Medicaid Expansion in 2017

Published October 6, 2016

Health care reform has been thrust back into the public spotlight in the run up to the election in November. During the October 4 vice presidential debate between Democratic Party candidate Sen. Tim Kaine (VA) and Republican Gov. Mike Pence, the two candidates discussed at length the need for reform of the Affordable Care Act (ACA) and other health care issues.

The two candidates offered very different visions for the future of health care in America. Pence called for more free-market reforms and for Obamacare to be repealed and replaced, while Clinton called for expanding Obamacare and adding a “public option.”

In a recent National Review article, writer Chris Jacobs described the importance of health care in the election, asserting if Hillary Clinton captures the White House, “Obamacare is here to stay, and [Clinton] will likely push to expand Medicaid in the states that have rejected the program’s massive expansion under Obamacare.”

State legislators in many states across the nation will address issues related to Medicaid expansion prior to and following the election. The 19 states that have not expanded Medicaid will likely face pressure from Democrats to fall in line with the 31 states that have. But many lawmakers are rightfully skeptical about expanding Medicaid and anxious about expansion costs, which are rising faster than expected in states that have expanded the program.

The Affordable Care Act was originally projected to substantially increase the number of people who have health insurance – in large part by expanding Medicaid – which was intended to improve hospitals’ financial health by reducing the amount of care they provide to uninsured patients, many of whom pay little or nothing for their care. However, a recent report released by the Congressional Budget Office analyzing projected profit margins over the coming decade concluded, “Medicaid expansion will not make a material difference in hospitals’ overall viability.”

In a recent Forbes article, Brian Blase, a senior research fellow with the Spending and Budget Initiative at the Mercatus Center at George Mason University, argues Medicaid expansion under ACA has been and will continue to be a poor use of taxpayers’ money, arguing, “Government spending on Medicaid expansion enrollees is nearly 50% higher than the government projected … [and] Medicaid enrollees obtain only 20 to 40 cents of value for each dollar the government spends on their behalf.”

Blase also argues Medicaid affects health care utilization and health outcomes for people other than the targeted enrollees. “Expanding Medicaid increases demand for health care services, and therefore affects the allocation of those services,” Blase wrote.

Dr. Hal Scherz, the founder of Docs4PatientCare, told Health Care News in September states should avoid any expansion of Medicaid unless there is a major shakeup. “Expanding Medicaid only makes sense if things are different,” said Scherz.

One option proposed by Scherz is to provide each Medicaid recipient with a direct primary care doctor alongside existing Medicaid coverage. Together, this would act as a high-deductible wraparound and pharmacy program. Scherz told Health Care News this model could lead to substantial savings: Four-fifths of health care costs could be locked up for under $1,200 per year.

In a recent Heartland Research & Commentary, Senior Policy Analyst Matthew Glans also argued against Medicaid expansion. “Instead of expanding a flawed Medicaid model that is too costly, delivers subpar health care, and shifts more power to the national government, state lawmakers should focus on reforming the current system before choosing to expand it,” wrote Glans.

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