The Affordable Care Act (ACA) allows states to expand Medicaid to cover individuals making up to 133 percent of the federal poverty level. Thirty two states and the District of Columbia have chosen to expand their Medicaid programs. In January, Governor John Bel Edwards signed an executive order expanding Medicaid coverage under the ACA.
Edward’s order expands Medicaid eligibility is for incomes below 138 percent of the poverty level. The new income standards amount to $16,242 for a single person and $33,465 for a family of four. According to an analysis last year by the Louisiana Legislative Fiscal Office, 298,000 uninsured adults in state will be eligible for Medicaid under the expansion; an additional 224,000 adults with private insurance would also receive eligibility.
The federal government has promised to cover 100 percent of the costs of newly eligible enrollees until 2017, but the matching rate declines over time, so states will eventually have to find other ways to pay for the newly eligible population. Moreover, the 100 percent match applies only to newly eligible enrollees. Those who were eligible for Medicaid before expansion and are required to enroll under Obamacare’s individual mandate are subject only to the lower, regular matching rate. This means state costs for Medicaid are increasing even for those states not expanding their Medicaid programs.
Opponents of Medicaid expansion note the program is already stretching states thin financially and has a poor track record of 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 spending accounts for 23.6 percent of state government expenditures.
Given the impact of Medicaid spending on state budgets, it is inappropriate for any governor to bypass the legislature, as the latter is responsible for the budget and will be held accountable for future deficits. Since implementation of the ACA, Medicaid spending nationwide has exploded. 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 the shortfall reaching as much as 66 percent of state expenditures. States will inevitably find the situation unsustainable.
Medicaid expansion is supposed to improve health outcomes and reduce costs, but the results have been less than promised. In 2008, Oregon expanded its Medicaid program by 30,000 people, selected randomly from a waiting list of 90,000. A 2013 study published in The New England Journal of Medicine found Oregon’s Medicaid expansion failed to achieve the principal goal of health care reform: improving overall health.
Louisiana should serve as a cautionary tale for states which have yet to expand Medicaid, depending on a legislative majority to block expansion is not enough. It is undemocratic to allow a governor to unilaterally expand the largest category of state budget expenditures.
Requiring legislative approval establishes the proper checks and balances of government and forces legislators to consider the wider implications of Medicaid expansion and how it would be implemented and funded in the long run.
The following documents examine Medicaid expansion and its effects in greater detail.
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.
Research & Commentary: States Should Innovate, Not Expand Medicaid
Matthew Glans of The Heartland Institute discusses how expanding Medicaid can cause problems extending beyond state budgets and the health care industry, and he notes better options are available: “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.”
Research & Commentary: Requiring Legislative Approval for Medicaid Expansion
Matthew Glans of The Heartland Institute examines Medicaid expansion and how some state governors are seeking to expand their state Medicaid programs without legislative approval. Glans argues Medicaid should require legislative approval for any future expansion. “It is undemocratic to allow a governor to unilaterally expand the largest category of state budget expenditures.”
Medicaid Expansion: Even Worse Than You Thought
The Pelican Institute examines Medicaid expansion in Louisiana and argues against expansion, pointing to the long history of federal programs exceeding their estimated costs; the unlikelihood of achieving market-friendly reforms when playing by Medicaid’s stifling rules; and the necessity of resisting another expansion of the modern welfare state.
Policy Tip Sheet: Medicaid Expansion
In this Heartland Institute Tip Sheet, Kendall Antekeier explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways offering better care at lower costs to taxpayers.
Research & Commentary: The Medicaid ‘Cure’
Kendall Antekeier of The Heartland Institute examines the Medicaid Cure, a pilot program established in five large Florida counties, which uses a premium support model in which 290,000 Medicaid recipients are given a range of premiums and plans from which to choose.
A Medicaid Cure: Florida’s Medicaid Reform Pilot
The Foundation for Government Accountability provides insight into the success of the Florida Medicaid Cure: “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.”
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 better fit coverage expansion with their states’ needs, resources, and budgets.
Kansas Governor: Medicaid Expansion Decision Up to the Legislature
In this article from Governing, the authors discuss new legislation which prohibits Medicaid expansion in Kansas without legislative approval.
After One Last Spat, Bill Requiring Legislative Approval of Medicaid Expansion Goes to Governor
Knoxblogs discusses legislation in Tennessee which requires specific approval of the House and Senate for any expansion of Medicaid in the state. The article discusses the lengthy debate on the issue, which began last year.
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 http://news.heartland.org/health, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org.
If you have any questions about this issue or The Heartland Institute’s website, contact Heartland Institute Government Relations Manager Logan Pike at [email protected] or 312/377-4000.