This month, Virginia Governor Ralph Northam signed a bill that will expand Medicaid coverage to roughly 400,000 low-income, able-bodied adults in the state. The governor praised the expansion as “the right thing for our people.”
His heart may be in the right place. But Medicaid has a well-documented history of doing little to improve the health of its beneficiaries — even as it accounts for an ever-greater share of state budgets.
Originally created in 1965 as a healthcare entitlement for low-income and elderly Americans, Medicaid has since become the nation’s largest health insurer. Medicaid and a related initiative, the Children’s Health Insurance Program, cover 74 million Americans. That figure has increased by roughly 16 million since 2014, when ObamaCare made able-bodied childless adults eligible for Medicaid.
The law originally required states to expand Medicaid to all legal residents earning up to 138% of the federal poverty level. The federal government volunteered to pick up the tab for the first three years. After that, the federal share gradually declined, to 90 percent by 2020.
That’s still a far higher federal match than the program as a whole; the federal government covers 50% to 80% of the overall program’s cost, depending on how poor a state is.
In 2012, the U.S. Supreme Court deemed ObamaCare’s mandated expansion of the program unconstitutional. The Court ruled that states had to decide.
Virginia is the 33rd state to opt for Medicaid expansion. Overall, expansion will cost about $2.8 billion. The federal government will cover most of that total, of course. Virginia plans to pay for its share by taxing hospitals more than $300 million.
Utah, Idaho, and Nebraska — all red states — are considering following Virginia’s lead. Voters in each state will consider ballot measures this November that would expand Medicaid within their borders.
Maine voters approved a similar initiative at the ballot box last November. It was the first time that Medicaid was expanded in a state by public referendum. Maine Governor Paul LePage has declined to implement the expansion, however, until the state legislature comes up with a way to pay for it. Earlier this month, a state judge ordered him to get moving.
Across the country, Medicaid’s costs are siphoning resources away from other important priorities. In 2000, spending on the program accounted for just over 19% of state budgets, on average. By 2016, that figure had jumped to 29%.
Meanwhile, the share of state spending allocated to K-12 education, corrections, and transportation has plummeted.
No Better Off
What do states get in return for Medicaid’s crippling costs? Not much.
Consider Oregon’s limited expansion of Medicaid in 2008. The state didn’t have enough money to offer benefits to all low-income residents. So it chose beneficiaries at random. Researchers compared health outcomes for 6,400 Oregonians who obtained Medicaid coverage against 5,800 residents who remained uninsured.
The new beneficiaries showed “no significant improvements in measured physical health outcomes in the first 2 years,” according to a study published in the New England Journal of Medicine.
In some cases, beneficiaries are worse off than their uninsured counterparts. Medicaid enrollees who underwent lung transplants had lower three-year survival rates than uninsured patients, according to a study by John Hopkins researchers.
Another 2010 study published in the Annals of Surgery found similar results. After analyzing nearly 900,000 major surgical operations, researchers found that uninsured patients were 25% less likely to die in the hospital than patients on Medicaid.
Fueling Opioid Abuse
States that expand Medicaid may even exacerbate the opioid epidemic. The entitlement program makes powerful painkillers more readily available. A recent report from the Senate Homeland Security Committee found that drug overdose deaths are rising nearly twice as quickly in states that have expanded Medicaid compared to states that haven’t.
Intuitively, expanding health insurance coverage to more people would seem to be an unmitigated good — the “right thing” to do, as Virginia Gov. Northam put it. But a wealth of research indicates that expanding Medicaid yields a host of unintended negative consequences — and does so at great cost to taxpayers.
Sadly, Virginia’s leaders seem to be ignoring this evidence. Good intentions do not necessarily make for wise public policy. Voters in other states should take note — and reject the expansion of their own Medicaid programs, before it’s too late.