Obamacare’s Medicaid Expansion Is Nothing to Brag About

At the end of last year, the Obama administration boasted that almost 10 million people had enrolled in Medicaid since Obamacare went into effect. “This is great news,” an administration official exclaimed.

Maybe for the White House. But not for patients and doctors, according to several recent studies.

Even before Obamacare, Medicaid was deeply troubled. Its costs have climbed at an average annual rate of 7 percent over the past decade — to nearly $450 billion in 2013. The feds have responded by trying to squeeze doctors and hospitals with de facto price controls.

The result is a program that’s breaking the bank while providing substandard care to millions. And Obamacare is only making things worse.

Obamacare tempted 27 states and the District of Columbia to expand Medicaid to everyone with income up to 133 percent of the federal poverty level by covering the entire cost of the expansion. In 2017, states will cover 5 percent of those costs. The states’ share of costs will increase each year until 2020, when it will settle at 10 percent.

Thanks to this expansion, 65 million Americans are enrolled in Medicaid. That’s an increase of 17 percent over the previous year — and equivalent to one in every five Americans.

But just because they have coverage doesn’t mean they’re getting care.

Just weeks before the 2014 enrollment numbers were released, the inspector general (IG) for the Department of Health and Human Services released the findings of its Medicaid audit. The IG’s representatives tried to schedule appointments with 1,800 doctors listed as accepting patients through Medicaid managed care plans.

Fewer than half managed to get an appointment. Doctors had retired, moved, left the practice, or weren’t taking new Medicaid patients.

For those who did manage to secure an appointment, the median wait time was two weeks. One in 10 had to wait more than two months.

This delay “creates a significant obstacle for enrollees seeking care,” explained Vince Greiber, an analyst with the Office of Inspector General.

The IG shouldn’t have been surprised. A 2011 study published in Health Affairs concluded that almost one-third of doctors weren’t taking new Medicaid patients. Another in the Journal of the American Medical Association observed that just over half of doctors would make an appointment for a Medicaid patient. Still another in the New England Journal of Medicine discovered that Medicaid patients were six times more likely not to get an appointment than those with private insurance.

As a result, Medicaid patients often don’t even receive routine care. When they do, it tends to be in high-cost emergency rooms.

A 2010 IG report, for example, found that three-quarters of children enrolled in Medicaid didn’t obtain all the required medical, vision, and hearing screenings. An updated audit last year identified only marginal improvements.

A study of new Medicaid enrollees in Oregon determined that emergency room use — even for routine care — jumped 40 percent after they enrolled. The Colorado Hospital Association noted that ER use in states that expanded Medicaid under Obamacare jumped 5.6 percent last year. States that refused to expand Medicaid only saw an increase of 1.8 percent.

Doctors have generally been reluctant to see Medicaid patients because the program offers low reimbursement rates while saddling them with mountains of paperwork.

In 2012, healthcare providers spent $13.7 billion beyond what they received from the government in reimbursements, according to the American Hospital Association and the Federation of American Hospitals.

Obamacare tried to address this discrepancy when it significantly boosted what Medicaid paid primary care doctors in 2013. By making it comparable to Medicare’s rates, Obamacare hoped to lure more doctors into the fold before the big Medicaid expansion in 2014.

But the Medicaid pay increase lasted only two years. Reimbursement rates plunged an average of 43 percent at the start of this year, according to an Urban Institute report.

Rather than expand the failing one-size-fits-all model for Medicaid, lawmakers must fundamentally reform the program.

The first step is to alter the way the federal government pays for Medicaid. Instead of simply picking up as much as 75 percent of a state’s Medicaid bills, Washington should switch to fixed block grants. This arrangement would empower states to experiment with how they spend their Medicaid dollars.

Such freedom would allow states to tailor their programs to the unique needs of their populations. It could also yield approaches that deliver better care at lower cost.

The status quo certainly isn’t working. Today, any state that wants to deviate from federal rules governing eligibility, benefits, reimbursement rates, or cost-sharing has to plead with federal regulators for a waiver. The process can take years.

Medicaid’s goal of helping the poor gain access to quality care is worthy. But in its current form, the program is failing to achieve that goal. And by dumping millions more people into this over-stretched program, Obamacare has only put that goal further out of reach.

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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