NCPA - National Center for Policy Analysis


September 25, 2009

Each health reform bill in Congress achieves part of its insurance coverage expansion by increasing eligibility for Medicaid. 

  • The latest health reform proposal, from Senate Finance Chairman Max Baucus (D-Mont.), would expand Medicaid to all U.S. citizens who earn up to 133 percent of the federal poverty level (which is $14,400 for an individual and $30,000 for a family of four), beginning in 2014.
  • Those earning 100 percent to 133 percent of poverty could take Medicaid or a private health insurance plan offered through a health insurance exchange.

Because Medicaid is funded jointly by the federal and state governments, there is concern that expanding the program would put significant new financial pressure on already tight state budgets, says Marilyn Werber Serafini of  Under the Baucus proposal, the federal government would pick up more of the tab than it does now for newly eligible people (as much as 95 cents of every dollar it costs to cover these people in some areas).

What should the state's contribution be?  What level of out-of-pocket payments should be required for beneficiaries, and what benefits should they receive?  How should providers be paid, asks Serafini? 

According to John C. Goodman, President, CEO and the Kellye Wright Fellow of the National Center for Policy Analysis, expanding Medicaid is a bad idea because it would punish people.  For instance:

  • One study found that the uninsured were able to get a doctor's appointment quicker than Medicaid patients.
  • American Cancer Society research shows that in terms of delays in the detection and treatment of cancer, Medicaid enrollment is only marginally better than being uninsured.
  • June and Dave O'Neill found that mortality among Medicaid enrollees is significantly higher than for the uninsured.

If all this is not bad enough, says Goodman, expansion of Medicaid eligibility causes people to drop their private coverage (which allows them access to a broad array of providers) in order to join the public plan (where access is much more narrow).  On the average, every $1 increase in Medicaid spending leads to a 50¢ to 75¢ contraction in private spending.

Source: John C. Goodman, response to: Marilyn Werber Serafini, "Medicaid Expansions," National Journal, Expert Blogs: Health Care,, September 21, 2009.

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