Politics & Policy

Hold the Line on Medicaid

President Obama, speaking in Dallas, said he hoped that Texas governor Rick Perry would reconsider and accept the administration’s push to expand Medicaid under the new provisions of the Affordable Care Act. Apparently, somebody forgot to tell the smartest president ever that the Texas legislature already has rejected that expansion and that it will not reconvene until January 13, 2015, Texas having long ago decided that a part-time legislature is the least dangerous sort. Governor Perry already opposed the expansion, but the legislature has taken the belt-and-suspenders approach and preempted any possible change of heart he might have had.

Perry and the Texas legislature have made the right decision.

To begin with, Medicaid is a terrible program. It provides few if any measurable health-care benefits, and a number of studies — not from right-wing think tanks, but from the Annals of Surgery, among others — have suggested that it has negative effects on the health outcomes of its so-called beneficiaries. From overall hospital deaths (University of Virginia study) to certain cancers (University of Pennsylvania study) to vascular disease (Columbia-Cornell study), Medicaid patients do no better, and often do worse, than those with no insurance at all; their outcomes reliably lag those of patients in private insurance. And their access to health care is far from guaranteed: Doctors do not want to see Medicaid patients, for reasons of reimbursement and bureaucratic hassle.

The benefit side of the cost-benefit analysis of Medicaid is depressing indeed. But the cost side is substantial as well.

Under Obamacare, the Democrats originally had sought to force states to participate in the expansion of Medicaid; the Supreme Court, perhaps remembering for a moment that the states formed the federal government and not the other way around, decided that the states could not be forced. With the avenue of coercion blocked, the administration instead emphasized bribery, advertising that it was offering the states “free” federal dollars to expand the program. That money is not free at all — not to taxpayers, of course, but not to state treasuries, either. That is because while the federal government has offered to pick up 100 percent of the new expenses at first, that alleged generosity is to be quickly scaled back. Even at ten cents on the dollar, Medicaid expansion is a very expensive proposition: It will cost New York some $52 billion over the next decade. Michigan will pay $2.3 billion.

A second and less-discussed issue is that the promised federal largesse does not apply to Medicaid recipients who were eligible for the program before the passage of the Affordable Care Act but who were not enrolled. States will have to pay for those Medicaid enrollees under the old formula, meaning that they will pick up approximately a third of the cost rather than a tenth.

This is especially troubling in light of the catastrophically mismanaged rollout of Obamacare, which is shaping up thus far to be mainly a push to enroll new Medicaid recipients. In some states, 90 percent of those signed up under Obamacare have simply been shunted into Medicaid, a fact that has troubling consequences for state budgets. Speaking for the National Association of Medicaid Directors, Matt Salo said of those early enrollment figures: “Everyone’s eyes kind of bugged out.” Taxpayers on the hook for this will no doubt have the same reaction.

The crafty politics behind the Medicaid expansion goes like this: Put a bunch of money on the table, remind Texans and others that they still pay taxes to support Medicaid, and ask, “Why isn’t Governor Perry helping you get yours?” The answer to that question is that Governor Perry and others have forgone the short-term revenue from Medicaid expansion in order to avoid the long-term cost associated with it, which will be enormous. Even without the expansion, Medicaid is poised to break the budgets of many states, Texas among them. Expansion is precisely the wrong course of action.

The states stood up to the administration’s attempt to coerce them into accepting bigger Medicaid bills. Unfortunately, fewer of them had the fortitude to resist the administration’s attempt to bribe them. From Maine to Montana to Wisconsin to Texas, other states have made the right decision. There will be more pressure on them to reverse themselves, but they should stay the course.


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