Economics, Health Care

Why the ACA’s Medicaid expansion isn’t a good deal for the poor

Image Credit: Shutterstock

Image Credit: Shutterstock

Medicaid is the federal health program aimed at helping those with low incomes get health care. It’s an important program, but one that is becoming increasingly costly and difficult to sustain, with expenditures rising from about $75 billion in 1990 to $400 billion in 2010. Future costs are set to skyrocket with the addition of a Medicaid expansion in the Affordable Care Act, as the chart below shows.

(Note: The Supreme Court ruled that the proposed mechanism to force states to accept this expansion—cutting off all federal funding for Medicaid—was unconstitutional, so the states will have to choose whether to expand eligibility as the ACA calls for.)

1.30.13 Medicaid Expenditures & Growth Rates

Now, it could be argued that the increased cost is worth it in order to ensure that low-income Americans have access to health care. But in a new paper published in the Journal of Health Politics, Policy and Law, AEI scholar Joe Antos argues that the proposed Medicaid expansion will actually hurt the poor rather than help them.

Why? Because saying that someone is covered is very different from actually providing them health care. As Antos points out, “Poor Americans have faced ‘a substantial vacuum in actual access to health care’ despite Medicaid’s coverage guarantee.”

That vacuum results from a lack of participation in Medicaid by many health care providers. They avoid Medicaid because it only pays about 66% of the rates paid by private insurers for inpatient hospital services and about 58% of the rates for physician services. Moreover, the program imposes burdensome administrative practices that many providers would rather just avoid entirely.

This lack of participation isn’t going to change anytime soon, with a 2008 survey revealing that only 52.6% of physicians say they would accept new patients on Medicaid. And while the ACA purports to increase Medicaid payment rates to 77% of private rates in 2014, CMS says they will drop back to 58% very quickly. Providers aren’t going to move into low-income areas for 58% of what they could make providing services to privately-insured individuals.

The bottom line, says Antos, is that:

Putting millions of additional people into a program that has been struggling with access to care for the past forty-five years is likely to result in worsening access for those who are currently enrolled in Medicaid.

We need to do more to help the poor get access to quality health care, but simply claiming from on high that they are now insured isn’t going to solve the problem if very few physicians will actually accept their insurance. Maybe we should focus on providing quality care to those already enrolled in the program before trying to expand it for those making up to 133% of the poverty line.

Check out Antos’s full paper for more details and some suggestions on how we could do better.

5 thoughts on “Why the ACA’s Medicaid expansion isn’t a good deal for the poor

  1. a “new” paper from American Enterprise that says this:

    “Even if Barack
    Obama is elected for a second term, there is considerable uncertainty about whether the deal struck in 2010 can be maintained in future years. Laws can be changed, and increasing budget pressures at the federal level could translate into a cost shift to the states.”

    so probably not so “new” and certainly dated in terms of the election.

    The think not recognized about MedicAid is that people who do not get doctor’s care STILL get health care but they get it from the hospitals and other medical providers that are forced to treat them because of EMTALA.

    Often people who do not get access to earlier stage periodic medical care, sustain chronic untreated disease that becomes very expensive in the latter stages – stages that taxpayers and those who have insurance pay for.

    If we did not have EMTALA and there was no moral conscience, then we COULD save money by just killing MedicAid all together and letting people just die of disease.

    But since we have EMTALA where we already agree to pay to treat disease for indigents, then the issue becomes what is the most cost-effective way of doing this?

    Obviously, if there is a shortage of physicians who will accept MedicAid, without changes, it translates into many more expensive ER physicians and personnel to treat the indigent.

    We have to decide if we are going to continue to have EMTALA or not. If we continue to have EMTALA then we have to decide if this is really how the rest of us want to pay for medical care for the indigent.

  2. 66% of what private insurers pay? No, Medicaid pays less than half of what private insurerers pay to doctors. Medicaid pays 22 cents on the dollar for usual and customary charges billed by doctors. But private insurers have been cheating doctors for years because 1) they own the patients and can tell doctors what they will pay, 2) doctors cannot unionize or negotiate…it’s take it or leave it (I don’t know how the NYC doctors can bargain as a group, as the Federal Trade Commission has forbidden doctors from banding together to negotiate), 3) the amount used in this article about “what private insurers pay is meaningless because insurers have ratcheted down pay to doctors simply because they can do it, and it increases the profit bottom line for insurance companies. Medicaid pays doctors even less than overhead, and doctors cannot run an office with this amount of charity, as they lose money on every patient. Subsidized hospitals with Medicaid money from the state plus billing at Medicaid rates does something, but increased funding mandated by Abysmalcare will bankrupt the state…as it is on its way to doing in Massachusetts with Romneycare. You cannot solve the problem of high gas prices by putting drivers on Gasicaid and forcing gas station owners to accept 80 cents a gallon from those on Gasicaid.

  3. The other thing that is really seldom reported on articles that question MedicAid expenditures is who is receiving the benefits.

    Without making it clear, many may think it is able-bodied indigent but that’s not the case at all:

    21% are the aged usually in nursing homes that Medicare does not cover.

    20% are kids

    45% are disabled

    only 14% are adults

    the real question is when the discussion is about the cost of MedicAid – and implications that it must be cut, the real question is what would we intend to do with the 86% who basically largely unable to care for themselves?

    It’s pretty easy to talk about cutting entitlements when the conventional wisdom that emanates from some either do not understand or do no care that 86% does not go to “slackers”.

    MedicAid IS means-tested also.

    I’m not arguing that it should necessarily be increased or expanded or even that perhaps it should not be shrunk but the devil is in the details when 86% of the recipients are elderly, disabled or kids.

    we almost never hear specifics about how it ought to be reformed.

    What the “new” paper recommends: ” One way to answer that question is to put the Medicaid expansion to the market test: give everyone a choice of private insurance or Medicaid and let them decide for themselves how they wish to spend the subsidy and,potentially, some of their own money.” clearly is off in LA LA Land with the 86% of recipients.

    All I can say is what planet are they on when they are basically advocating that the elderly in nursing homes, children and handicapped “use their own money” to “go out and bargain for cheaper care”.

    one must ask what’s the value of such “studies”?

    • Your child-like ignorance and statist zeal is pitiable. You spew your inanity all over the Internet and have shown a remarkable tenaciousness that allows you to remain ignorant. You are too stupid to realize it, but most people laugh at your comments. Mental retardation is funny, except when the consequences have disastrous results, as always happens when your ideology is implemented.

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