Politics & Policy

Obamacare’s Medicaid Burden

The law imposes massive costs on states.

Medicaid is burdening the states with financial liabilities of hundreds of billions of dollars. Already Obamacare is making this problem far worse through its “maintenance of effort” clause, which forbids states from tightening their eligibility requirements even as their economies shrink.

And beginning in 2014, the states will be responsible for administering a Medicaid expansion: All families earning up to 133 percent of the poverty level will become eligible. An estimated 17 million more patients will flood the program. Even though services for these patients will be financed primarily by the federal government (over 90 percent of the long-term costs), the administrative costs (billions of dollars per state) will not be.

The states simply can’t afford it. In fact, some argue that the mandated Medicaid spending is unconstitutional: In the forthcoming Supreme Court case that is best known for addressing the individual mandate, 26 states are also protesting the law’s Medicaid expansion, arguing that it will coerce them into assuming unworkable financial burdens.

Is it any wonder that states are already responding to Obamacare’s “maintenance of effort” clause and the anticipated 2014 expansion by cutting services? Of course, many of the cuts are unjust and bureaucratic and arbitrary. What would you expect of lawmakers instead of practicing physicians? Several states (including Florida, Alabama, and Hawaii) are limiting the number of hospital admissions a Medicaid patient can have in a given year. The patients or the hospitals have to bear the costs of additional visits, whether the patient is terribly sick or not. Other states are limiting dental work, eye care (Mississippi, North Carolina), or adult diapers (Nebraska).

So what should be done to the law outside of the Supreme Court? There is a surprisingly simple answer.

If the federal government wants to expand coverage to 17 million people who can’t afford to buy their own insurance, there is no reason that the product offered has to be as easy to overuse as Medicaid is. Medicaid is too comprehensive, and it doesn’t pay enough for the services it covers. This is why doctors are running away from it at an unprecedented rate. Surveys show that up to 50 percent of physicians restrict the number of new Medicaid patients they see.

Instead of contributing to spiraling health-care costs by expanding Medicaid to millions more people without the state funding or the doctors available to take care of them, the federal government should offer a more limited catastrophic and illness-based insurance to people who cannot afford to buy their own. There is no objective evidence that having a Medicaid card will help you stay healthy, but there is a rationale for ensuring that everyone who comes to the ER has coverage. This service should pay doctors and hospitals well. And this reform would still save the federal government billions of dollars.

At a time when the federal government is trying to contend with out-of-control deficit spending, we should not leave the Supreme Court to decide how much damage Obamacare will inflict on the nation. We should replace the Medicaid 2014 expansion with something more limited and practical.

— Marc Siegel is an associate professor of medicine at New York University and medical director of Doctor Radio at NYU Langone Medical Center. He is a Fox News medical contributor and author of The Inner Pulse: Unlocking the Secret Code of Sickness and Health.


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