Despite Obamacare, healthcare spending is spiraling out of control

Former President Barack Obama promised the Affordable Care Act would bend “the cost curve and [start] to reduce costs for families, businesses, and government.” But his pledge has gone unfulfilled – patients and taxpayers are spending record amounts on healthcare.

This year, total healthcare spending will increase 5.3 percent, according to a recent estimate from the Centers for Medicare and Medicaid Services. That’s after spending rose by 4.6 percent last year to total $3.5 trillion.

Obamacare’s expansion of Medicaid deserves part of the blame for this inflated tab.

Starting in 2014, Obamacare enabled states to expand Medicaid to able-bodied, childless adults with incomes below 133 percent of the federal poverty level. The federal government offered to pay 100 percent of the initial expansion costs and 90 percent of the costs in 2020 and beyond. Thirty-three states and the District of Columbia have chosen to expand the program. Nationally, Medicaid rolls have grown from 56.5 million people in 2013 to 73.3 million in 2018.

Obamacare’s architects hoped that expanding Medicaid would curb healthcare spending. They reasoned that newly insured people would no longer visit the emergency room to obtain treatment for minor ailments. Instead, they’d visit cost-effective providers such as family doctors.

But doling out “free” health insurance hasn’t reduced patients’ reliance on emergency rooms. In California, the total number of ER visits increased 10 percent in the two years following the expansion.

In fact, Medicaid has been shown to increase people’s use of emergency services. In 2008, Oregon expanded Medicaid via a random lottery. Researchers concluded that the partial expansion “increased hospitalizations, emergency-department visits, outpatient visits, prescription-drug use, and preventive-care use” among the new enrollees. However, it “had no statistically significant effect on physical health outcomes.”

Medicaid is notorious for delivering poor value to patients at a high cost to taxpayers. It’s not at all surprising that expanding the program to millions more people has caused healthcare spending to soar.

Despite Obamacare’s failure, numerous Democrats, including Obama, are endorsing a “Medicare for all” plan that would put the federal government entirely in charge of healthcare. Luckily, President Trump has announced his opposition to the proposal. The failure of Medicaid expansion should be enough for any sensible person to realize it’s a terrible idea.

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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