NCPA - National Center for Policy Analysis


April 17, 2007

Despite Medicaid's growing pressure on state budgets, some governors and state lawmakers want to expand its coverage, seeking to increase eligibility for the program up the income scale and enroll larger numbers of uninsured working families, says Dr. John S. O'Shea, practicing surgeon and Health Policy Fellow in the Center for Health Policy Studies at the Heritage Foundation.

Aside from the daunting fiscal issues -- Medicaid is already the largest expenditure in increasingly strained state budgets -- as a clinical matter, it would be an ideologically driven mistake to enlarge the program because it does not provide high-quality health care, says O'Shea.  A much better option would be to mainstream low-income families into the private health insurance markets, enabling them to secure the kind of coverage that best meets their personal needs.

Specifically, policymakers at the federal and state level should:

  • Restructure health care financing to assist low-income Americans in purchasing coverage in a way that addresses the basic purpose of the program -- providing quality health care coverage for low-income and medically needy individuals, without heavily subsidized care. 
  • Increase flexibility through creative federalism; Congress needs to allow states enough flexibility to tailor programs to meet their particular needs without having to go through burdensome federal waiver process.
  • Promote individual responsibility and realign economic incentives for the purchase of value-based health care; for instance, Congress could enact an advanceable and refundable individual health care tax credit for low-income individuals and families to help them secure affordable private health insurance.

Ultimately, an expansion of Medicaid is the wrong policy for the uninsured and for the taxpayers, says O'Shea.  And according to surveys, uninsured Americans would prefer private coverage to Medicaid.  Nonetheless, many policymakers insist on pushing them into Medicaid.  As editorialists of the Washington Times noted, "That's like forcing people into the medical equivalent of public housing."

Source: John S. O'Shea, "More Medicaid Means Less Quality Health Care," WebMemo No. 1402, Heritage Foundation, March 21, 2007.


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