The Leaflet: States Consider Medicaid Reform

Published January 28, 2016

Many states are debating making or have already made significant changes to their health care programs, with many focusing on Medicaid expansion. Following the passage of President Obama’s health care plan, the Affordable Care Act (ACA), the federal government promised to fully fund Medicaid expansion for all fifty states from 2014 to 2016. However, beginning in 2017, states will be required to foot part of the bill, paying 10 percent of program costs by 2020. Nineteen states did not expand Medicaid, rejecting Obama’s original plan.

Medicaid expansion battles in Arkansas, Kentucky, Louisiana, Montana, and North Carolina are currently underway. Louisiana Gov. John Bel Edwards (D) signed an executive order to expand Medicaid last week. Similar to Louisiana, Montana officially expanded Medicaid earlier this month. Carving out their own path, North Carolina legislators approved an overhaul to Medicaid last year that will evolve into a managed-care system.

Since implementation of the ACA, Medicaid spending nationwide has increased exponentially. Peter Ferrara, a senior fellow at The Heartland Institute, warns total future expansion costs to state governments are estimated to exceed the funds provided by the federal government by an additional 66 percent.

In a recent study from Massachusetts Institute of Technology (MIT) Professors Amy Finkelstein, John Bates, and Clark Medal titled “The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment,” the researchers used various econometric methods to measure the benefits that enrollees receive from Medicaid. The report, utilizing data from the Oregon Health Insurance Experiment, found that “Medicaid enrollees receive very little benefit from each dollar spent on Medicaid. The absolute minimum enrollees receive is 15 cents of benefit per dollar spent….No matter how the authors sliced the data, Medicaid’s costs exceed the benefits to enrollees. If the government just gave enrollees the money, Medicaid is such a bad deal that enrollees would not buy Medicaid coverage with it.”

According to Heartland’s Reform Medicaid project, Medicaid is already the largest budget expense for the states. Their website highlights a study by The University of Virginia that finds it is better to be uninsured than to be on Medicaid. A large survey by UVA which compensated for several major factors found startling data last year claiming “surgical patients on Medicaid are 13% more likely to die than those with no insurance at all, and 97% more likely to die than those with private insurance.”

States should think twice about giving up more control of their Medicaid programs in order to further expand a system that is already fiscally unsustainable.

What We’re Working On

Budget & Tax
Research & Commentary: Mississippi Welfare Reform
In The Heartland Institute’s 2015 Welfare Reform Report Card, Mississippi received a C- grade and ranks 29th for its anti-poverty Temporary Assistance for Needy Families (TANF) policies. While Mississippi has successfully reduced its number of TANF recipients since 1996, its overall poverty rate has continued to increase. According to data from the U.S. Census Bureau’s Small Area Income and Poverty Estimates program and information from the Annie E. Casey Foundation, Mississippi’s poverty rate increased by 15.4 percent from 1996 to 2013.

In this Research & Commentary, Government Relations Manager Logan Pike and Senior Policy Analyst Matthew Glans argue Mississippi’s current set of welfare and anti-poverty programs disincentivize work, trapping welfare recipients in long-term poverty. Pike and Glans advise Mississippi legislators to continue reforming Mississippi’s welfare system by adopting policies that improve opportunities for upward mobility and self-sufficiency while also protecting the truly needy. Read more

Research & Commentary: School Vouchers in Tennessee
Proposed legislation in Tennessee would make vouchers available to children who qualify for free or reduced-price lunches and who currently attend or are zoned for a school ranking in the bottom 5 percent statewide. The bill would also incrementally cap the number of students to be awarded scholarships each year. A maximum of 5,000 scholarships would be awarded for the 2015–16 school year. Altogether, a total of 42,500 scholarships would be offered through 2018–19. In this Research & Commentary, Policy Analyst Tim Benson and Heartland Research Fellow Joy Pullmann note school choice offers families equal access to high-quality schools that meet their widely diverse needs and desires. Furthermore, they explain, instead of unjustly condemning millions of children to failing and dangerous schools because their parents cannot afford to pay private school tuition rates, vouchers give all families a greater opportunity to meet each child’s unique education needs. Read more

Energy & Environment
Research & Commentary: Federal Ownership of Public Lands
According to the United States Geological Survey, nearly half the land in the Western United States is owned by the federal government. This includes 84.9 percent of land in Nevada, 64.9 percent of Utah, 61.6 percent of Idaho, 61.2 percent of Alaska, 52.9 percent of Oregon, 48.1 percent of Wyoming, and 45.8 percent in California. Most of the land held by the U.S. Bureau of Land Management, excluding national parks and monuments and federal wilderness areas, however, is the result of historical accident, not environmental concerns. In this Research & Commentary, Policy Analyst Tim Benson argues, “not only would a transfer of Western federal lands to the states be better for the preservation of much of the land and the residents of the states, but it would also be a better deal for taxpayers nationwide.”

Health Care
Research & Commentary: Direct Primary Care
The Association of American Medical Colleges has estimated the United States will face a shortage of 12,000–31,000 primary care physicians by 2025. Because the demand for primary care physicians is outpacing the supply of these doctors, many of patients are going to emergency rooms or immediate care facilities to obtain routine health care.

Current primary care doctors face myriad restrictions and a reimbursement system that is both slow and costly; creating overhead that can eat up to 60 percent of a typical primary care practice’s revenue. For this reason, many new doctors have chosen to avoid this kind of practice. In this Research & Commentary, Senior Policy Analyst Matthew Glans examines one health-care-provider model which has become increasingly popular for doctors and patients alike and could serve to revitalize the U.S. primary care system, direct primary care. Read more

Constitutional Reform
Heartland Daily Podcast – Kyle Maichle: U.S. Term Limits and Wolf-Pac
In this edition of The Heartland Daily Podcast, Kyle Maichle, project manager for Constitutional Reform at The Heartland Institute joins Host Donald Kendal to talk about the final two organizations seeking an Article V convention – U.S. Term Limits and Wolf-Pac.

U.S. Term Limits is seeking a constitutional amendment to establish term limits on politicians on a state and federal level. Wolf-Pac has a different objective in mind. Wolf-Pac’s goal is to overturn the Citizens United ruling. They want to create a “free and fair elections amendment.” Listen here

From Our Free-Market Friends
Washington Policy Center Releases New Education Policy Brief
Washington Policy Center (WPC) recently released study titled, Education Money for Families:  How Education Savings Accounts can help children learn in Washington state. In the study, Director of the WPC Center for Education Liv Finne, argues that a practical, forward-looking solution lies in providing Washington families with more choice in access to education services. Giving parents voluntary options in the education of their children would especially benefit those children assigned to the state’s low-performing schools. Offering fully-funded Education Saving Accounts to all parents in Washington would benefit students. Read more