Is Obamacare’s survival as of now a victory for the nation’s poor?
That’s what the law’s supporters would have people believe. Democrats — and more than a few Republicans — maintain that House Speaker Paul Ryan’s decision to withdraw the American Health Care Act on March 24 has saved millions from losing coverage through Medicaid, the joint federal-state health insurance program for low-income people.
In the wake of AHCA’s failure, leaders in several of the 19 states that originally rejected Obamacare’s Medicaid expansion are now trying to adopt the reform. Although that effort failed in both Kansas and Virginia the perception that Medicaid is a gift to low-income patients remains popular.
Reality tells a different story. Medicaid is failing. Thanks largely to Obamacare’s expansion of the program, Medicaid accounts for an unsustainable share of federal and state spending — even as it fails to improve the health of the patients it purports to serve. Spending grew to roughly $554 billion in 2015, or more than 3 percent of the gross domestic product.
Only in government would the survival of a program that costs ever more to run — and delivers little to no benefit — be celebrated. Republicans must renew their efforts to replace Medicaid’s open-ended federal funding commitment with a series of fixed payments to the states in order to put the program back on a fiscally sound path that works for patients — and demand accountability from its administrators.
Obamacare swelled Medicaid’s rolls to over 74 million. The federal government pays 100 percent of the funding for expansion enrollees through the end of next year, and will pick up 90 percent of the tab until the end of 2020.
But research has long raised doubts about how much good the program actually does for patients. A two-year study in Oregon, for instance, found that Medicaid conferred “no significant improvements” in health outcomes compared to those who had no coverage at all.
Another new study in the New England Journal of Medicine found that Medicaid expansion in 29 states and the District of Columbia had no effect on the actual health of low-income patients.
Obamacare’s Medicaid expansion did succeed in hiking the costs of an already unsustainable program. A report compiled by the Obama administration estimates the program’s costs will exceed $975 billion by 2025.
There’s no guarantee that the money will be spent wisely. Fraud, waste, unnecessary procedures, and other “improper payments” accounted for more than 10 percent of federal Medicaid spending in 2016, or $36 billion, according to the Government Accountability Office.
So Medicaid fails to meet the healthcare needs of the poor — and does so at great cost to taxpayers.
Many Republicans are trying to repair the program by giving states fixed block grants pegged to the size of their Medicaid population. No longer would states have to ask the feds for permission to experiment with new modes of delivering care. States could spend their funds largely as they saw fit. Some versions of the reform even allow states to impose work requirements on able-bodied adults seeking Medicaid coverage.
Block grants are also a powerful tool for reining in spending. At present, the more states spend on Medicaid, the more federal support they receive. That arrangement has, predictably, led to explosive cost growth.
An analysis by the consulting firm Avalere, meanwhile, estimates that a block-grant model would reduce federal Medicaid spending by $110 billion over the next five years.
To understand the benefits of state-level experimentation, consider Rhode Island’s recent Medicaid reforms. State officials recognized that enrollees’ reliance on expensive emergency care was a main driver of the program’s cost growth. Efforts to connect high-need patients with primary-care doctors and community health centers have put the state on track to save $100 million — even as patients get better care than they did under the old system.
As long as Obamacare remains the law of the land, Medicaid patients will be trapped in an expensive, fraud-ridden program that doesn’t provide them with adequate care, limits access to doctors, and forces many to use emergency rooms as their main source of care. Republicans must continue fighting to fix this failing status quo.