ACA Medicaid expansion drives up health care costs – Pacific Research Institute

ACA Medicaid expansion drives up health care costs

Emergency room usage has spiked sharply in recent years. That’s the depressing finding from a new survey by the American College of Emergency Physicians – and it’s putting those who need emergency care at grave risk. The survey concluded that three in four emergency room doctors have experienced a surge of new patients since the Affordable Care Act became law.

That isn’t a coincidence.

By design, Obamacare relies on Medicaid – the federal health insurance program for the poor – to expand health coverage. Since 2013, more than 11 million people have gained insurance through the federal program, which supports those earning below 133 percent of the federal poverty level.

At the same time, there hasn’t been a surge of new or current primary care physicians taking on Medicaid patients. As a result, millions of enrollees can’t access a doctor and have turned to the ER for basic care. The best way to reverse this trend is to redesign how Medicaid is financed.

Medicaid patients have been relying on ER care for quite some time. A report released last year by researchers at the Massachusetts Institute of Technology and Harvard University discovered that adult Medicaid beneficiaries use emergency rooms 40 percent more frequently than their uninsured counterparts.

Medicaid enrollees visit the ER so often because finding a doctor is incredibly difficult – nearly one in three physicians refuse to accept new Medicaid patients. The reason? Medicaid pays physicians as much as 50 percent below prevailing market prices for basic medical services.

This dramatically drives up health care costs for everyone. For non-urgent care, an ER trip costs an average of $580 more than a visit to a primary care physician.

Without serious reform, this problem is only going to get worse.

According to the Association of American Medical Colleges, the United States will be short nearly 63,000 doctors this year. By 2025, that number will more than double. With physicians increasingly unable to handle Obamacare’s flood of new patients, all Americans – not just Medicaid patients – could be turning to emergency rooms for routine care.

Far from addressing this general physician shortage, Obamacare has made it worse. By strapping caregivers with costly new rules and bureaucratic procedures, it’s prompted many to hang up their stethoscopes. According to a survey from the Physicians Foundation, 39 percent of doctors are planning to retire early. Almost half of the 20,000 surveyed gave Obamacare a letter grade of a “D” or an “F.”

To help reduce the strain on doctors and emergency rooms, Congress must reform how it funds Medicaid.

Currently, the federal government picks up between 50 to 75 percent of a state’s Medicaid expenses – no matter how large the total. Officials should switch to a block grant system, providing states with a single lump sum at the start of the year, indexed to the size of the state’s Medicaid population. Local policymakers would be free to spend that money as they see fit.

Block grants would encourage states to get the greatest bang for their buck. They’d have a reason to find innovative ways to encourage more physicians to join the pool and decrease ER visits.

For example, states could allow Medicaid patients the freedom to choose their own private coverage. That would empower enrollees to take an active role in their own health care.

The president himself has acknowledged the problem of excess ER usage. As Obama said in 2009, “those of us with health insurance are also paying a hidden and growing tax for those without it – about $1,000 per year that pays for somebody else’s emergency room.”

Obamacare didn’t just fail to eliminate this hidden tax; it increased it. The law did expand coverage. But coverage doesn’t accomplish much if patients can’t find a doctor – as millions of Medicaid enrollees have discovered. To solve this problem, Congress must fundamentally reform the way the government finances public insurance through block grants.

Until then, Obamacare will only succeed in ensuring that the ER is the only doctor in town.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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