Medicaid: A Fifty-Year-Old Flimflam - The American Spectator | USA News and Politics
Medicaid: A Fifty-Year-Old Flimflam

Recently, while most of the media obsessed over the antics of Hillary Clinton and Donald Trump, the nation passed a significant milestone. Medicaid, the federal-state program meant to provide a medical safety net for the poor, turned 50. This anniversary was celebrated by progressives as proof that government-run health care really works. Few of these cheerleaders noted, however, that this once modest program has morphed into a budget-busting behemoth most of whose expenditures go to the middle class. They also neglected to mention the difficulties Medicaid patients face accessing care or that they experience worse health outcomes than the uninsured.

This last item concerning the poor medical outcomes endured by Medicaid patients is one of the best documented yet least known aspects of the program. The most comprehensive study of this phenomenon was the “Oregon Experiment.” The state of Oregon chose enrollees for its Medicaid program by lottery, which gave researchers an unprecedented opportunity to compare the outcomes of Medicaid patients to those who remained without insurance. The results, published by the New England Journal of Medicine, were startling: “This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes.”

Ironically the deplorable plight of Medicaid patients has long been known to health care researchers. Five years ago, Avik Roy wrote about a study that should terrify any Medicaid patient needing surgery. “A landmark study conducted at the University of Virginia … found that surgical patients on Medicaid are 13 percent more likely to die than those without insurance of any kind.” The study also revealed that Medicaid patients were 93% more likely to die in the hospital after surgery than patients with private insurance. This is what our liberal friends call a smashing success. And it is “smashing” the finances of states, many of which devote a third of their budgets to Medicaid.

So, exactly how much money are the taxpayers coughing up for a program that produces such disappointing results? The Kaiser Family Foundation reports that, in 2014, the program cost $492.3 billion, including expenditures for the U.S. territories. About 40 percent of that total came from the states. One hardly needs to consult the Delphic Oracle to predict where this is going. The overall cost of Medicaid will obviously come in well over $500 billion in 2015, and its budget will become more and more bloated as coverage is expanded under Obamacare. As Robert Moffitt points out at the Daily Signal, “By 2023, total Medicaid spending is projected to climb to $835 billion.”

Yet, despite the expenditure of such gigantic sums, the amounts Medicaid pays to doctors is so low that many can’t afford to accept patients covered by the program. In other words, while problems such as those illuminated by the Oregon experiment and the University of Virginia study could be at least partially ameliorated by access to decent primary care, many Medicaid patients do not enjoy this luxury. As Nina Owcharenko of the Heritage Foundation writes, “Due in part to… the low reimbursement levels, many physicians—general and specialist—refuse to accept Medicaid patients.” In other words, like most uninsured patients, many Medicaid patients get no real primary care.

Just how poorly does Medicaid pay? Because both the states and the federal government contribute funding, the answer varies from state to state. The average Medicaid payment for an office visit is about half of what most private insurers pay. Where, then, is all the money going? Well, not only has Medicaid metastasized at an alarming rate, it has undergone an enormous amount of mission creep. As Owcharenko puts it, “Medicaid… was created to provide health care for certain categories of low-income Americans. Over the past 50 years, the program has changed significantly. Not only has Medicaid eligibility expanded, so also has the scope of its care and services.”

An important motivating factor in creating Medicaid was a desire to assure that poor children could get access to decent health care. And, in the beginning, the majority of the program’s enrollees were indeed low-income kids. But because of the ever-accelerating expansion of eligibility, the number of able-bodied adults on Medicaid will soon eclipse the number of children in the program. Moreover, Owcharenko continues, “Medicaid [is] becoming the default long-term-care option for America’s vast middle class. In 2013, this group, combined with the disabled, represented less than one-third of the program’s enrollment, but over 64 percent of Medicaid spending.”

Note that last datum. Medicaid, a program originally meant to provide a safety net for poor children, spends two-thirds of its budget on adult members of the middle class. Could this be related to the fact that children don’t vote? Could it be why Obamacare expanded Medicaid to millions of adults whose household incomes exceed any rational definition of poverty? Could it be why the Obama administration tried to circumvent the NFIB v. Sebelius ruling by threatening to cut off funding for Florida’s Low Income Pool unless the state expanded Medicaid? That suggests they see Medicaid as just another flimflam, another taxpayer-funded vote-buying scheme. Surely not.

David Catron
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David Catron is a recovering health care consultant and frequent contributor to The American Spectator. You can follow him on Twitter at @Catronicus.
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