NCPA - National Center for Policy Analysis

National Health Care Reform and the New Medicaid

January 5, 2011

Almost one half of the cost of the Patient Protection and Affordable Care Act will pay for creating a new, greatly-expanded Medicaid program.  In fact, the new law uses traditional Medicaid to create an entirely new entitlement.  The eligibility requirements and funding mechanisms for the new Medicaid will be totally different from the existing program, according to a new study by Roger Stark, a health care policy analyst at the Washington Policy Center.

Key Findings from Stark's analysis:

  • After more than 40 years, there is no evidence Medicaid has improved health outcomes for the vast majority of either children or adults enrolled in the program.
  • Medicaid spending is now the fastest growing line item in nearly every state in the country.
  • Medicaid is unsustainable -- at the current rate of spending increase, Medicaid spending will double compared to fiscal 2008 levels in nine years (fiscal 2017).
  • Medicaid costs will explode as a result of recent health care reform legislation.

Eventually, the federal government will have only three choices, all of which are bad: run huge budget deficits, raise taxes or ration medical care by limiting funding, says Stark.

Source: Roger Stark, "National Health Care Reform and the New Medicaid," Washington Policy Center, January 2011.

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