Medicaid Expansion Follies


ObamaCare News Roundup curated by Jane M. Orient, M.D.

The most important way in which the Affordable Care Act (ACA) has increased coverage is through Medicaid expansion. But California, according to the HHS inspector general spent an estimated $738.2 million on 366,078 expansion beneficiaries who were ineligible, and an additional $416.5 million for 79,055 expansion enrollees who were “potentially” ineligible, from Oct 1, 2014, to Mar 31, 2015. Nearly 90 percent of the $1.15 billion in questionable payments involved federal money.

Once a Washington afterthought, Medicaid now enrolls 70 million Americans. An investigation by the Senate Homeland Security and Governmental Affairs found that Medicaid, which initially cost just $222 per user, has soared to $7,973, a 3,491 increase, writes Paul Bedard in the Washington Examiner, June 20. Overall cost to taxpayers for the program designed for the poor is $554 billion. HHS now estimates that federal Medicaid expenditures—which were $299 billion in fiscal year 2014—will rise 96 percent to $588 billion by 2025.

Fraud is rampant. The Government Accountability Office discovered Medicaid benefits for dead people and prisoners; hundreds of thousands of beneficiaries who provided apparently false Social Security numbers; and an ACA data hub granting coverage to fictitious applicants.

Private insurers have made “spectacular profits” from Medicaid expansion in California, with one insurer’s margins increasing 578 percent in the expansion’s first two years, from $71 million to $484 million.

One argument for expanding Medicaid, which convinced Arizona, was that hospitals would have to provide less uncompensated care and would therefore pass along less cost to private payers and insurers. The so-called hidden healthcare tax on the insured was claimed to be 14 percent above hospitals’ costs before Medicaid was expanded. But three years into the expansion, private payers in Arizona paid 27 percent above hospital costs, according to a study by the Goldwater Institute.

Hospitals’ list prices for services increased more for insured patients than for the uninsured. Total charges for all payment groups (public and private) went up, but Medicaid charges in Arizona’s emergency departments alone increased more than 300 percent.

“The Arizona experience is a cautionary tale for lawmakers: A program should be evaluated based on outcomes, not intentions,” write Naomi Lopez Bauman et al.    

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