Medicaid—Safety Net or Snare?


This week’s health policy news roundup curated by Jane M. Orient, M.D.

A number of Republican governors, including presidential hopeful John Kasich of Ohio and Dennis Daugaard of South Dakota, have expanded or are expanding Medicaid under the Affordable Care Act, even though Republican members of Congress, notably Sen. John Thune (R-S.D.) oppose the expansion and want ACA to fail. Governors don’t want to “leave free money on the table.” Kasich defended his action, saying he “felt a moral imperative to help the poor”—with other people’s money.

Medicaid proponents forget that coverage is not care. “What’s surprising is that there’s been so little push back over the awful results that Medicaid has yielded,” writes Glenn Harlan Reynolds. “It’s as if the government ‘health care’ boosters don’t really care about the well being of the poor.” He notes that the solution proposed by Avik Roy in his book How Medicaid Fails the Poor—pay a primary-care physician $80 per month per patient and add a $2,500-a-year catastrophic plan—would cost $3,460 per person, 42% less than Obama’s Medicaid expansion.

Enrollment in the program does not improve health outcomes—the contrary may be the case, writes Yevgeniy Feynman. Access to physicians, particularly specialists, is poor. Some of the nation’s leading health economists found that Medicaid’s value to actual beneficiaries is only about 20 to 40 cents on the dollar. Like other in-kind redistribution programs, the funding goes to program administrators and “providers,” who allocate goods and services in ways the beneficiaries would not choose if they had cash to spend themselves.

States that expanded the program have seen spending grow much faster than those that didn’t. The Kaiser Family Foundation found that total Medicaid spending grew nearly 18 percent in expansion states.

The “free money” has had a very high cost, as new enrollments have greatly exceeded estimates. And the extra federal contribution has an expiration date. California, for example, expected 800,000 new enrollees after the state’s 2013 Medicaid expansion, but wound up with 2.3 million. Illinois had to increase its estimated cost by $2 billion. Ohio’s Medicaid spending has grown by $5.8 billion since 2011. The Ohio Department of Medicaid projects that by 2017 spending will total $28.2 billion—a 59% increase during Mr. Kasich’s tenure, write Evelyn Everton and Chris Hudson (WSJ, Nov 6, 2015).

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