NCPA - National Center for Policy Analysis

ObamaCare Puts Pressure on Medicaid

February 8, 2011

President Obama promised that health care reform would cost less than $1 trillion, so the Affordable Care Act relies heavily on expanding Medicaid to cover the uninsured.  But without substantial Medicaid reform, ObamaCare will result in a human and fiscal disaster, says Paul Howard, director of the Manhattan Institute's Center for Medical Progress, and Douglas Holtz-Eakin, president of the American Action Forum and a former director of the Congressional Budget Office. 

  • The program often pays only 70 percent of what Medicare pays physicians -- which itself is about 20 percent below private rates -- and reimbursement is slow.
  • Small wonder, then, that more than half of primary care physicians and 35 percent of specialists have either limited the number of Medicaid patients they see or refused to accept new ones.
  • With so many doctors unwilling to treat them, Medicaid patients often have to wait longer before receiving a diagnosis or treatment.
  • This can have lethal consequences: in 2007, a Maryland boy died from an abscessed tooth because his mother had trouble finding a dentist who accepted Medicaid.

Adding financial insult to medical injury, Medicaid spending currently consumes about 20 percent of state budgets, crowding out spending on everything from education to infrastructure.  It is also part of the trifecta of federal programs -- Medicare, Medicaid, and Social Security -- driving the federal budget over a deficit cliff, say Howard and Holtz-Eakin.

  • In 2011, the federal and state governments are projected to spend $466 billion on Medicaid, with costs rising about 8 percent a year.
  • Under the new law, Medicaid will spend an additional $443 billion by 2019 -- hardly evidence of the cost control that Obama promised for health care reform.

Source: Paul Howard and Douglas Holtz-Eakin, "A Medicaid Rebellion?" City Journal, Winter 2011.

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