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Research & Commentary: Nothing ‘Free’ About Georgia Chamber of Commerce’s ‘Free-Market’ Medicaid Expansion Plan

September 12, 2016

In this Research & Commentary, Matthew Glans examines several plans for Medicaid expansion in Georgia and why expansion is a bad idea.

Some Republican-controlled states have expanded their Medicaid programs using reforms they have labeled as “free-market,” even though the policies enhance the power of government and are fiscally irresponsible. Other states, including Georgia, have considered using funds from the pot of allegedly “free” dollars offered by the federal government to expand Medicaid, even though many states have learned the hard way these funds have detrimental strings attached to them. 

The Georgia Chamber of Commerce recently unveiled three options for what it calls a “conservative-friendly blueprint” for Medicaid expansion. The first two options would expand the state’s existing Medicaid managed-care system by providing Medicaid coverage to childless adults who earn less than $11,700 annually, which is below the current minimum income requirements that need to be met to receive federal subsidies under the Affordable Care Act’s insurance exchange. The second option increases eligibility to adults earning up to 138 percent of the federal poverty level, which is currently $16,242. The third option would copy the expansion model used in Arkansas, which utilizes Obamacare exchange plans to provide Medicaid benefits. According to the Atlanta Business Chronicle, the third plan would enroll “all adults earning up to 100 percent of the poverty level in Medicaid and those earning between 100 percent and 138 percent of the poverty level in a private insurance plan paid for by Medicaid.” 

Emulating Arkansas’ model is especially 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 the Centers for Medicare and Medicaid Services has largely rejected similar proposals. 

In a recent article published in Forbes, The Foundation for Government Accountability’s Nic Horton, Jonathan Ingram, and Josh Archambault argue expanding Medicaid in any state, including Georgia, would harm those in real need. “Details aside, there is one fact expansion supporters cannot escape: every penny spent on expansion is a penny stolen from the state’s most vulnerable citizens. Thousands of kids and adults with developmental disabilities, traumatic brain or spinal cord injuries, and other severe conditions in Georgia are currently languishing on waiting lists for needed Medicaid and other home or community-based services. But if policymakers adopt the ‘Georgia Way,’ Obamacare’s new class of able-bodied adults will take top priority, pushing those waiting even further to the back of the line.” 

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. 

Dr. Hal Scherz, the founder of Docs4PatientCare, told Health Care News in September Georgia should avoid any expansion of Medicaid unless there is a major shakeup. “Expanding Medicaid only makes sense if things are different,” said Scherz. 

One option proposed by Dr. Scherz is to provide each Medicaid recipient a direct primary care doctor alongside the existing Medicaid program. Together, this would act as a high-deductible wraparound and pharmacy program. Scherz told Health Care News this model could lead to substantial savings: Four-fifths of health care costs could be locked up for under $1,200 per year. 

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 on reforming the current system before choosing to expand it. 

The following documents examine state Medicaid reform. 
 

Georgia Chamber’s Obamacare Medicaid Expansion Plan Is Anything but Conservative
http://www.forbes.com/sites/theapothecary/2016/09/06/georgia-chambers-obamacare-medicaid-expansion-plan-is-anything-but-conservative/#f2ab40a5ced9   
In this article published in Forbes, The Foundation for Government Accountability’s Nic Horton, Jonathan Ingram, and Josh Archambault argue expanding Medicaid in Georgia would harm people in real need. “The reality is that the ‘Georgia Way’ is simply a more expensive way to expand Medicaid under Obamacare. Despite what the Chamber may suggest, expanding welfare to able-bodied adults – at the expense of help for the truly needy – is neither conservative nor sustainable,” the authors wrote.

Georgia Chamber Pitches Conservative-Friendly Blueprint for Medicaid Expansion
http://politics.blog.ajc.com/2016/08/31/georgia-chamber-pitches-conservative-friendly-blueprint-for-medicaid-expansion/
Greg Bluestein, writing for the Atlanta Journal-Constitution in August 2016, examines the Georgia Chamber of Commerce’s plan for Medicaid expansion.

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://www.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://www.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://www.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://www.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 and other topics, visit the Health Care News website, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

Whether sending an expert to your state to testify or brief your caucus, hosting an event in your state, or simply sending you further information on the topic, Heartland can assist you. If you have any questions or comments, contact Heartland Institute Director of Government Relations John Nothdurft at jnothdurft@heartland.org or 312/377-4000.

Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.