5 Medicaid Expansion Myths Debunked

Myth #1: The Medicaid Expansion is largely funded by free federal money for state governments.

Under the Affordable Care Act (ACA), also known as “Obamacare,” the federal government would pay the lion’s share of costs for new Medicaid enrollees.  But the federal government first takes that money through taxes on individuals, families and businesses across America, including those in Maine.

The Congressional Budget Office has already increased its estimate of the cost of Obamacare over ten years from $940 Billion to $1.76 Trillion.  In the words of Thomas Jefferson, “the principal of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” Total U.S. national debt currently stands at $16.7 Trillion and rising.

Myth # 2: No expansion means Maine will subsidize Medicaid expansion in other states.

Expansion states will not receive additional expansion dollars because other states opt out, rather the total cost of the ACA will decrease.  According to a 2012 Congressional Budget Office projection, states refusing to expand Medicaid in 2014 will reduce the federal deficit by $84 billion.  Rejecting the Medicaid expansion keeps money in the pockets of Maine taxpayers who also pay federal taxes.

[RELATED: LePage offers Sebelius quid pro quo on Medicaid expansion…]

Myth # 3: Expanding Medicaid will increase access to quality health care for low-income Mainers.

Medicaid is a troubled program that often harms the poor.  Due to low payment rates, one-third of doctors won’t see Medicaid patients, meaning recipients have difficulty securing appointments.  A study in the New England Journal of Medicine found that 44 percent of children with juvenile diabetes on Medicaid could not get an appointment with an endocrinologist, compared to only nine percent with private insurance.

When Medicaid patients do receive care, they often experience worse outcomes than the uninsured.  For example, a University of Virginia study found that Medicaid patients are twice as likely to die following surgery as those with private insurance and 13 percent more likely to die than the uninsured.

[RELATED: Maine GOP warns on Medicaid expansion’s unforeseen consequences…]

Myth # 4: Expanding Medicaid will save taxpayers money and lower insurance costs by reducing uncompensated care.

Government health insurance programs actually drive up privte health insurance costs.  A Milliman study puts the price of this cost shifting from Medicaid and Medicare to those with private insurance at $1,800 per family, or 10.7 percent of health care spending.

Past voluntary Medicaid expansions in other states including Maine promised reductions in uncompensated care, but in practice, cost shifting and uncompensated care costs increased.  In Maine, the 2002 expansion of Medicaid; uncompensated care did not meaningfully decrease while Medicaid crowded out higher-paying private insurance.  In 2000, similar problems surfaced in Arizona.  Their expansion resulted in skyrocketing Medicaid enrollment, but little change in the number of uninsured residents, and the share of people with private insurance actually dropped.

Myth # 5: Maine can participate now but opt out in three years if the expansion costs too much.

It’s highly unlikely Maine politicians would remove individuals from Medicaid once they begin depending on government insurance.  In addition, the federal Department of Health and Human Services could prohibit states from opting out once they choose to participate, something Maine is experiencing today with the ACA maintenance of effort provision.

Unknown?  

Obamacare imposes enormous challenges for businesses with the introduction of exchanges and pay or play rules, also known as the employer mandate.  There are many unknowns that could dramatically impact the number of Maine residents who qualify for Medicaid in the coming years.

• How many employers will be forced to stop offering group health insurance?
• How many employers will reduce employee hours to part time levels?
• How will subsidy levels for individual coverage through the exchange impact employees’ willingness to take on more responsibility and climb the economic ladder?
• How will exchanges impact the ability for small businesses to maintain group health insurance coverage?

We cannot know for sure how the effects of Obamacare will impact the number of Maine residents eligible for Medicaid.  Expanding Medicaid without clear understanding of these dynamics could lead us once again to broken promises and broken budgets for Maine.

Joel Allumbuagh is the director of the Center on Health Reform, a project of the Maine Heritage Policy Center. He is also the Chief Executive Officer of National Worksite Benefit Group, Inc. (NWBG).

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