10 Reasons Not to Expand Medicaid Under Obamacare

1. More people will enroll than projected – making access to Medicaid-accepting providers that much more difficult for those that already rely on the program.
   • Medicaid expansion states projected expansion enrollment totaling 6.5 million people. Actual expansion enrollment in those states was 16.7 million – 160% more than they projected.
2. It will cost much more than projected – accounting tricks and overly-optimistic budget projections won’t stop the reality that other states have already experienced. Medicaid expansion is a budget buster and often takes away from other priorities.
   • Costs per enrollee for Medicaid expansion are 64% higher than projected.
   • Before Medicaid expansion, the program accounted for one out of every five dollars states spent. After Medicaid expansion, this spending now accounts for one out of every three dollars states spend.
3. Medicaid expansion opens the door to massive increases in fraudulent and improper payments.
   • In 2020, the Centers for Medicare and Medicaid Services (CMS) estimated that one in five dollars spent on Medicaid was an improper payment, totaling in an estimated loss of $86 billion in that fiscal year alone.
   • Much of those improper payments come from paying for people who aren’t eligible for the program – an estimated 17 million enrollees nationwide are not actually eligible for Medicaid.
4. Medicaid expansion causes people to shift from private insurance plans to Medicaid – this crowd-out hurts health care providers and lures people into a broken health plan that won’t be there when they need it.
   • After Kentucky expanded, its hospital association reported that one in five Medicaid patients seeking treatment at their hospitals previously held private insurance and had not been uninsured before enrolling in Medicaid.
   • In North Carolina, 63% of potential expansion enrollees already have private insurance.
5. Medicaid recipients are already forced to wait too long to receive care – if they can get an appointment at all.
   • Medicaid patients are 1.6 times less likely to successfully schedule a primary care appointment and 3.3 times less likely to successfully schedule a specialist appointment than a patient with private insurance.
   • If they are able to receive an appointment, Medicaid patients will wait longer for that appointment than a privately insured patient, too.
   • An investigation done by the inspector general for the Department of Health and Human Services found that only half of all doctors listed as accepting new patients by the insurer were actually accepting new Medicaid patients. Of those, one in four providers had wait times of over one month for an appointment.

6. Medicaid recipients already receive lower quality care.
   • The strongest randomized control studies on Medicaid show that health outcomes for those paying for care with Medicaid are consistently worse than health outcomes for the privately uninsured. And, more concerning, health outcomes for Medicaid recipients may not be better than those of the uninsured.
   • Quality in state Medicaid programs is so abysmal that some Medicaid recipients have sued their state governments over it. A group of Medicaid recipients in California lodged a civil rights suit against the state over the substandard care they received. Despite this pressure, the state is still struggling with its Medicaid health plans. Just a few weeks ago the state leveled massive fines against an insurer “for failing to ensure adequate care and allowing treatment delays that threatened enrollees’ health.”
7. Many people who sign up for Medicaid expansion are already eligible for the program – and the state is on the hook for a higher percentage of their costs.
   • There is a noticeable “woodwork effect” – that is, when a state makes efforts to enroll the newly eligible population, individuals who were already eligible but hadn’t signed up for Medicaid “come out of the woodwork”. In the initial wave of Obamacare and Medicaid expansion enrollment efforts, states saw a woodwork effect of about 10%, meaning a 10% growth in the traditional Medicaid enrollee population above the anticipated enrollment rate.
   • This makes a difference for a state because these previously eligible individuals receive a lower match rate in federal funding – meaning more money comes out of the state coffers to pay for these individuals. Fiscal projections often do not account for the increased costs associated with the woodwork effect as these individuals don’t officially “count” as a cost of Medicaid expansion.
   • To make matters worse, HHS audits continue to uncover states misclassifying enrollees as part of the newly eligible Medicaid population versus the traditional population. This means that many states are currently underpaying for their share of the Medicaid program. If required to comply with federal law, expansion states will be forced to increase their share of funding for their Medicaid programs.
8. Once a state expands Medicaid under Obamacare, there’s no going back – there’s no way to trim or limit expansion enrollment if costs spiral out of control.
   • As a condition of Covid funding, the federal government currently prohibits states from removing ineligible enrollees, and we do not know for certain when this restriction will end.
   • States have not been able to successfully implement a work requirement for enrollment in Medicaid expansion after numerous legal challenges.
   • The federal government has told state officials it will not allow for the capping of enrollment in the expansion program, nor will it allow states to reduce eligibility below the income levels laid out by Obamacare. There is no “phase-out” or “off ramp”. States like Ohio and Arkansas have explored these options, but have been unsuccessful at getting out of Medicaid expansion.
9. States are always at risk of the federal government finding ways to make them shoulder more of the expansion costs.
   • While the federal government could alter its FMAP (matching) rate for traditional or expansion Medicaid enrollees, it’s far from the only way it could make states pick up more of the tab.
   • As previously mentioned, the federal government could become more stringent in enforcing Medicaid enrollee classification at any time – instantly increasing a state’s required share of Medicaid funding.
   • The federal government could also further crack down on the use of provider fees to fund a state’s share of Medicaid funding – a practice it has long detested because provider fees, in effect, reduce a state’s actual share of Medicaid spending, while drawing down more federal dollars. While there are currently limits on the practice, the federal government could certainly go further if it chose – leaving states scrambling to find additional funding sources. This is not a hypothetical, legislation to do this very thing is regularly considered by Congress.
10. Medicaid expansion has made Medicaid insurers a lot of money, but little of that money directly benefits patients.
    • Research shows only 20-40 cents of each dollar spent on Medicaid directly improves the welfare of Medicaid recipients.
    • Yet we consistently see reporting on massive profits for Medicaid Managed Care Organizations – private insurers that provide health plans to Medicaid enrollees. For example, from 2014 to 2016, Anthem made a profit of $549 million from California Medicaid plans. Yet during that time, eight of its twelve Medicaid health plans received low scores for patient care, and the company only spent 77% of the money it received from the state for enrollee coverage on medical care for those enrollees.

Bonus Reason: There are so many other things states can do to increase access to care, improve quality of care, reduce costs, and increase health care options for patients – we call these reforms The Personal Option. Best of all, The Personal Option doesn’t require lawmakers to sign away control of the state budget or push people into substandard health plans.

Medicaid Expansion Is Wrong for Kansas

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