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New York Daily News

 

Exploding Medicaid Bills Will Threaten Budgets and Health

November 24, 2013

By Paul Howard

PRINTER FRIENDLY

So get ready for more Obamacare trouble

While the persistent problems with Obamacare’s health exchanges have captured media headlines, a more troubling underlying story is the law’s historic and unsustainable expansion of Medicaid.

For every one person that has enrolled in private coverage under Obamacare to date, four have enrolled in Medicaid. That portends an astronomical rise in Medicaid spending in state and federal budgets - and worse health outcomes for millions of Americans.

Enacted into law in 1965, along with Medicare, Medicaid is a health program for low-income elderly and disabled Americans, offering free or nearly free access to many covered health services (like doctor’s visits and prescription drugs). Unlike Medicare, Medicaid financing is split between the states and federal government, under a formula where poorer states get a bigger federal match for their spending than richer states. States also have broad responsibility for administering Medicaid and setting payments to providers.

Obamacare doesn’t just create state exchanges for the uninsured; it encourages - and mostly funds - expanded eligibility in Medicaid.

And there’s the rub. Medicaid enrollment under the law is likely to be even larger and more expensive than federal budget experts have projected, largely because of what is known as the "woodwork effect." This means that Americans who already qualify for Medicaid coverage under pre-Obamacare rules but haven’t signed up are now likelier to get coverage thanks to streamlined eligibility requirements, pervasive media coverage and the individual mandate.

Meantime, Medicaid enrollment is also likely to continue crowding out private insurance coverage for Americans close to the poverty line. Under the law, employees who qualify for Medicaid but have private insurance have the option of declining that coverage and taking Medicaid, which is cheaper and has generous benefits, at least on paper.

In a new study, Health Systems Innovations Network used a peer-reviewed simulation model to estimate the "woodwork" and "crowd-out" effects of Obamacare’s Medicaid eligibility regime in the 20 states that are likely to have the largest Medicaid-eligible populations.

Over 10 years, HSI estimates that 43.9 million Americans will become newly enrolled in Medicaid, with 11 million fewer individuals enrolled in private insurance in the same states. And while it is true that these states would see a significant infusion of additional federal cash for newly eligible populations, they would also bear substantial new costs - $15.5 billion, with federal government contributions rising to $155 billion by 2023.

From 2014-23, five states saw Medicaid spending increases of over $1 billion, including New York ($1.6 billion), Arizona ($1.1 billion), Florida ($2 billion), North Carolina ($1.2 billion), and Texas ($2.3 billion). In New York, 872,000 fewer individuals are expected to be covered by private insurance in 2023, with 3.72 million New Yorkers added to the Medicaid rolls.

Expanding Medicaid might be a good bargain if it produced outcomes comparable to private insurance. But it doesn’t. In his new book, "How Medicaid Fails the Poor," Manhattan Institute senior fellow Avik Roy finds that Medicaid enrollees have worse outcomes than privately insured patients, including higher mortality rates for some surgeries and cancers. Some Medicaid patients had worse health outcomes for clogged arteries and veins than even the uninsured.

In Oregon, researchers from MIT and Harvard in 2012 found that Medicaid "generated no significant improvement in measured physical health outcomes" after two years for conditions such as diabetes, high cholesterol, high blood pressure and overall mortality compared to the baseline population.

Medicaid’s poor outcomes are a function of the program’s design: One of the few areas where states have significant discretion is in how much they pay Medicaid providers. Roy notes that Medicaid, on average, pays primary care physicians only 52% of what private insurers pay. And in states with the lowest Medicaid payments, patients have to wait much longer to see physicians, assuming they can get in at all. Nationally, 30% of physicians don’t accept any new Medicaid patients.

Under the Supreme Court’s 2012 ruling upholding the individual mandate, states can opt-out of the law’s Medicaid expansions. To date, 25 states have declined the expansion, with 25 others (and the District of Columbia) embracing it.

Should we continue to embrace a tiered health system that sends the largest health insurance subsidies to middle- and upper-income Americans through employers and the Obamacare exchanges, while offering third-rate health care for the poor through Medicaid?

A better idea would be to create universal system of health care tax credits that would be generous to the poor, while asking affluent Americans to pay more for their coverage. This isn’t a left-wing pipe dream, however. It was proposed by Sen. John McCain, in 2008.

Original Source: http://www.nydailynews.com/opinion/exploding-medicaid-bills-threaten-budgets-article-1.1526369

 

 
 
 

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