jail detainees to be enrolled for Medicaid benefits immediately upon their release.

Under the ACA, many prisoners are now eligible for medical coverage through Medicaid. Their eligibility comes after a January 1, 2014 activation date that now allows single, childless adults whose income is up to 138% of the federal poverty level, or $16,394 for a single adult in 2016, to participate in the program. More than half the states and the District of Columbia have agreed to the voluntary Medicaid expansion. Previously, Medicaid mainly applied to pregnant women, people with children, the blind, disabled and elderly; the program provides federal funds to the states, subject to substantial regulation.

Those regulations generally include a prohibition on Medicaid for state or local prisoners. However, the rules allow the use of Medicaid funds to pay for extended hospital stays outside the facility. Medicaid will pick up the tab because a prisoner in an in-patient medical facility for 24 hours or more is no longer considered “incarcerated” for Medicaid reimbursement purposes. Further, prisoners making less than the 138% income threshold are eligible to be enrolled in Medicaid after they are released.

Madison County, Alabama jail officials said they are moving quickly to initiate the new rules. Chief Deputy Steve Morrison said the jail has a medical budget of $3 million, but sometimes prisoners and detainees have to be admitted to outside hospitals for treatment. A detainee in a coma had cost the jail almost $300,000 in hospital bills. “[W]hen you get just one of those out of a thousand inmates that can really cripple your budget,” he said. Morrison has no problem shifting some of that financial burden to the federal government. “Constitutionally we’re supposed to provide medical care,” he noted. “It doesn’t say we have to pay for it.”

In Washington State, the Department of Corrections has quickly adopted the ACA changes, too. DOC spokeswoman Norah West said the state already estimates that enrolling prisoners in Medicaid will save about $2.2 million in the 2013-2015 budget cycle. State Senator Jim Hargrove went on record to applaud the move.

“If there is some way to shift the cost to the feds, I think that could be a good idea,” he said. Hargrove added he’s examining whether the same approach can be used to cover health care costs at the state’s Special Commitment Center for sex offenders.

Even only covering in-patient hospital stays lasting more than a day can save state and local governments millions of dollars in prisoner medical costs. Stuart Hudson, the managing director for health care at the Ohio Department of Rehabilitation and Correction, plans to enroll prisoners who spend over a day in the hospital and expects to save $18 million a year by shifting their health care costs to the federal government. [See: PLN, Nov. 2015, p.58].

Colorado, Illinois, Iowa, Ohio and Oregon are among other states enrolling prisoners in the newly-expanded Medicaid program. [See: PLN, Nov. 2013, p.24]. Local jails in Kentucky, Illinois and Oregon are also enrolling prisoners. The Kentuckiana Regional Planning & Development Agency is signing up eligible prisoners among the 2,000 incarcerated at Louisville Metro Corrections, and expects to expand the program to other jails in the 16-county region.

The jail system in Cook County, Illinois processed over 13,000 Medicaid applications in the first year after it began doing so during the booking process.

North Carolina reportedly saved over $42 million on prisoner medical expenses since implementing a similar system in 2010. Jails in California and Delaware are planning to start their own programs.

According to Alex Briscoe, the health director in Alameda County, California, less than 12% of jail detainees were previously eligible for Medicaid. That number has increased to over 90% thanks to Obama­care. Based on estimates from the U.S. Department of Justice, over one-third of newly-eligible Medicaid recipients are recently-released prisoners.

States that opt-in to the Medicaid expansion offered by Obamacare will experience significant savings, with the portion of Medicaid costs paid by the federal government increasing from 58% pre-expansion to 100% after expansion. The federal government will pay 100% from 2014 through 2016, then gradually reduce the payments to 90% by the end of the decade.

The idea of using Medicaid to defray the costs of prisoner health care does not make everyone happy. Perhaps predictably, U.S. Senate Minority Leader Mitch McConnell said signing up prisoners and those being released from prisons and jails is just another burden for taxpayers.

“This is yet another disturbing aspect of a profoundly troubling piece of legislation,” he said.

Still, the changes wrought by Obama­care have not been derided by all of McConnell’s fellow Republicans. In Tennessee, GOP lawmakers sponsored bills in both houses of the legislature to change the state’s termination of Medicaid benefits for the incarcerated to a mere suspension under ACA rules, allowing the state to take advantage of the January 1, 2014 changes.

“This is a very important bill,” said state Rep. Vince Dean. “This will save our local government a lot of money.” Lawmakers predict at least $2 million in savings in the first year alone.

Many observers view the changes in how prisoners can be enrolled in Medicaid immediately upon their release as an even greater boon to state and local governments. Dr. Josiah Rich, director of the Center for Prisoner Health and Human Rights, based at the Miriam Hospital in Providence, Rhode Island, believes the new rules will not only provide necessary health care to an oft-neglected group, but also help to reduce recidivism.

“Enrollment improves access to basic health services, including substance-use and mental health services, and can in turn benefit the health of the communities and families to which prisoners return,” Rich observed. “There is a possibility that there will be decreased recidivism as people get treatment for their mental illness and addiction.”

The jail in Seattle, Washington has been working to implement an early Medicaid sign-up program for prisoners scheduled to be released. Said Public Health spokesman James Apa, “We can connect with their established primary care provider, which provides a continuity of care.”

Louisville Metro Corrections in Kentucky has been aggressive in implementing the new ACA rules. To answer criticisms that Obamacare unduly burdens the taxpayers with prisoner health care, director Mark Bolton noted, “But taxpayers are paying for these people anyway.” Metro’s health care costs make up $9 million of the agency’s $52 million jail budget, Bolton said. “If we can intervene on the front end, then we don’t have to on the back end ... and maybe we can help keep these people from coming back in.”

According to the Council of State Governments Justice Center, at least 70% of prisoners released from the nation’s prisons and jails lack health insurance. About a third would qualify for expanded Medicaid and about 24% would qualify for subsidized coverage under the ACA.

Nancy Griffith, the director of corrections for Multnomah County, New York, expects to save around $1 million a year by ensuring released prisoners have Medicaid coverage.

“The ability for us to be able to call up a treatment provider and say, ‘We have this person we want to refer to you and guess what, you can actually get payment now,’ changes the lives of these people,” said Griffith, who noted that the program will save money over the long term if connecting released prisoners to health care services keeps them out of jails and emergency rooms.

Rick Raemisch, executive director of the Colorado Department of Corrections, agreed. He expects billing Medicaid to save the state prison system “several million dollars” a year, but thinks it is equally important there will be a chance to coordinate health care post-release. He said 70% of the state’s prisoners struggle with addiction and 34% are mentally ill. Colorado prisoners without health insurance are released with 30 days of their prescribed medications and no additional support for their medical or mental health needs.

“If they go off their medications, oftentimes it can once again lead to more criminal activity,” Raemisch stated. “So, by keeping them medicated and keeping them mentally healthy, it really helps us in our re-entry efforts.”


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