Obamacare and Medicaid

Published July 22, 2011

The key to understanding how the massive Obamacare bill will affect health care across the nation is to understand how it will expand and change the role of Medicaid. 

Medicaid illustrates clearly how every expansion of government into healthcare inevitably squeezes out the private sector. The evident goal of such actions is to transform what was once an important private activity into one managed and run by government, with taxpayer-funded physicians working in government-controlled hospitals and nursing homes. 

Huge Numbers Eligible

Medicaid is the companion program to Medicare, providing for poor people what Medicare provides for the elderly. It is run out of the same federal office—the Centers for Medicare and Medicaid Services (CMS). In 2008 Medicaid’s total expenditures were $204 billion, approximately 10 percent of the total healthcare costs for the United States. 

Despite that high cost, Medicaid payment schedules are not particularly generous and vary from state to state, since states have a say in fees schedules. The states administer the Medicaid programs and the federal government monitors the programs, establishing standards for benefits and eligibility. States pay about 43 percent of the costs, but that varies because federal matching funds offer more support for poorer states. 

Medicaid has become the program for all sorts of special needs, HIV/AIDS treatment, nursing home care for qualified poor, treatment of disabled or poor children, and obstetrics (37 percent of all deliveries) and pediatrics for low-income mothers, even dental coverage for those under age 21. 

Budget expansions of the Medicaid program, particularly when including the State Children’s Insurance Program (SCHIP), do not begin to compare to the projected increases in beneficiaries. Eligibility is based on disabilities and annual income of less than 133 percent of the federally designated poverty level—roughly $29,000 for family of 4 and $14,400 for singles—which allows for a massive number of Medicaid users. 

Enormous Financial Challenges

According to a recent study by Ed Haislmaier of the Heritage Foundation, the rolls of beneficiaries and the costs of Medicaid continue to rise, bringing state budgets to the point of crisis. Thanks to Obamacare, this process has been accelerated.

Under Obamacare, Medicare and Medicaid can be expected to add 35-40 million enrollees in the next ten years, with cost projections amounting to a 35 percent increase of the current state burden of $190 billion. States will face massive cost-sharing increases, with a disproportionate increase in the Mountain States.

When Nevada announced it would join a lawsuit by various state attorneys general to challenge the legality of President Obama’s bill, state officials calculated its increased Medicaid costs under Obamacare at $1 billion a year—and keep in mind, that estimate does not even begin to account for the likely increase in utilization that comes from the illusion of “free” healthcare.

Collectivist Ethic

The expansion of Medicaid does not just create a financial challenge for the states; it also creates all sorts of ethical challenges, which will affect millions of Americans.

Taxpayers will now be forced to bear significant custodial care costs under Medicaid for the disabled. The nation will have to decide how we will define terminal illness, given the unavoidability of mortality and the rising costs of care. Will the advance directive projects described in Obamacare become more prevalent and aggressive? If a person is on Medicaid for custodial care—and 60 percent of the nation’s current nursing home patients are on Medicaid—will a quality of life score determine availability of care and access to resources for the weak and the politically silent?

Zeke Emanuel, the physician brother of White House Chief of Staff Rahm Emanuel and an influential advisor in this administration, has publicly advocated requiring reductions of care for those with an allegedly decreased quality of life. Dr. Donald Berwick, the Ivy League aficionado of the British National Health Service recently named as chief administrator of CMS via recess appointment, has repeatedly voiced support for stringent rationing of end-of-life care.

All the evidence suggests Berwick and Emanuel agree with collectivist ethic that calls for reductions in care for the elderly and the disabled and view it as a positive social good. Essentially, Berwick and Emanuel are setting themselves up as the arbiters of others’ health care decisions, casting off centuries of moral and ethical views in favor of a new collectivist/socialist ideal.

Medicare Power to Increase

The Obama administration has already put big new burdens on industry and insurers in its national health-care overhaul. Now it will inevitably pressure providers and physicians to comply with programs which override professional ethical and medical care standards. The nation is in for a rude awakening when the Medicaid monster suddenly becomes a much bigger player with an even more powerful influence than before on segments of the population most in need and with the least resources. 

States will experience a rapidly increasing burden of Medicaid costs as a result of higher utilization and eligibility expansions. Doctors will feel the government pressure as a constant force influencing what they are allowed to do for their patients. And the nation’s citizens will soon witness the results as their families, neighborhoods, and communities experience the inevitable ramifications of government rationed care.


John Dunn MD JD ([email protected]) is an emergency physician, inactive attorney, and policy advisor to the Heartland Institute and the American Council on Science and Health.


Internet Info: 

“Obamacare’s Impact on States,” the Heritage Foundation: http://www.heritage.org/Research/Reports/2010/07/Obamacare-Impact-on-States