As featured in Kaiser Health News Morning Briefing
Maine made history earlier this month by becoming the first state to adopt Obamacare’s Medicaid expansion via ballot initiative. The vote could inspire progressive activists in other states to push for similar referenda.
Expanding Medicaid to cover childless, able-bodied adults would blow a hole in state budgets while yielding few, if any, public health gains. That’s because Medicaid provides such low-quality care that its beneficiaries often experience worse health outcomes than people with no health insurance.
Since its creation in 1965, Medicaid has been an insurer of last resort for low-income Americans. It has traditionally covered the very low-income elderly, children, pregnant women, and people with disabilities. States and the federal government split the cost; the feds give wealthier states one dollar for every dollar they spend on the program, and poorer states more than that.
Obamacare expanded eligibility to adults earning below 138 percent of the poverty level. It originally made this expansion mandatory. But to entice states to participate, it provided that the federal government would cover 100 percent of the cost of expansion from 2014 through 2016, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and beyond.
In 2012, the Supreme Court ruled that expansion was optional. So only 31 states and the District of Columbia chose to expand their programs. These expansions have swollen Medicaid rolls by 15 million, bringing total enrollment to roughly 74 million. That’s nearly one in four Americans.
The success of Maine’s ballot referendum, which passed with 59 percent of the vote, could motivate progressives to attempt end-runs around governors and legislatures that haven’t expanded the program. Activists in Utah and Idaho have already initiated the ballot referendum process. Some in Nebraska and Missouri are considering doing so.
Further expansion of Medicaid would be disastrous for taxpayers, even if states impose work requirements on new beneficiaries, as Centers for Medicare and Medicaid Services Administrator Seema Verma recently came out in support of. Medicaid’s costs are already unsustainable. The program’s tab was $576 billion in 2016 and is expected to reach $956 billion in 2025, according to the latest federal estimates. Medicaid’s expected annual growth rate over that period is 5.7 percent — far larger than the economy’s overall growth rate.
As costs soar, Medicaid will crowd out spending on other government priorities, from infrastructure investment to education.
Between 70,000 and 89,000 additional people will enroll in Medicaid if Maine expands the program. According to Gov. Paul LePage, that will cost the state $54 million annually — and cost federal taxpayers $525 million.
Other analysts predict even higher costs. Expanding the program could cost Maine between $649 million and $3.16 billion over a decade, according to the Alexander Group, a consulting firm.
These exorbitant costs are the reason Maine Gov. Paul LePage vetoed Medicaid expansion bills five times and opposed the ballot measure. Despite its passage, he’s refused to expand the program until the legislature identifies a source of funding — one that doesn’t involve raising taxes.
Activists may just wait him out; Gov. LePage leaves office next year.
Even if Medicaid were free for state governments, expansion still wouldn’t be wise. The program offers doctors such low reimbursements that many refuse to see Medicaid patients. So beneficiaries struggle to obtain care.
This de facto rationing is so pervasive that Medicaid beneficiaries are no healthier than folks who lack insurance.
Consider the experience of Oregon. In 2008, the state partially expanded Medicaid. Beneficiaries were picked via random lottery. A study published in the New England Journal of Medicine found “no significant improvements in measured physical health outcomes” among the newly enrolled beneficiaries compared to their uninsured counterparts.
The program might even make the health of its beneficiaries worse. Medicaid patients are more prone to complications and more likely to die following colon cancer surgeries than those without insurance, according to a University of Pennsylvania analysis.
Similarly, a 2010 study published in the Annals of Surgery found that Medicaid beneficiaries were 97 percent more likely to die in the hospital following surgery than patients with private insurance, even after accounting for variables such as age and health status. That mortality rate was even worse than for uninsured patients, who were only 74 percent more likely to die. The study suggests the higher mortality could result from the fact that “less skilled and less specialized surgeons” are most likely to accept Medicaid.
There’s a word for half-trillion-dollar healthcare programs that, at best, deliver no medical benefits: failure. Sweeping more patients into Medicaid not only defies logic — it puts lives at risk.