Medicaid Expansion

Medicaid expansion jeopardizes services for the truly needy

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Proponents of Medicaid expansion often assert that expansion insures more people and leads to a healthier population. As Maine knows from its trial with expansion in 2002, the reality of Medicaid expansion is quite the opposite. Maine’s uninsured rate did not measurably decline after expansion in 2002, nor did our people become healthier.

What’s even more troubling is what Medicaid expansion does to traditional Medicaid enrollees. Expansion covers able-bodied, childless adults ages 21 to 64 with earnings up to 138 percent of the federal poverty level (FPL), but traditional Medicaid covers our most vulnerable citizens – low-income children, pregnant women, and the disabled. However, resources for traditional enrollees are being cut due to the massive cost associated with expansion, which puts unbearable strain on state budgets.

This is due in large part to the inaccurate estimates concerning how many new enrollees Medicaid expansion would cover. In 2002, proponents of Medicaid expansion in Maine promised only 11,000 new Mainers would enroll in the program. However, within 14 months, enrollment had reached 17,000 and the program was eventually capped once 25,000 new Mainers enrolled.

When the Left makes these estimates, they are only looking at the number of uninsured people within the income threshold, or up to 138 percent FPL. However, what they don’t consider, is that there are thousands of people on private insurance within this income range. When eligibility widens, these people leave private plans and enroll in Medicaid. And why wouldn’t they? Who is going to pay for their own insurance when the government is handing out freebees?

What they also don’t consider is a phenomenon called the Woodwork Effect. The Woodwork Effect highlights the segment of the population that is already eligible for Medicaid benefits but is not currently enrolled in the program. When eligibility widens and this portion of the population realizes they are eligible for benefits, they will then enroll in the program.

Unfortunately, states that expand Medicaid under the Affordable Care Act (ACA), or ObamaCare, cannot use ACA funds on those who were previously eligible for the program. This means the state of Maine will bear the majority of this cost, as the federal government subsidizes traditional Medicaid at roughly 64 percent but covers 90 percent of the costs associated with Medicaid expansion.

Yes – you read that right – the federal government gives states more money to provide health insurance for healthy people than it does for people who are physically unable to procure their own health insurance.

Those pushing the November ballot referendum (the Maine People’s Alliance) to expand Medicaid assert that expansion will cover 70,000 new Mainers. However, according to the Census Bureau, there are 144,000 Mainers between the ages of 21 and 64 who earn up to 138 percent FPL. Additionally, there are approximately 79,500 Mainers in the same age group that earn between 138 and 200 percent FPL who now have a strong incentive to limit their earnings in order to obtain government subsidized healthcare.

This means their cost estimates are just as inaccurate as their enrollment estimates, and Maine taxpayers will be forced to foot the bill for covering healthy, able-bodied people.

When cost overruns occur, which they have almost universally among expansion states, lawmakers must decide where they can save money. Unfortunately, because states get more matching funds to cover healthy people, many have begun to cut care and services for the truly needy – traditional Medicaid enrollees.

An earlier Medicaid expansion in Arizona resulted in the state being forced to cut coverage for heart, liver, lung, pancreas and bone marrow transplants for traditional Medicaid enrollees after expansion cost taxpayers nearly four times the estimated amount.

In Arkansas, Governor Asa Hutchinson has proposed cutting $1 billion from the traditional Medicaid program, saying he expects the cuts to come “primarily from payments for services to patients with expensive medical needs, such as nursing-home residents, the developmentally disabled and the mentally ill.” Meanwhile, 3,000 Arkansans remain on waitlists for these services.

Alaska’s Governor Bill Walker has also proposed to cut services for the developmentally disabled in his state, which expanded Medicaid under the ACA in 2015.

Remember this when supporters of the ballot question begin running radio and television ads that promise Medicaid expansion is all Maine needs to be a healthy and prosperous state. Not only is Medicaid expansion wrong for Maine, it puts our neediest citizens – the ones who truly need our help – at risk of severe illness or death.

About Jacob Posik

Jacob Posik, of Turner, is a policy analyst for the Maine Heritage Policy Center. He can be reached at jposik@mainepolicy.org.

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