Thirty-one states, in addition to the District of Columbia, have chosen to expand their Medicaid programs under Obamacare, and 19 have refused to do so. Medicaid is already placing severe financial strain on state budgets, and the program has a proven track record of failing to provide cost-effective and efficient care for those in need. Georgia is among the states that have chosen not to expand Medicaid because of concerns regarding ongoing costs and federal mandates.
The Georgia Public Policy Foundation says expanding Medicaid eligibility poses many challenges, including uncertainty regarding funding and costs, questions about the effectiveness of the Medicaid program as a whole, and the impact on current recipients.
In recent weeks, several senators have once again stated to discuss Medicaid expansion in Georgia. While no plan has been announced, the discussion has centered on the possibility of pursuing a waiver from the Centers for Medicare and Medicaid Services (CMS) to implement a private-option model similar to the system now used in Arkansas. Under the Arkansas premium assistance model, an estimated 250,000 new enrollees have been added to Arkansas’ Medicaid rolls. These enrollees purchase private health insurance from the state’s Obamacare health insurance exchange and receive a premium support payment to help offset costs.
Emulating Arkansas’ model is problematic for several reasons. First, despite various private-market characteristics of the program, it still represents an expansion of a failed Medicaid system. The federal government would dictate multiple aspects of insurance plans, effectively reducing many of the benefits linked to real market competition. It’s true many of these programs attempt to include some limited free-market reforms, such as copays and employment requirements, but CMS has largely rejected similar proposals.
A second significant problem is related to funding. According to The Washington Post, the initial projections by an actuary firm hired by Arkansas to review the plan found the premium support model would cost federal taxpayers $18.9 billion over the next ten years and an additional $1.59 billion from Arkansas taxpayers. Peter Ferrara, a senior fellow of The Heartland Institute, warns total future costs to state governments are estimated to exceed the funds provided by the national government, with the shortfall reaching as much as 66 percent of state expenditures. States will find the situation unsustainable.
The federal government has promised to cover 100 percent of the costs of newly eligible enrollees until 2017, but the matching rate declines over time, so states will eventually have to find other ways to pay for the newly eligible population. Moreover, the 100 percent match applies only to newly eligible enrollees. Those who were eligible for Medicaid before expansion and required to enroll under the individual mandate are subject only to the lower, regular matching rate. This means state costs for Medicaid are increasing even for those states not expanding their Medicaid programs.
A 2013 study published in The New England Journal of Medicine found Oregon’s Medicaid expansion created some improvements, such as overall health care use and financial assistance, the state’s expanded Medicaid program failed to achieve the principal goal of all health care reform: improving overall health.
Making matters worse, if Medicaid expansion occurs in Georgia, it would be extremely difficult to roll back, as it has been in other states. Federal law effectively blocks states from backing out of expansion under a provision called “Maintenance of Effort,” which requires states to fund a program at the initially agreed-upon level, regardless of the amount of federal funding received.
Georgia legislators should continue to resist Medicaid expansion and instead reform their fiscally unsustainable program in ways that offer better care to enrollees and lower costs for taxpayers. Instead of expanding a flawed Medicaid model that is too costly, delivers subpar health care, and shifts more power to the national government, state lawmakers should focus instead on reforming the current system before choosing to expand it.
The following documents examine state Medicaid reform.
Ten Principles of Health Care Policy
http://heartland.org/policy-documents/ten-principles-health-care-policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems.
Designing an Alternative to Medicaid Expansion
http://www.georgiapolicy.org/2014/04/designing-an-alternative-to-medicaid-expansion/
The Georgia Public Policy Foundation examines the key components for an alternative to Medicaid expansion, including catastrophic insurance, reasonable cost sharing, price signals, health savings accounts, and charity care.
Medicaid Expansion: Why Georgia Should Pursue an Alternative
https://heartland.org/policy-documents/medicaid-expansion-why-georgia-should-pursue-alternative
The Georgia Public Policy Foundation examines state Medicaid expansion, the many problems it creates, and discusses why Georgia should pursue an alternative.
Uncompensated Care and an Alternative to Medicaid Expansion
https://heartland.org/policy-documents/uncompensated-care-and-alternative-medicaid-expansion
Kelly McCutchen, president of the Georgia Public Policy Foundation, notes the current major health care debate in many states is whether or not to expand Medicaid. Expanding Medicaid under the inflexible federal regulations in place now would not be a good long-term decision for Georgia, but that doesn’t mean states shouldn’t propose a more effective alternative, McCutchen writes.
The Oregon Experiment—Effects of Medicaid on Clinical Outcomes
https://heartland.org/policy-documents/oregon-experiment-effects-medicaid-clinical-outcomes
This article from The New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to being uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results showed no improvement in health for enrollees, but it did reveal better financial protections for patients and increased medical spending.
Research & Commentary: States Should Innovate, Not Expand Medicaid
http://heartland.org/policy-documents/research-commentary-states-should-innovate-not-expand-medicaid
Matthew Glans, senior policy analyst for The Heartland Institute, discusses how expanding Medicaid can cause problems that extend beyond state budgets and the health care industry. Glans says better options are available: “It is important to remember government spending creates little or no income or economic growth; it is merely the redistribution of tax dollars taken from the pockets of taxpayers.”
Policy Tip Sheet: Medicaid Expansion
http://heartland.org/policy-documents/policy-tip-sheet-medicaid-expansion
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways that would offer better care at a lower cost to taxpayers.
The Empty Promises of Arkansas’ Medicaid Private Option
http://heartland.org/policy-documents/empty-promises-arkansas-medicaid-private-option
The Foundation for Government Accountability examines the empty promises of Arkansas’ Private Option program for Medicaid. It rebuts, point-by-point, direct quotes from supporters, including media interviews, floor speeches, and social media posts.
Why States Should Not Expand Medicaid
https://heartland.org/publications-resources/publications/why-states-should-not-expand-medicaid?source=policybot
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to better fit coverage expansion to states’ needs, resources, and budgets.
How Medicaid Expansion (and the “Private Option”) Will Lock its Clients into Poverty
http://heartland.org/policy-documents/how-medicaid-expansion-and-private-option-will-lock-its-clients-poverty
Dan Greenberg of the Advance Arkansas Institute argues legislators need to consider the potential economic problems from Medicaid expansion—slowing economic growth and trapping clients into low-wage jobs.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at https://heartland.org/topics/health-care/index.html, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at [email protected] or 312/377-4000.
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.
