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The public policy blog of the American Enterprise Institute
Medicaid is the federal health program aimed at helping those with low incomes get health care. It’s an important program, but one that is becoming increasingly costly and difficult to sustain, with expenditures rising from about $75 billion in 1990 to $400 billion in 2010. Future costs are set to skyrocket with the addition of a Medicaid expansion in the Affordable Care Act, as the chart below shows.
(Note: The Supreme Court ruled that the proposed mechanism to force states to accept this expansion—cutting off all federal funding for Medicaid—was unconstitutional, so the states will have to choose whether to expand eligibility as the ACA calls for.)
Now, it could be argued that the increased cost is worth it in order to ensure that low-income Americans have access to health care. But in a new paper published in the Journal of Health Politics, Policy and Law, AEI scholar Joe Antos argues that the proposed Medicaid expansion will actually hurt the poor rather than help them.
Why? Because saying that someone is covered is very different from actually providing them health care. As Antos points out, “Poor Americans have faced ‘a substantial vacuum in actual access to health care’ despite Medicaid’s coverage guarantee.”
That vacuum results from a lack of participation in Medicaid by many health care providers. They avoid Medicaid because it only pays about 66% of the rates paid by private insurers for inpatient hospital services and about 58% of the rates for physician services. Moreover, the program imposes burdensome administrative practices that many providers would rather just avoid entirely.
This lack of participation isn’t going to change anytime soon, with a 2008 survey revealing that only 52.6% of physicians say they would accept new patients on Medicaid. And while the ACA purports to increase Medicaid payment rates to 77% of private rates in 2014, CMS says they will drop back to 58% very quickly. Providers aren’t going to move into low-income areas for 58% of what they could make providing services to privately-insured individuals.
The bottom line, says Antos, is that:
Putting millions of additional people into a program that has been struggling with access to care for the past forty-five years is likely to result in worsening access for those who are currently enrolled in Medicaid.
We need to do more to help the poor get access to quality health care, but simply claiming from on high that they are now insured isn’t going to solve the problem if very few physicians will actually accept their insurance. Maybe we should focus on providing quality care to those already enrolled in the program before trying to expand it for those making up to 133% of the poverty line.
Check out Antos’s full paper for more details and some suggestions on how we could do better.
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