Obamacare

Expanding Medicaid: Nope, Still Not a Good Idea

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Over the weekend, a New York Times editorial responding to criticism of the new health care law made the following claim:

Republican governors are complaining bitterly that reform will force them to expand their Medicaid programs. What they are not saying is that the federal government will pick up the vast bulk of the added expense to cover millions of vulnerable Americans. States that do not want this largess will be shortchanging the health of their poorest citizens, who will continue to use costly—to the state and the taxpayers—emergency rooms for routine health care.

First off, complaints about the new law's Medicaid expansion aren't strictly limited to Republicans. Prior to the law's passage, Tennessee's Democratic governor, Phil Bredesen (who still opposes the law), told The Boston Globe that the Medicaid expansion was "the mother of all unfunded mandates" and argued that the program was a "poor vehicle for expanding coverage." And in Nevada, Democratic gubernatorial candidate Rory Reid—who, yes, is the son of Senate Majority Leader Harry Reid—said that, under the new law, "there is potential for it to put significant pressure on states because Medicaid rates could go up significantly."

Regardless of their political affiliation, state officials are right to worry. The NYT editorial is correct that the federal government will pick up a sizable share of the cost of adding newly eligible individuals to Medicaid. But shifting the cost to the federal government shouldn't be much comfort to taxpayers, who will be on the hook either way. And, as Devon Herrick, a senior fellow at the National Center for Policy Analysis, explains in a handy new briefing paper, the remaining cost to the states will still be a significant burden on many state budgets. In particular, states are going to have to pick up a much larger share of the cost of enrolling those who were already eligible for Medicaid but not enrolled. Estimates indicate that somewhere upwards of 10 million individuals currently fit that criteria. But because of the individual mandate, which requires everyone to get insurance, many of them are likely to seek out insurance coverage. And when they do, states will direct them toward Medicaid.

As for emergency rooms, the best bet is that they'll actually be far more strained as the PPACA rolls out and Medicaid expands. That's because, as NCPA CEO John Goodman recently pointed out in Health Affairs, Medicaid recipients use far more emergency room services than other types of patients. One reason why they likely go to the emergency room so frequently is that Medicaid's provider reimbursements are far lower than either Medicare or private insurance, so doctors aren't exactly thrilled to add Medicaid patients to their rolls. And their options will be even more limited under the PPACA. Although it's expected to expand insurance coverage to 32 million extra individuals, it doesn't do anything to significantly expand the number of primary care doctors—a number that was already expected to be inadequate even before health care reform passed. So thanks to all that extra insurance coverage, there will be a lot more demand for health care services but not much in the way of extra supply. Goodman's rough estimate is that, all told, the PPACA could result in about 40 million additional emergency room visits each year.

Those figures are speculative, of course. But the basic trend is not without precedent. This is more or less exactly what happened in Massachusetts, which passed a health care overhaul in 2006 that served as a model for the federal plan. But Bay State emergency room visits have risen sharply in recent years, and state officials admit that the health care overhaul is a factor. Who's getting shortchanged here?

I cover some of these issues and more in greater detail in my piece on ObamaCare and the states. More on the many problems with Medicaid—and what might be done to reform it—here.

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  1. But the government can print all the money it needs to pay for it!

    Just ask Paul Krugmann.

  2. Yes, it’s “free” money. How dare you rascally Republicans balk at accepting it?!

  3. Oh, sure, like government programs have unintended consequences. THAT’s believable.

    Why don’t you just admit you hate poor people and want them to die?

  4. Stick your right-wing orthodoxies up your fat ass, Suderman, you tiresome piece of shit.

    1. That was pretty weak, Edward. Do you need some coffee? A Red Bull? 5 hour Energy?

      1. I am a little tired.

      2. He’s just phoning it in anymore.

  5. I don’t like this as I do not want medicare rates to increase anymore!

  6. I don’t know if Reason missed this before, but Bredesen wrote a scathing editorial in the WSJ last week stating that

    My state of Tennessee could reduce costs by over $146 million using the legislated mechanics of health reform to transfer coverage to the federal government

    .

    Basically he explained that if the state of Tennessee was a business, it would be cheaper to throw everyone on to the Federal plan.

    1. “Tennessee, Inc.” No easier said than done!

      (Here’s my card.)

    2. Only if you’re stupid enough to assume Federal taxes won’t increase to compensate.

      1. Only if you’re stupid enough to assume Federal taxes won’t increase to compensate.

        Yeah, but that won’t be the states problem. If you’re a business (or a state for that matter) what do you care about increased federal income taxes? Your employee may be paying more personally, but your business won’t see an increase.

        The main point Bredesen makes in the editorial is that imagine that if the costs for his 40,000 employee business (using as an example the state of TN) usually pays $346 million for healthcare, it will cost $146 million less to pay the $2000 per employee fine and dump everyone on to fedcare, which Bredesen describes in glowing terms -“Employees, thanks to the exchanges, can easily purchase excellent, fairly priced insurance, without pre-existing condition limitations, through the exchanges.”

        Ha ha Phil, you’re a funny guy. I’m glad he’s my Governor though, he cleaned up Tenncare and thanks to that our state budget isn’t completely fucked right now. We still average around a 8.75% sales tax and (giggle) we have NO STATE INCOME TAX.

        Not bad for a bunch of hicks, eh? Also the Titans are 5-2 and spanked the Iggles this weekend, so I’m kinda on a Tennessee roll, whatever that means.

        1. “If you’re a business (or a state) what do you care about increased federal income taxes?”

          If you’re a state, you don’t care because dropping your healthcare costs on the Feds, only to have the Feds turn around and tax your citizens to pay for it, doesn’t hurt you at all. Remembering Bastiat, however, will remind you this is a lie.

          If you’re a business, you sure as heck do care. Your business’ profits are considered earned by it (C corporation) or by you (S corporation, partnership, sole proprietor). Either way, an income tax is being paid on said profits. Shoving your health care costs onto the Federal government, only to lose more than you saved by virtue of the inevitable increase in income and SS taxes needed to pay for both the care and the overpaid Federal bureaucracy, is a stupid game to play. No rational CEO believes that they will *actually* save money by dumping their employees on FedCare, once all is said and done.

          1. Remembering Bastiat, however, will remind you this is a lie.

            Yes, I realize this. But as an employee of a company that needs to keep finding ways to save money, if my company doesn’t save itself 10% in labor costs by telling me I have to get fedcare, they would be irresponsible and soon out of business, thus I hope they repeal Obamacare before this mess becomes reality.

            No rational CEO believes that they will *actually* save money by dumping their employees on FedCare, once all is said and done.

            {citation needed}

            1. The reason I said {citation needed} was because I posted an article from a Democratic Governor who was saying “a rational CEO believes that they will *actually* save money by dumping their employees on FedCare, once all is said and done.”

              So you know, gimme something.

            2. “if my company doesn’t save itself 10% in labor costs by telling me I have to get fedcare, they would be irresponsible”

              You probably would indeed save on labor costs. The rational CEO, however, believes that whether company profits are lost in labor or taxes, it’s a dollar lost either way. Moving your healthcare costs from the “labor” bin to the “taxes” bin is hardly a win.

              As to why no rational CEO believes FedCare will save them money, in order to believe that said CEO would have to believe that a Federal bureacracy, whose per-employee average total compensation is double that of the private sector and which is subject to no external discipline, will be less expensive to run than an insurance company. Said CEO would have to further believe that those extra costs will not be passed on to them in the form of either taxes or inflation. Neither belief passes muster in my opinion.

              1. The rational CEO, however, believes that whether company profits are lost in labor or taxes, it’s a dollar lost either way.

                Look Bob, just because you keep saying this doesn’t make it true. I want to see some numbers for these predicitions you’re making that federal taxes on businesses for those who pay the penalty and dump their employees in to Fedcare will increase.

                Said CEO would have to further believe that those extra costs will not be passed on to them in the form of either taxes or inflation.

                But why would these said CEO’s be any different from a company that keeps paying directly for employees healthcare? Would they be exempt from inflation? Show me something Bob, not just your assumptions.

    3. At the end of Breseden’s column, he openly questions the motives of the plan’s designers. He’s the only Democrat I’ve seen that will admit the plan was intended to destroy private insurance.

  7. So, are Medicaid recipients more likely to use emergency services because they’re on Medicaid, or more likely to use emergency services because they’re more like to have medical emergencies? I would imagine there is a correlation between being that poor and getting stabbed or shot or ODing on drugs or god knows what else. If the problem is the people, then shifting a different set of people won’t affect emergency room usage much. Is there evidence that the increase in Medicare patients is driving the trend?

  8. So I hear a lot of critics say that the plan is really bad and unfunded. Perhaps we should scrap the ONLY coverage for the poor and spend it on more resourceful and profitable causes…Like War perhaps.

    I understand the free-market bla bla bla. And, I actually agree with it. If people actually paid to go see a doctor or buy a prescription or go to the hospital or clinic and there was NO THIRD PARY PAYOR, expenses would be in-line with what people can pay. And, if there were no regulations, everything would be ok.

    THESE ARE PIE-IN-THE-SKY solutions.

    1. We are not going to NOT offer poor people health-care at the tax payer’s expense. So, in some way/shape/form, we’ll need something like medicaid.

    2. Insurance companies are not going away. The lobby is too too too too strong. In fact, Obama (can’t wait to vote him out of office after making fools of us progressives…I’ll vote for hitler if I have to) enriched the purse of the Insurance Companies by mandating that EVERYONE buy insurance (that big pinko anti-government commie).

    In fact, once insurance companies found out that 15cents of every Dollar is all that’s allowed for profit and so-called overhead, they made sure to raise premiums to maintain current profits. And Obama made sure to give them a head-up and enough time to do it so that the insurance companies could preserve their profits. (Once again, that big pinko anti-government commie muslum white-man hating Christian ).

    3. Healthcare providers are NOT going to charge less. Some people feel that the FREE market will kick in once we out-law patients ability to sue a doctor. Yea, once they no longer pay malpractice insurance, they’ll just lower prices. I can’t wait to see it.

    I want to hear from libertarians a real solution that would work for the poor, other than just saying FUCK the Poor.

    1. FUCK the poor!

      Drink!

    2. FUCK THE POOR!

      Drink sounds good.

    3. FUCK the Poor. India has a population 1.5 billion poor people. When one of them comes to the US and graduates from medical school, let him stay and become a US citizen.

  9. This is exactly the response I expected from you guys.

    The only problem (for you, at least) is that the poor will continue to grow in numbers. And, will some day, FUCK YOU BACK.

    1. Fuck the poor? Kill the poor!

      1. Thanks 4 bringing that back BakedPenguin.

        Haven’t heard Dead Kennedys since college.

    2. Alice,

      Get some perspective, being dirt poor is the normal human condition. Escaping from poverty only occurs when a person gets to keep the rewards of his own efforts.

      1. In what planet?

        I’ll admit, the USA is probably the BEST place to escape poverty. Nonetheless, very unlikely.

        The ‘great society’ that you all hate did manage to bring many poor people out of hell.

        1. I like acid rock in general, ‘The Great Society’ isn’t my favorite, but they’re OK. The best thing about the The Great Society is that picked up guitarist Jorma Kaukonen on the way to calling themselves the ‘Jefferson Airplane’. Embryonic Journey:

          http://www.youtube.com/watch?v=1IzoiqDaG4A

        2. Splitting up families has been a great boon to the poor. How many generations of poverty are we up to now since we passed the Great Society?

    3. And if the poor grow in numbers, it’s because dildos like you support small business-murdering regulation that prevent the poor from moving up in the world.

      You might have noticed how China, one of the most tightly controlled economies, has gone from starvation to not-starving by making small concessions to not controlling absolutely everything in their economy. Let me repeat that, because you’re slow: they lessened regulation. Prosperity went up.

      See if you can figure out the lesson. See if you get the principle. See if you can stop being a dildo.

      1. Actually, I’m not a dildo.

        And how exactly does medicaid kill small businesses?

        The truth is that small businesses are actually killed by bigger businesses like walmart, etc. Both by offering goods at cut-throat prices and creating small business-murdering regulations to kill their smaller competitors.

        Now how’s that for a straw man argument.

        1. And how exactly does medicaid kill small businesses?

          You’re doing it again. Alice, when did you stop beating your husband?

          The truth is that small businesses are actually killed by bigger businesses

          Stop right there. You are saying this as if it’s bad that because old mom n pop hardware stores can’t compete with Walmart this is somehow correctable through what, government intervention?

          The fact that Walmart can sell a much cheaper hammer is a bad thing? What fucking use do I have for mom and pop store when my budget is stretched thinner than Pauli Krugnuts intellect?

          Both by offering goods at cut-throat prices and creating small business-murdering regulations to kill their smaller competitors.

          Guess what, if you want to get rid of corptocracy get rid of the democrats. Republicans do it too, but if they fuck up this time they know it’s over. If they clean house this week Team Red’s possible failure will bring about a libertarian third party sooner than a Team blue failure by decades.

          You liberal idiots keep buying the same Team Blue line, Team red is a lot less forgiving at this point.

          The funny part is “independents” are growing every year, and they consist of people with mostly social liberal/economically conservative views.

          Remind you of anyone?

          1. It actually reminds me of me.

            STOP CALLING ME NAMES JUST BECAUSE I HAVE A DIFFERENT OPINION

            1. I AM CALLING YOU NAMES BECAUSE YOU USE STUPID STRAWMAN ARGUMENTS.

              Your opinion is irrelevant.

              1. You are truly an idiot

        2. “Actually, I’m not a dildo.”

          But you are a killjoy. Couldn’t you at least call Sugarfree a turd spackle on a dildo so I could read his response?

          1. BakedPenguin. Big oops.

    4. No Alice, you are starting with a straw man. When did you stop beating your husband?

  10. Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts.

    1. many of us live here.

    2. You must be a fucking moron.

      1. Is that any way to treat a new guest?
        Or were u just referring to me as usual?

  11. What they are not saying is that the federal government will pick up the vast bulk of the added expense to cover millions of vulnerable Americans.

    And what the NYT doesn’t tell you is that the extra federal assistance is temporary, meaning the states will be picking up the tab for all those new enrollees eventually.

    So, are Medicaid recipients more likely to use emergency services because they’re on Medicaid, or more likely to use emergency services because they’re more like to have medical emergencies?

    Don’t confuse going to the ER with needing or receiving emergency services. Medicaid recipients use the ER as an urgent care clinic, a hideously expensive and inefficient use of resources.

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  15. Goodman’s rough estimate is that, all told, the PPACA could result in about 40 million additional emergency room visits each year.

  16. Great article, I think you covered everything there. . . I would say freelancing is quite hard especially if you are not used to working on your own, can be quite hard to motivate yourself also. . . we all know what it is like to stare at the monitor.

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