Expanding Medicaid: A Foolish Way to Improve Healthcare Access

BY SALLY C. PIPES

United States Health and Human Services Secretary Kathleen Sebelius recently said “that if you want a healthier population, looking at the opportunity to expand Medicaid has got to be a piece of the puzzle.”

Expansion of Medicaid — the jointly run federal-state health plan for low-income Americans — has long been an essential element of progressives’ vision for healthcare “reform.”

But it won’t work. Medicaid already suffers from serious problems, including perpetual cost overruns, doctors who increasingly refuse to accept patients covered by the program, and low quality of care. Expanding Medicaid will only exacerbate these issues — while doing little to improve the health of the people it covers.

The debate over Medicaid expansion began in earnest in 2010, when the Affordable Care Act (ACA) — otherwise known as Obamacare — became law. The ACA incentivized states to expand their Medicaid programs by offering to cover 100 percent of the increased cost for the first three years — and then 90 percent in subsequent years.

Originally, this was an offer of the “can’t be refused” variety. The ACA threatened to punish states that didn’t expand by rescinding federal Medicaid funds for which they were already eligible.

But in June 2012, the U.S. Supreme Court ruled that the feds’ threat was unconstitutional. States could forego Medicaid expansion without jeopardizing existing federal funding.

Fully 21 states have taken up this option and refused to expand their Medicaid operations.

There’s good reason for their refusal.

For starters, Medicaid patients often suffer from constrained access to care. Technically, they’re “insured” — but they can’t find anyone to treat them.

That’s because fewer and fewer doctors are participating in the program. Between 2010 and 2011, a staggering 33 percent of doctors decided not to accept new Medicaid patients, chiefly because the program’s reimbursement rates are incredibly low — and often don’t cover the cost of treatment.

Last year, less than 70 percent of American doctors participated in Medicaid.

Consequently, current beneficiaries have difficulty finding a physician who will accept their coverage. Once they do, they may have to wait a long time to actually see the doctor.

Expanding the program will only exacerbate this state of affairs. In Massachusetts, for instance, which launched an Obamacare-style expansion of Medicaid on its own several years ago, just 66 percent of internists and 70 percent of family physicians accepted the state’s Medicaid plan, according to a 2013 survey. In some counties, just 30 percent of family doctors take Medicaid.

What’s more, the care beneficiaries receive doesn’t substantially improve their health. A major analysis of Oregon’s Medicaid program found “no significant improvements” in health outcomes for patients enrolled in the program. Researchers reported that Medicaid coverage had virtually no effect on blood pressure, cholesterol levels, or blood sugar — risk factors for chronic conditions like heart disease and diabetes.

All this evidence suggests that expanding Medicaid won’t improve the health of the low-income Americans it’s supposed to help. But it will drive up costs for state taxpayers.

Supporters of the expansion claim that it’s essentially free for states, with the federal government picking up the entire tab initially and then the bulk of it soon after.

But that’s hardly the case. The California Legislative Analyst’s Office, for instance, estimates that the expansion will yield between $300 million and $1.3 billion in new annual public costs by 2020. The Congressional Budget Office puts the total cost to the states between 2014 and 2022 at $73 billion.

Medicaid expansion will also strain the economy and slow job creation. A new paper from the National Bureau of Economic Research found that expanding the program actually discourages people from finding a job, because they no longer need to be employed to get coverage. The study estimated that the planned state-level expansions of Medicaid would cause between 530,000 and 940,000 people not to seek employment.

Fortunately, many states aren’t buying the false promise of Medicaid expansion. They know that it will prove wasteful and do little to improve access to care for low-income patients.

Today, Medicaid delivers substandard care while strapping state governments with skyrocketing costs. Expanding this troubled program is a bad strategy for improving health care in America.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is The Cure for Obamacare (Encounter 2013).

  healthcare, medicaid, medicaid explansion, obamacare