Fix Medicaid, Don't Expand It

When the Supreme Court decided Obamacare's massive expansion of Medicaid would be an unconstitutional "gun to the head" of states -- which would have forced states to either expand Medicaid or lose all federal Medicaid dollars -- the Court solved one problem for states but created another. States now have to decide whether to voluntarily accept Obamacare's Medicaid dollars or develop their own, innovative ways to serve their state's low-income populations.

We believe the more responsible and compassionate solution is to reform, rather than expand, Medicaid.

First, why expand a program that is already denying care at an alarming rate?

Medicaid proves the axiom that access to a government health care program is not the same access to health care. In fact, some studies even show that many patients on Medicaid may have poorer outcomes than Americans with no insurance at all.

Today, only a fraction of providers even accept Medicaid patients. As a result, patients have a hard time accessing care. Surveys indicate that about one-third of physicians nationally are unwilling to accept new Medicaid patients.

A 2010 study concluded that Medicaid patients were more likely to die than those with private insurance, and their hospital stays were more than 40 percent longer while costing 25 percent more.

Second, expanding the program shifts Medicaid's focus away from the poor.

The Supreme Court found Obamacare's forced Medicaid expansion would have fundamentally changed the nature of the program. They were right. Medicaid was designed to be a safety net for certain low-income Americans with special needs - mothers and children and the long-term aged, blind, and disabled - not an entitlement program for Americans with the means to make reasonable contributions to the cost of their coverage.

Expanding Medicaid would undermine the private market and essentially herd Americans into government-run "care." But let's remember, that was the President's original goal in the first place. Researchers from Harvard and Boston University have found that a large portion of the newly covered population under Medicaid could have had, or been eligible for, private coverage. They conclude, "the Medicaid expansion provisions of [Obamacare] will shift workers and their families from private to public insurance without reducing the number of uninsured very much."

We have already seen examples of Medicaid expansion crowding out private coverage. In the long-term care market, for instance, Medicaid's rapidly-growing benefit has discouraged Americans from accessing more effective private coverage options.

President Obama is fond of invoking a call to fairness when advocating for his policies. We would challenge him to apply that same test to his Medicaid expansion and answer the following questions:

Is it fair that under an expanded Medicaid program, the federal government would pay a greater portion of the Medicaid dollar for an adult with no children above poverty, than for a single mother with children who live in poverty?

Is it fair to expand a program that allows an individual to own a Lexus and qualify for a long-term care benefit because Medicaid allows the exclusion of one vehicle regardless of value?

Is it fair for this Congress and Administration to promise benefits from an expanded Medicaid program that soon will demand either dramatically higher taxes, significant benefit cuts, or both?

Is it fair to claim short-term political and financial gains from expanding Medicaid, while socializing the negative impacts of crowding out private coverage and delaying or denying care to the neediest citizens?

We agreed with President Obama in 2009 when he said it is "not sufficient for us simply to add more people" to Medicaid or "increase coverage in the absence of cost controls and reform." Unfortunately, Obamacare did exactly that.

Third, and finally, there's the issue of math.

One of the most persistent arguments for expansion is the notion that it's just "money on the table" for states. After all, proponents of expansion say, the federal government would pay for 100 percent of the expansion for the first three years and then reduce payments to 90 percent in years thereafter. So the federal government is like a clever car salesman offering to put states into a new car they cannot afford, by offering the first few months for free. Never mind what happens after that.

But the catch is that future Congresses are bound by nothing. Uh oh. The federal government can change this formula when it pleases, or ignore it entirely. And we know the federal government has a history of overpromising and under-delivering when it comes to aid to states. The federal government is like a dinner host who promises a feast of benefits but only pays for the drinks and appetizers, leaving the guests - the states - holding the check for the meal.

Consider education. When Congress passed the Individuals with Disabilities Education Act (IDEA) in 1975 the federal government promised to pay 40 percent of each state's costs. Yet, over the past two decades the federal government has paid less than half of what it promised. Since 1995 that shortfall has cost states around $175 billion.

Why, then, should states trust the federal government to meet its 90 percent promise under a Medicaid expansion? After all, the federal government doesn't have a plan to keep the promises it has already made. It is unwise to trust the federal government to keep new promises it can't afford.

Even if the federal government has good intentions, the money just isn't there. And make no mistake, states already face substantial budgetary pressures from Medicaid. Under the status quo, Medicaid spending will continue to consume nearly a quarter of every state dollar, passing education as the largest state budgetary commitment. Increased Medicaid spending will further crowd out other state spending and make the fiscal outlook for states even worse.

Today's runaway entitlement spending also is already crowding out other parts of the budget - and it will get worse in the future. Medicare's hospital fund and Social Security's disability fund could both be insolvent within ten years. If Congress continues to dither, Social Security, Medicare and Medicaid will be pitted against each another in an epic budget battle for dwindling dollars. And in the accompanying lobbying war, disparate low-income Medicaid families will be overmatched by the AARP. Social Security and Medicare will be protected while states will be expected to pick up the tab for an expanded and unaffordable Medicaid system.

Given the math, it's no surprise Congress is already actively exploring ways to dramatically reduce the federal Medicaid dollars states currently receive by altering supplemental payments and reducing funds states receive for administrative costs.

The bottom line is that the proposed Medicaid expansion is very expensive counterfeit compassion from Washington. The expansion is like a shady subprime loan that creates the illusion of free money up front in order to hide massive and devastating costs down the road.

The real compassionate solution is to reform -- not expand -- the Medicaid program.

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