Late last month, Oklahoma voters narrowly approved a ballot measure expanding the state’s Medicaid program to childless adults making up to 138% of the poverty level under the terms of Obamacare. Missouri could follow suit next month when a similar ballot initiative comes up for a vote.
Medicaid expansion seems like a great deal for states. The federal government picks up 90% of the tab for new enrollees. Given how badly the coronavirus pandemic has battered state budgets and undermined public health, a massive influx of federal healthcare dollars would appear to be a huge help.
But Obamacare’s Medicaid expansion isn’t the gift to states it’s often made out to be. On the contrary, it can put states on even shakier financial ground while doing little to improve the health of patients.
When Obamacare became law on March 23, 2010, it envisioned a mandatory expansion of Medicaid that would take effect in 2014. But in 2012, the U.S. Supreme Court deemed the expansion optional for states.
The promise of billions of federal dollars has been enough to entice 37 states, including most recently Oklahoma, and the District of Columbia to sign on to the expansion.
Do a little arithmetic, however, and it becomes clear that expanding Medicaid—which covers nearly 71 million people—is a recipe for
For starters, 10% of the costs for newly eligible enrollees is still a substantial sum. According to one analysis, Oklahoma’s expansion is likely to bring more than 200,000 people, out of the total state population of 4 million, into the program at a one-year cost to the state of more than $200 million.
It’s anyone’s guess where this money will come from. Oklahoma already faces a budget shortfall of more than $1.3 billion, largely as a result of lost revenues due to COVID-19. State lawmakers are scrambling for ways to cut spending by as much as 10%.
Similarly, the fallout from coronavirus has sent Missouri’s state revenues into negative territory, requiring budget cuts of at least $700 million in order to balance the state’s books. Responding to this fiscal crisis with a drastic increase in mandatory health spending is lunacy.
And if the first decade of Obamacare has proven anything, it’s that expanding Medicaid is almost always more expensive than expected.
A study by the Foundation for Government Accountability found that, as of 2018, states that expanded Medicaid had enrolled twice as many newly eligible patients as originally anticipated. Per-patient costs, meanwhile, were 76% higher than initial estimates.
Ohio saw cost overruns of more than 100% after expanding its Medicaid program. In California, costs exceeded projections by more than $32 billion in the course of just two and a half years.
Such unplanned expenses are exactly what one should expect from a program as rife with fraud and abuse as Medicaid. By one estimate, improper payments—a substantial portion of which go toward patients who aren’t legally eligible for the program—now total $75 billion a year.
All this spending doesn’t even purchase high-quality care. Just look at the landmark study of an expansion of Oregon’s Medicaid program in 2013. Researchers compared more than 6,000 patients randomly chosen to enroll in Medicaid with a control group of similarly situated uninsured patients. After two years, the group of Medicaid enrollees showed “no significant improvements in measured physical health outcomes” compared to the uninsured patients.
In a survey from 2017, Medicaid patients reported being in poorer health than either uninsured Americans or those with other forms of coverage.
By expanding Medicaid, governments in Oklahoma and Missouri could end up spending hundreds of millions of dollars on an insurance program that doesn’t benefit patients. For two states simultaneously battling a deadly pandemic and a fiscal crisis, it’s hard to imagine a worse use of resources.