Don’t Sell Obamacare as a Medicaid Expansion for Children

by Oren Cass

The path to victory for Obamacare boosters is getting mighty narrow. Over at the New York Times’s Upshot yesterday, Professor Aaron Carroll led off a defense of Obamacare by observing:

Three years into Obamacare and it seems as if much of the news is bad: private insurers exiting the exchanges, networks being narrowed, premiums rising and competition dwindling out of existence.

But it’s important to remember that many, if not most, of the newly covered Americans became insured through an expansion of Medicaid. Here, too, you hear a lot of bad news: that Medicaid offers poor quality and little choice of providers, that it is expensive for the states to administer and that its growing cost will eventually bankrupt states.

Still, he takes it upon himself to argue that “in most ways, Medicaid offers an excellent return on investment.” Even if that were true, defending Obamacare as a glorified Medicaid expansion is no defense at all. But the case he offers for Medicaid turns out not to apply anyway.

Yes, he admits, studies show Medicaid often produces worse outcomes than no insurance at all. But those studies are “often flawed” because “those on Medicaid are often poorer and sicker than those who are uninsured.” Yes, there was an excellent randomized trial in Oregon that also, per the study’s own conclusion, found “no significant improvements in measured physical health outcomes in the first two years.” But, he says, it can be “interpreted in many ways” and, anyway, “even that study couldn’t answer many of the long-term, holistic questions about its effects on health.”

The “long-term, holistic” studies that Carroll prefers show coverage for expectant mothers produced better health outcomes in their children and that children themselves receiving coverage had better health, educational, and financial outcomes. That’s all great news, but there’s one problem: Obamacare’s Medicaid expansion does not target pregnant women or children. It allows states to offer Medicaid coverage to households with income as high as 133% of the poverty line; but every state was already covering pregnant women and children to at least that threshold. The argument, in other words, is a case for the 1997 State Children’s Health Insurance Program. Not Obamacare. (SCHIP, by the way, cost $13 billion last year. The rest of Medicaid cost $568 billion.)

Capping it all off, Carroll also acknowledges that:

Policy decisions, including those involving health, need to be considered in terms of trade-offs. It is true that providing Medicaid can cost the federal government, and even states, a lot of money, which can’t then be spent on other worthy pursuits.

This is an important point and should be central to discussions about how best to help the poor. But without offering any further analysis, he concludes, “it’s not hard to argue that money allocated to Medicaid is well spent.” If only there were some way to test the premise that continued expansions of Medicaid (which now costs more than the rest of the safety net combined) are the best use of public resources… like this recent study from the Yale School of Public Health finding that states allocating relatively less of their social spending to health care get better health outcomes.

The narrowing networks, rising premiums, dwindling competition, costly administration, and eventual state bankruptcies—that we still get.​

The Corner

The one and only.