Why Virginia Shouldn’t Expand Medicaid

Published February 26, 2013

In a useful guide for the Old Dominion and other states as well, Grace-Marie Turner and Avik Roy explain why Virginia shouldn’t expand Medicaid:

1. Virginia’s Medicaid spending will explode.

According to a forthcoming publication from the Heritage Foundation, Medicaid spending will increase dramatically as the federal match rate for the expansion population begins to drop and as more and more Virginians enroll in the program – as the data from Heritage in this chart indicates.

2. Medicaid harms the poor.

The Medicaid program is so badly broken that it actually harms the people it is intended to serve. Mountains of clinical literature show that, on average, patients on Medicaid have poorer health outcomes than those with no insurance at all. The largest such study by far, conducted by surgeons at the University of Virginia, examined outcomes for 893,658 individuals undergoing major surgical operations from 2003 to 2007. It found that patients on Medicaid were 13 percent more likely to die in the hospital after surgery than those with no insurance, even when adjusting for age, gender, income, region, and health status. Medicaid patients were 97 percent more likely to die than those with private insurance.

This is because the Medicaid program pays doctors and hospitals far less than private insurers do. In 2008, the Virginia Medicaid program paid doctors 29 percent less than private insurers did. In California and New York, states with expansive Medicaid programs, Medicaid pays doctors 62 and 71 percent less, respectively. As a result, many doctors refuse to take Medicaid — and when Medicaid patients can’t get predictable access to care, their cancers go undiagnosed and their heart conditions go unmanaged. Access to specialists is particularly challenging. When Medicaid patients finally do get care, their diseases are often more advanced and more difficult to treat. This is worse than having no insurance at all, because uninsured people pay out-of-pocket, which doctors accept, compared with Medicaid, which underpays doctors and requires lots of form-filling and arguing. Virginia should instead insist that Washington provide more flexibility with Medicaid spending so that the Commonwealth can provide them the dignity of private insurance.

3. Medicaid’s access problems will get worse as more doctors drop out.

According to the Urban Institute, there is considerable concern about whether there will be enough doctors to see the influx of new Medicaid patients.  While Obamacare provides for a two years of increased federal Medicaid payments for primary-care physicians, it seems unlikely there will be a permanent increase in participation among privately practicing physicians since the increase in federal payments for primary-care physicians will last only two years. The biggest problem in Virginia will be in developing sufficient capacity in the southern and southwestern parts of the state, where enrollment increases will be the largest and provider shortages the greatest.

And that’s just the beginning. Read the rest here.