Welcome to ObamaCare Part XIV: Medicaid Admits Lower Payments Equals Less Care

November 02, 2012 J

By: Nicole Kaeding

Yesterday, the Center for Medicare and Medicaid Services (CMS) released a new regulation with a long, technical title “Payments for Services Furnished by Certain Primary Care Physicians.” But what is noteworthy about this regulation isn’t the title–it’s the contents. This regulation is an explicit endorsement of what Americans for Prosperity has been saying for a long time: Lower Medicaid payments to providers means less care for Medicaid payments.

Medicaid is a joint federal-state health insurance program for low income individuals, the disabled and pregnant women. The program covers almost 50 million Americans.

Medicaid is a broken, costly system due to its unusual structure. The federal government splits the cost of Medicaid with each state through a matching formula. The federal government pays on average 57 cents of every dollar spent on Medicaid. In exchange, the federal government puts numerous restrictions on states on who must be covered and how the program must be run.

This complex, ineffective setup means that states have their hands tied in running the program. As a result, states are forced to slash payments to providers, doctors and hospitals, to control for the rapid growth in Medicaid.  Medicaid pays about 55% of what private insurance does; Medicare pays 75%. When payments to doctors are reduced, doctors decide not to accept Medicaid patients. A recent study in the journal Health Affairs estimates that 30% of doctors do not accept new Medicaid patients. In some states, the numbers is much higher—it’s 60% in New Jersey.

When fewer doctors accept Medicaid patients, health outcomes suffer. Individuals are unable to find doctors to treat conditions and maintain adequate care. Unfortunately, Medicaid patients are experiencing this firsthand. Health outcomes for Medicaid patients are worse than those of Medicare and privately-insured patients. In some studies, health outcomes for patients with no insurance are better than those with Medicaid.

And sadly, the President’s health care law will make this situation even worse. Medicaid is the largest vehicle for expanded care under the law. Eleven million more Americans will be covered by Medicaid.

So now, CMS is trying to bribe doctors into complying in this unworkable framework. This new regulation issued yesterday provides primary-care physicians with higher payments for treating Medicaid patients. CMS hopes that by paying doctors more they won’t refuse to cover these 11 million people who are being promised insurance and will flood the market in 2014.

But what happens after 2014? The money runs out. Doctors will face the same reimbursement rates they currently receive, and the system will be strained millions more enrolled. Two years of higher payments won’t solve this problem.

The President and CMS continue down the path. Instead of reforming this broken, costly system, they hope that by spending more money they will solve the problem. Welcome to ObamaCare.

Check out previous posts in the “Welcome to ObamaCare” series by clicking below.

Part II-Obama Taxing Benefits Costs Companies Millions

Part III-CMS Finally Admits ObamaCare “Cost Savings” are Phony

Part IV-Can You Really “Keep Your Plan” If You Like It?

Part V-Businesses Feeling the Impact, Asking for Waivers

Part VI-Proposed Regulations Exchange a Good Idea for a Bad One

Part VII – Acting up in CLASS

Part VIII – Don’t Let a Simple Thing Like Funding Stop You

Part IX-Exchange Flexibility? What Flexibility?

Part X- You Know What We Meant

Part XI- HHS Spends Wildly

Part XII-One of the Largest Tax Increases in History

Part XIII-Essential Health Benefits, Another Costly Mandate

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