Dems Want to Use Medicaid to Incinerate Yet More Taxpayer Money

Congressional Democrats are looking to put billions more federal dollars into Medicaid as part of their plan to fight COVID-19. The HEROES Act, which narrowly passed the House in May, would temporarily increase the share of the program’s spending covered by the federal government, to the tune of $45 billion in new outlays.

Proponents of the measure claim the states need a hand. They’ll be facing an uptick in Medicaid enrollees among the newly unemployed, just as their tax revenues collapse thanks to the recession.

But Democrats’ romantic notion of the program — as a vital, humane medical backstop for the nation’s poor — elides the program’s grubby realities. Medicaid is a money pit that fails in its most basic mission of improving the health of its enrollees.

The body of research documenting Medicaid’s failures is substantial. For example, a Journal of Health Care study found that children covered by Medicaid who suffer from asthma have much longer hospital stays and worse health outcomes than those on private insurance.

Another investigation published in the American Journal of Public Health found that colorectal cancer Medicaid patients had higher mortality rates than their privately insured counterparts.

And an Archives of Internal Medicine investigation of the Kentucky Medicaid population found substantially lower survival rates for breast, lung, and prostate cancer.

For the treatment of some conditions, those on Medicaid fare no better than the uninsured. Consider a 2010 Cancer study comparing throat cancer patients who had Medicaid coverage and those who had no insurance at all. Both groups were equally likely to die of their disease, relative to privately insured patients. Medicaid coverage was no help.

A bombshell 2013 study published in the New England Journal of Medicine compared Medicaid enrollees to uninsured patients in Oregon and found that “Medicaid coverage generated no significant improvement in measured physical health outcomes.”

A big reason for Medicaid’s poor performance is its broken reimbursement policy. The program sets compensation so far below prevailing market prices that doctors often lose money when they treat Medicaid beneficiaries. As a result, patients often struggle to find a doctor who will see them. Indeed, one in three physicians has simply stopped accepting new Medicaid patients.

The HEROES Act would throw more money into the program with the expectation that states will enroll more people. That could make it even more difficult for beneficiaries old and new alike to get care.

Despite paying providers little, Medicaid’s costs to taxpayers are enormous. Between 1988 and 2018, state spending on Medicaid jumped from $1.1 trillion to $2 trillion — a cost increase over three times bigger than population growth.

The Medicaid expansion enacted by the Affordable Care Act — which made everyone with income below 138 percent of the poverty level eligible, including able-bodied adults — cost nearly a quarter-trillion dollars more than initially estimated, according to a 2016 report from The Mercatus Center. Billions of that was pure waste. Improper payments — that is, benefits going to people with incomes that should render them ineligible for the program — more than tripled after the ACA expansion, to $75 billion annually.

Medicaid’s decades-long history of fraud is reason enough not to pump billions more federal dollars into the program. The fact that it doesn’t actually improve the health of its beneficiaries makes it even less worthy of taxpayer largesse.

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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