Medicaid Expansion Would Only Expand Waste And Poor Care

Expanding Medicaid is popular, according to new survey data from the Kaiser Family Foundation. Two-thirds of Americans living in the 12 states that have not expanded the program as prescribed by Obamacare want their leaders to change course and boost enrollment.

Perhaps they’ll change their minds after reviewing the latest data on Medicaid’s wasteful spending and subpar care.

Medicaid has swelled dramatically since it was signed into law in 1965 by President Lyndon Johnson as part of his “Great Society.” Originally a safety-net program for low-income people, the program now covers nearly 79 million Americans. One out of every six dollars spent on health care in this country goes toward the entitlement—roughly $672 billion.

Obamacare only further inflated the ballooning program. The law originally required states to expand Medicaid to individuals with annual incomes up to 138% of the federal poverty level—about $18,750 in today’s dollars. The federal government enticed states to comply by offering to pick up 100% of the tab for expansion in the first two years—and 90% of the cost of expansion in perpetuity.

But in 2012, the U.S. Supreme Court ruled that Medicaid expansion was optional for the states in National Federation of Independent Business (NFIB) v. Sebelius. Since then, lawmakers have used all sorts of carrots and sticks—from offering even more money to revoking Medicaid waivers—to persuade states to expand the program.

It’s not hard to see why 12 states are still holding out. The cost of expansion has far exceeded original estimates. States are on the hook for much more than they bargained for. In the states that have expanded, the program covers twice as many people and costs 76% more per enrollee than initially projected.

Many of these additional enrollees may be ineligible for Medicaid. A 2015 federal audit of a sample of beneficiaries in Medi-Cal, California’s Medicaid program, found that half were either improperly or potentially improperly enrolled. A more recent audit found there were eligibility review errors in nearly 30% of enrollee files in expansion states, according to Brian Blase, a former economic advisor to President Trump.

Those errors have cost taxpayers a fortune. Last year, more than one in every five dollars the government spent on Medicaid was “improper.” That accounts for roughly $99 billion in fraudulent and erroneous payments—an amount equivalent to the GDP of Ecuador.

For all the money Americans spend on Medicaid, they might expect the program to provide adequate care to its beneficiaries. But that isn’t the case.

That’s partly because Medicaid pays doctors 62 cents for every dollar that private plans do. As a result, just 70% of providers were willing to accept new Medicaid patients as of 2019—compared to the 90% who were willing to accept privately insured patients.

That may seem inconsequential. But by expanding Medicaid, states have dramatically increased the number of patients on the program’s rolls. Meanwhile, the number of doctors willing to see those patients has largely stayed the same. That’s a recipe for long waits—and ultimately poor health outcomes.

In Colorado, Medicaid patients wait 1.4 times longer than those with private insurance for specialty care. They’re also three times more likely than privately insured patients to report not having access to specialty care because they couldn’t find a provider who accepts their insurance.

Waits could grow substantially in California if Gov. Gavin Newsom’s budget passes. He wants to make all undocumented immigrants in the state eligible for Medi-Cal. Beneficiaries could find themselves competing with more people for scarce appointments—especially if undocumented immigrants from other states come to California to take advantage of the governor’s largesse.

Without access to timely care, Medicaid enrollees suffer. In just one study of individuals with throat cancer, Medicaid and uninsured patients were both 50% more likely to die when compared with privately insured patients—even when researchers controlled for age, socioeconomic status, smoking, and other factors that can affect cancer outcomes.

In other words, having Medicaid is as good as having no insurance at all.

Other researchers have come to similar conclusions. A landmark study in Oregon, for example, found that “Medicaid coverage generated no significant improvements in measured physical health outcomes” when compared with being uninsured.

Americans living in non-expansion states should consider themselves lucky. Expanding Medicaid would only expand the entitlement’s inefficiencies and poor health outcomes.