De-fund ObamaCare's Medicaid Expansion

Alex Cortes
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Posted: Feb 04, 2011 12:01 AM

The predominant purpose of ObamaCare was to achieve liberals’ long-sought goal of universal health care coverage in America. Although the law falls short of this goal with the CBO estimating 26 million will remain uninsured, it significantly closes the coverage gap through a dramatic expansion of the joint state-federal Medicaid program in 2014 to almost one quarter of the population. Not surprisingly, Republican Governors are kicking and screaming for relief.

With the recession fueling 5.2 million new Medicaid enrollees from 2008 to 2009 alone and growth in the program’s spending almost doubling from 4.8 to 9 percent in the same period, many states are already struggling to pay for this additional cost from the eligibility-based obligation. For example, Texas expects an additional Medicaid cost of $9.1 billion through 2013, an amount that if only paid for by cutting provider reimbursement rate cuts, would require them to be slashed by 48%, resulting in rates so low that virtually no provider will see patients.

Tragically, this is just one programmatic driver of state budget shortfalls that nationwide run around $130-140 billion per year. Now add on ObamaCare’s new unfunded Medicaid mandate on states that Kaiser estimates to total $21.2 billion over six years and you create some very unhappy Governors.

Twenty-nine of them to be exact. This is the number that sent a joint letter to the White House and congressional leaders asking them for more flexibility to set eligibility and spending levels.

Note to Republican Governors, don’t hold your breath for new flexibility from a statist Administration committed to centralized governance or you may easily find your state even deeper in the red. For substantive change you’re simply going to have to wait for a new President that’s committed to reform.

However, that doesn’t mean those seeking reform should just sit on their hands until this time. In the fight to reduce the size and scope of the federal government, the disaster that is Medicaid offers the GOP a powerful opportunity to display the all-too-real problems of government-run programs and advance the argument for greater deference to states and individuals.

On average the entitlement reimburses doctors 56 percent of private sector rates, leading 28 percent of doctors to refuse seeing any Medicaid patients, 19 percent accepting some, and only 40 percent are willing to treat all. These denials then force patients to resort to emergency rooms that drive the cost of care higher for us all.

The problem will be significantly exasperated when combined with an already impending shortage of 150,000 doctors and ObamaCare’s expansion of coverage to Americans with no corresponding increase in the size of the medical field. This perfect storm will force physicians to discriminate who they will see more actively, rationally accepting higher-paying private-sector patients over those with lower-paying government plans.

For enrollees that are able to see providers, the quality of care is far below that received in the private marketplace. A recent University of Virginia study found that Medicaid patients were almost twice as likely to die as those with private insurance; their hospital stays were 42% longer, and cost 26% more. Relative to those without health insurance, Medicaid patients were 13% more likely to die, stayed in the hospital for 50% longer, and cost 20% more.

Let’s just say Medicaid is not exactly a government success story. Republicans should articulately make this case and offer a clear alternative that better serves the poor.

Many Republican Governors are calling for Medicaid to be turned into a block grant program similar to how welfare is run, where their states are allocated a defined set of money and they can run it freely with few federal strings attached. Although this has the benefit of allowing states to craft a program that fits within their budgetary means, it would likely lead to eligibility and reimbursement cuts that will leave the poor even worse off than they already are.

Thankfully we don’t have to trade one for the other. Congressman Paul Ryan’s Roadmap for America turns Medicaid into a refundable tax credit program that reduces the amount states contribute and empowers individuals to purchase plans that fit their needs and desires, rather than being forced to accept a one-size fits all plan handed down by government bureaucrats.

Initially one might think Ryan’s reform plan cannot be implemented until there is a Republican Senate and President. But what most forget about Medicaid is that, unlike other entitlements, its funding has to be appropriated by Congress each and every year. If Republicans de-fund ObamaCare’s expansion of Medicaid, Democrats will have little choice but to accept the consumer-driven alternative of providing the poor refundable tax credits.

For a GOP that is known by far too many Americans as the party of and for the rich, Medicaid offers a prime opportunity to demonstrate that conservative solutions work better for the poor and are more fiscally sustainable.