Voters Swallowed The Medicaid Snake Oil

Voters in Idaho, Nebraska, and Utah just approved ballot referendums to expand Medicaid. The three solidly red states will soon add 300,000 beneficiaries to the joint state-federal insurance program for low-income Americans.

These voters doubtless had good intentions. They wanted to help vulnerable residents in their states gain access to health care. But expanding Medicaid, a chronically mismanaged entitlement program plagued by fraud and abuse, won’t accomplish that goal. Instead, it will create new burdens for taxpayers without doing much to improve beneficiaries’ health.

ObamaCare directed states to expand Medicaid — a program originally intended for low-income elderly, blind and disabled Americans, as well as children and pregnant women — to able-bodied adults earning up to 138% of the poverty line starting in 2014. But in 2012, the U.S. Supreme Court ruled that individual states could decide whether to expand Medicaid in line with ObamaCare’s dictates.

The federal government tried to coax them into doing so by initially funding 100% of the cost of expansion. Starting in 2017, the federal government ratcheted down its contributions. By 2020, the feds will only cover 90% of the cost. State taxpayers will have to pick up the rest of the tab.

Despite this looming burden, 36 states and the District of Columbia have opted to expand the program.

Waste, Fraud And Taxes

Montana’s expansion of the program may end next year; voters this year turned down a ballot initiative that would’ve imposed a new tobacco tax to pay for it. If the state legislature doesn’t come up with an alternative funding mechanism, then the expansion will end in June 2019.

Waste and fraud run rampant in Medicaid. In 2017, improper payments totaled $37 billion, according to a Senate report released this past summer. That’s an increase of more than 150% in just four years.

A February report revealed that California spent $629 million in federal money on 366,000 people ineligible to enroll in Medi-Cal, the state’s Medicaid program, in just six months — from October 2014 to March 2015. It also spent $400 million on 79,000 people who are potentially ineligible. Over the same period, New York used $26 million in federal funds for more than 47,000 ineligible people.

The federal government seems unwilling to address such abuse. In the past three years, the Government Accountability Office has made 11 anti-fraud recommendations to the Centers for Medicare and Medicaid Services. CMS hasn’t acted on any of them.

Where Are The Benefits?

Even worse, these millions of dollars in inappropriate spending are doing little to nothing to improve beneficiaries’ health. Medicaid enrollees fare no better than the uninsured on measurable health outcomes.

Consider Oregon’s experience. In 2008, the state partially expanded Medicaid. It chose the new enrollees by lottery. A 2013 study of the effort analyzed this group’s health compared to uninsured people who weren’t selected. They concluded that Medicaid enrollment increased enrollees’ utilization of health services without improving outcomes.

The program is ineffective largely because it underpays doctors. Private insurance pays physicians, on average, 69% more than Medicaid for children’s doctor appointments, according to the Department of Health and Human Services. For orthopedic appointments, private insurance pays an average of more than 2.5 times as much as Medicaid.

Because of these low reimbursement rates, only about half of general practitioners accept new Medicaid patients. In Atlanta, for example, only 35% take on new Medicaid patients, according to an analysis of 15 major metropolitan areas conducted by Merritt Hawkins.

Without true access to primary care doctors, enrollees flock to emergency rooms for minor health problems. In California, the number of emergency room visits by Medi-Cal enrollees rose 44% between 2014, the first year of Medi-Cal expansion, and 2016.

Medicaid And Opioid Abuse

Medicaid isn’t merely failing to improve people’s lives. There’s also evidence that it’s exacerbating the epidemic of opioid addiction plaguing the country.

More than a few of the program’s enrollees have obtained prescription painkillers heavily subsidized by the program — and then sold those pills on the black market. One Connecticut dealer, with the help of Medicaid beneficiaries using forged prescriptions, secured $200,000 of oxycodone, according to a recent Senate report. Opioid overdose deaths have increased about twice as fast in Medicaid expansion states as non-expansion states.

Voters in Idaho, Nebraska, and Utah surely thought they were doing a good deed by expanding Medicaid. Everyone wants low-income people to have access to quality health care. But enlarging Medicaid won’t achieve that goal. Instead, it will consign billions more taxpayer dollars to waste, fraud and abuse.

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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