Citizens' Initiative

Medicaid Expansion: Taxpayer-funded health care for adults and noncitizens

on

It’s imperative that government spends public funds in the best interest of its citizens. With this in mind, the people of Maine should have many issues with the upcoming ballot initiative to expand Medicaid expansion.

Expanding Medicaid eligibility under the Affordable Care Act (ACA), or ObamaCare, means that taxpayers will be subsidizing health care coverage for able-bodied, childless adults between the ages of 21 and 64 who are not impoverished, as well as noncitizens 21 and under.

Traditional Medicaid, which is offered to low-income children, pregnant women and the disabled, exists to provide health care coverage to those who are incapable of financing their own health insurance. Medicaid expansion provides coverage for adults who live above poverty and have the physical means to procure their own health insurance.

While it’s important to have healthy citizens and adequate preventative care to keep health care costs low across the board, Maine taxpayers must ask themselves just how badly they want to foot the bill for able-bodied adults and noncitizens to have health insurance while the rest of working Maine continues to privately finance their own.

One troubling aspect of expansion is that the state doesn’t know exactly how many new Mainers will enroll in the program. Proponents claim expansion will cover an additional 70,000 Mainers and the initiative’s fiscal note projects approximately 90,000 new enrollees, but these are only estimates.

If more people enroll than what the state anticipates, there will be massive cost overruns within the program. When Maine expanded Medicaid in 2002, proponents claimed only 11,000 new people would enroll. Within 14 months, enrollment hit 17,000 and the program was eventually capped at 25,000. Many of these new enrollees were people who previously financed their own insurance and switched to government subsidized care after eligibility widened.

Dozens of expansion states have experienced over-projected enrollment and cost overruns already. After expansion, California was $14.7 billion over budget. Kentucky saw a 107 percent budget overrun, or $3 billion, two and a half years after expanding. Oregon was 128 percent over budget, or $2 billion, within just a year and a half of expansion.

These cost overruns put lawmakers in a situation where they must cut services in other areas of government in order to maintain funding from the federal government for Medicaid expansion.

Unfortunately, one of the first places lawmakers turn to for cuts is the traditional Medicaid program. This is because there is a perverse incentive for them to do so.

The federal government uses an equation called the Federal Medical Assistance Percentage (FMAP) to determine its share of Medicaid costs in each state. FMAP is based on a state’s per capita income. Through the FMAP equation, Maine receives about 64 cents from the federal government for every dollar spent on traditional Medicaid, leaving the state responsible for the remaining 36 cents.

Under Medicaid expansion, the federal government pays for 90 percent of expansion costs, meaning for every expansion dollar spent in Maine, the state is only required to contribute 10 cents. In other words, the federal government contributes approximately 25 cents more to insure healthy people in Maine than it does for low-income children, pregnant women and the disabled. Additionally, expansion dollars cannot be used on traditional Medicaid enrollees.

Because of this backwards funding structure, when cost overruns occur, lawmakers turn toward the traditional Medicaid program for cuts because it allows them to save more money – about 25 cents more on every dollar in comparison to expansion.

This means passing Medicaid expansion puts Maine’s truly vulnerable citizens – traditional Medicaid recipients – at risk of losing services.

For example, in Arizona, an earlier Medicaid expansion resulted in lawmakers eliminating coverage for heart, liver, lung, pancreas and bone marrow transplants under traditional Medicaid. Arkansas Governor Asa Hutchinson has proposed approximately $1 billion in cuts to traditional Medicaid and is on the record saying he “expects 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.”

Similarly, Alaska Governor Bill Walker has proposed cuts for people with developmental disabilities after expanding Medicaid in 2015.

Maine cannot afford to leave its truly needy out in the cold and put taxpayers on the hook to provide health care for working-age adults and noncitizens. We’re the only state in New England that has not expanded Medicaid under the ACA, and for good reason. We cannot turn our back on those who need our help.

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.

Recommended for you

Comments