Research & Commentary: Idaho Should Avoid Pitfalls of Quasi Medicaid Expansion

Published March 21, 2016

In the years following the enactment of the Affordable Care Act (ACA), Idaho legislators have offered several proposals that would have expanded Medicaid, including a failed plan that would have emulated the private-option model implemented in Arkansas.

The latest proposal, the Idaho Accountable Care Waiver Act (ACWA), would use federal dollars to provide health insurance for 78,000 Idahoans caught in the “Medicaid gap”— people whose household incomes  are too low for marketplace subsidies under the ACA but don’t currently qualify for Medicaid. ACWA would allow the Idaho Department of Health and Welfare to apply for a Medicaid waiver seeking federal dollars to pay for a managed-care program for Idahoans in the gap group. The managed-care programs would emphasize primary and preventive care. If a waiver is approved, the state would need to set up the program and its funding mechanisms. Receiving a waiver is far from guaranteed, and even if a waiver is granted, there is no guarantee it would be renewed down the road.

This approach presents several major problems. First, despite various private-market characteristics of the program, it still represents an expansion of a failed Medicaid system, where the federal government dictates multiple aspects of an insurance plan and the beneficial aspects of real market competition are lost. Despite the fact many of these programs attempt to include more substantive reforms, such as copays and employment requirements, the Centers for Medicare and Medicaid Services (CMS) have largely rejected those proposals.

A second major problem with any model accepting federal dollars is funding. Medicaid is one of the fastest-growing liabilities in both state and federal budgets. Under the ACA, the federal government promises it will provide 90 percent of Medicaid expansion costs. Since the implementation of the ACA, spending on Medicaid has exploded to unsustainable heights. Peter Ferrara, a senior fellow at The Heartland Institute, warns total future costs to state governments are estimated to exceed the funds provided by the federal government, with this shortfall reaching as high as 66 percent of state expenditures. States will inevitably find the situation impossible to maintain without spending cuts, incurring massive debt, or tax hikes.

Opponents of Medicaid expansion note the program is stretching states’ already thin budgets and has a poor track record at providing cost-effective and efficient care for those in need. Medicaid is currently the largest category of state spending; according to the National Association of State Budget Officers, Medicaid accounts for 23.6 percent of state government expenditures.

Medicaid is not the only health care option for needy families. The Idaho Freedom Foundation (IFF) argues the state government should get out of the way and allow non-government, locally based programs to operate unencumbered. “After all, community programs, including those run by churches, charities or direct primary care providers have been infinitely more successful targeting services to people in need, providing help, lifting them out of poverty and doing so at less cost,” wrote IFF in a commentary.  

Without significant reform, Medicaid will remain fiscally unsustainable, delivering subpar health care and shifting more power to the federal government.

The following articles examine state Medicaid reform from several perspectives. 

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

‘Skin-in-the-game’ Medicaid Expansion did not Work in Oregon
Brandon Hershey of the Idaho Freedom Foundation examines Medicaid expansion in Oregon, the problems it has faced, and the lessons Idaho could learn from its experience: “Oregon’s attempt to fund Medicaid expansion via high premiums and copayments proved an unsuccessful endeavor. As Medicaid costs grow—dramatically should Idaho choose to expand—implementing cost sharing will not help the poor in Idaho. As alternatives and solutions are discussed, this is one idea that should be thrown away. Medicaid expansion—no matter what the packaging is—will do nothing but place a burden on Idaho’s most vulnerable.” 

Research & Commentary: States Should Innovate, Not Expand Medicaid
Matthew Glans of The Heartland Institute discusses how expanding Medicaid can have repercussions beyond state budgets and the health care industry and notes better options exist: “It is important to remember government spending creates little or no income or economic growth; it is merely the redistribution of tax dollars taken from the pockets of taxpayers.”

Beware of Funding Promises Made by Medicaid Expansion Proponents
Brandon Hershey of the Idaho Freedom Foundation questions the ability of the federal government to cover the costs of Medicaid expansion: “Expanding Medicaid in Idaho relies on federal funds and the promise that the federal government will pay 90 percent of the costs. Really? With a debt of more than $17 trillion? The federal government rarely follows through with funding promises to the states. Medicaid expansion will bring the state’s hospitals a pile of reimbursements, but at what cost to state’s taxpayers and future generations?”

Idaho’s Emergency Room Costs Could Climb Under Medicaid Expansion
Dustin Hurst of Idaho Reporter writes about the increased costs created when Medicaid expands. Hurst focuses on the increases in emergency room costs. “Idaho’s emergency room costs for the state’s Medicaid population grew last year, though the increase is nothing compared to what could happen if the state swells the health care program. A records request delivered to reveals the state spent $53.8 million on emergency room services for Medicaid recipients in fiscal year 2014, which ended June 30. That’s up from $53.6 million just a year before,” Hurst wrote.

Policy Tip Sheet: Medicaid Expansion
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways that offer better care at a lower cost to taxpayers.

A Medicaid Cure: Florida’s Medicaid Reform Pilot
The Foundation for Government Accountability explains the success of its Project Medicaid Cure: “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.”

The Private Option: Medicaid Expansion by Another Name
Nicole Kaeding of Americans for Prosperity forecasts the effects of the decision to expand Medicaid in Arkansas.

Why States Should Not Expand Medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to fit coverage expansion. 

The Empty Promises of Arkansas’ Medicaid Private Option
The Foundation for Government Accountability examines the empty promises of Arkansas’ Medicaid private option program. The authors offer direct quotes from media interviews, legislative floor speeches, and social media posts made by private option supporters, and they provide point-by-point free-market rebuttals. 

How Medicaid Expansion (and the ‘Private Option’) Will Lock its Clients into Poverty
Dan Greenberg of the Advance Arkansas Institute argues legislators need to consider the potential economic problems that come from expanding Medicaid, including slow economic growth and trapping taxpayers into low-wage jobs.  

Research & Commentary: The Medicaid ‘Cure’
Kendall Antekeier examines the Medicaid Cure, a pilot program established in five large Florida counties by former Gov. Jeb Bush (R). The Medicaid Cure is a premium support model passed in 2006 in which gave 290,000 Medicaid recipients a range of premiums and plans from which to choose.

A Medicaid Cure: Florida’s Medicaid Reform Pilot
The Foundation for Government Accountability analyzes the success of Florida’s Medicaid Cure program, stating, “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.” 


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database, at 

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