Medicaid Expansion Is the Wrong Move

NCPA March 14, 2013

The Affordable Care Act ("ObamaCare") encourages states to expand Medicaid to all individuals earning less than 138 percent of the federal poverty line. Medicaid, which is already struggling to provide care to its current beneficiaries, needs reform, not expansion, says Nina Owcharenko, director of the Center for Health Policy Studies at the Heritage Foundation.

• By 2021, 46 percent of all Americans will be dependent on the government for their health care.
• In 2010, state and federal spending on Medicaid exceeded $400 billion for over 60 million Americans.
• Under ObamaCare, the federal government would cover 100 percent of the cost of expanding Medicaid; this enhanced federal funding would gradually decline to 90 percent in 2020.

When the Supreme Court struck down the Medicaid mandate of ObamaCare, it made the expansion of Medicaid optional for states. Since then, governors and state legislators have been debating whether their state should expand coverage.

• Proponents argue that expansion provides states with an influx of new revenue and results in savings as the cost of uncompensated care declines with expanded coverage.
• However, Medicaid expansion will result in states spending money they would not have previously spent as eligibility expands and reimbursement decreases.
• With Medicaid already consuming 23 percent of state budgets, expanding coverage could mean a decrease in other important state priorities like education, emergency services, transportation and criminal justice.

While even the Obama administration admits that entitlement spending is unsustainable, Medicaid expansion will exacerbate the country's deficit imbalance.  An alternative solution would reduce the burden on the Medicaid system, which is already spread too thin.

• Rejecting Medicaid expansion would reduce state reliance on federal funds.
• Scaling back existing eligibility would restore Medicaid as a safety net program.
• Allowing each state to create its own non-Medicaid state-based approach would give states the control they need to address the needs of their citizens.

Additionally, Congress could level the playing field by eliminating the federal matching funds under ObamaCare and instead offer block grants to each state to develop state-specific approaches.

Source: Nina Owcharenko, "Why the Obamacare Medicaid Expansion Is Bad for Taxpayers and Patients," Heritage Foundation, March 5, 2013.