Last week, Alaska became the 30th state to expand Medicaid with federal funding from the Affordable Care Act. “Alaska and Alaskans cannot wait any longer,” said Gov. Bill Walker. “We‘re not going to step away from this opportunity to help fellow Alaskans, period.”
Some “help.” Obamacare’s Medicaid expansion is saddling taxpayers with billions in new health costs — much of which the states will eventually have to shoulder on their own. The program’s new beneficiaries, meanwhile, may have coverage. But they face interminable waits to actually find doctors and get care. And that care is often of low-quality.
The 20 states that have thus far avoided expanding Medicaid must continue to resist. If many more state dominos fall, Obamacare’s multibillion-dollar expansion will be nearly impossible to undo — even if Republicans sweep the elections in 2016.
Obamacare’s Medicaid-expansion spell is proving tantalizing to more than just Alaska. Billions of dollars in “free” federal money will do that.
The Democratic governors of Missouri and Virginia — who had previously said “no” to expansion — might soon say “yes.” Utah’s Republican governor is talking with the Obama administration about how to expand his state’s program.
These governors should know better.
Costs under the expansion are higher than expected. Earlier this month, the Centers for Medicare and Medicaid Services observed that treating enrollees in the states that expanded cost about $1,000 more than anticipated.
Enrollment is also far above what most states had planned. That’s putting pressure on state budgets.
Consider Kentucky. Some 311,000 people enrolled last year — double expectations. The Bluegrass State didn’t think that many would sign up through 2021. As a result, it has doubled its Medicaid cost estimate for 2017.
Other states’ experiences have been similar. Michigan’s Medicaid costs have climbed 50 percent. Ohio’s have more than doubled. Illinois now figures its Medicaid expansion will add $2 billion to its costs from 2017 to 2020 — almost four times its original predictions.
All that extra spending was supposed to reduce costs for providers, as they’d no longer have to eat the cost of treating low-income uninsured patients in expensive emergency rooms.
Things haven’t worked out that way. A Moody’s report shows that nonprofit hospitals in states that expanded Medicaid didn’t fare any better financially than those in states that rejected expansion. Southern Illinois Healthcare, for example, saw its unpaid bills drop by $9 million. Yet because of the surge in Medicaid costs, the hospital still lost $5 million.
That’s in part because Medicaid pays so little.
Just ask doctors. Thanks largely to low reimbursement rates, only half of doctors are scheduling appointments with new Medicaid patients, according to a recent study published in the Journal of the American Medical Association. By adding more than 11 million people to Medicaid, Obamacare is making it even harder for beneficiaries to get a doctor’s appointment.
Without access to doctors, many Medicaid enrollees are turning to emergency rooms — the very places their new coverage was supposed to keep them out of. ER usage is up 5.6 percent in expansion states, compared with 1.8 percent in non-expansion states, according to a recent Colorado Hospital Association report.
Then there’s the fact that Medicaid may not even improve beneficiaries’ health. A recent study in Oregon compared new Medicaid enrollees to similarly situated folks who remained uninsured. According to the authors, “This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes” in the two years of the study.
Finally, states that have expanded Medicaid have lost even more control over their budgets. In exchange for picking up half the tab for legacy Medicaid — and nearly all of it for expansion, at least in the short term — the federal government largely dictates how Medicaid is run.
States have little incentive to try different ways of administering their programs in search of savings, as they must beg Washington for waivers to do so. That process can take months or years. Even if a state get a waiver, the feds keep no less than 50 cents of every dollar the state saves.
If governors and state legislatures really want to help low-income folks while keeping their budgets under control, they should insist that Washington replace the failed, open-ended Medicaid entitlement with block grants pegged to inflation.
Such a move would provide states with powerful incentives to cut costs, since they could keep every dollar they saved. At the same time, block grants would free states to experiment with new ways to serve the unique needs of their own low-income residents.
Consider the experience of Rhode Island. A few years ago, the Ocean State tried a payment program akin to block grants. The state gave its lowest-income denizens more control over the money they spent on their health care — and saw its Medicaid costs drop.
Unfortunately, instead of pushing hard for block grants, too many states have decided to take the federal government’s Medicaid money and run.
And that’s exactly what President Obama wants. Obamacare intended to expand Medicaid in all 50 states. And the president is now personally lobbying the 20 holdout states to boost their Medicaid rolls.
His efforts are part of a recent trend toward public health insurance. According to the U.S. News Health Care Index, the number of Americans with government-sponsored insurance roughly doubled from 2000 to 2013 — from 12.9 percent to 23.8 percent.
Under Obamacare, that number has spiked again. More than 70 million people are now covered by Medicaid — or about one in five Americans. Medicare has 50 million enrollees — up from its original population of 19 million — with 10,000 more joining each day.
As the government increasingly has a hand in more of the healthcare sector, it’s a short jump to the president’s dream of single-payer.
Lawmakers in the holdout states must understand the consequences of following the lead of the tempted 30. Not only will expanding Medicaid bust their budgets and do little to help low-income Americans — it will also further embed Obamacare within our nation’s healthcare system.
That will make repeal more difficult, even if a Republican wins the 2016 presidential election.