NCPA - National Center for Policy Analysis

Medicaid Freedom of Choice

July 17, 2012

The Medicaid system, which provides health care to many of America's most in need, is largely broken. Its problems, broadly, fall into two categories. First, it creates subpar health outcomes for enrollees who, because of their lack of economic means, often have no alternative avenue to gain care. Second, it creates unnecessary cost overruns due to poorly conceived incentives, say Stephen Moore, a member of the Wall Street Journal editorial board, and Peter Ferrara, a senior fellow at the National Center for Policy Analysis.

With regard to the first problem, numerous studies have been conducted that show that, for a number of reasons, Medicaid participants routinely receive poor treatment by health care providers.

  • Scott Gottlieb of the New York University School of Medicine writes that a 2010 study of throat cancer "found that Medicaid patients and people lacking any health insurance were both 50 percent more likely to die when compared with privately insured patients."
  • A 2011 study of heart patients found that people with Medicaid who underwent coronary angioplasty were 59 percent more likely to have strokes and heart attacks, compared with privately insured patients.
  • Medicaid patients were also more than twice as likely to have a major, subsequent heart attack after angioplasty as were patients who didn't have any health insurance at all.
  • A 2010 study of major surgical procedures found that being on Medicaid was associated with the longest length of hospital stay, the most total hospital costs and the highest risk of death.

These studies speak to the ineffectiveness of the Medicaid program in providing adequate care for those who rely upon it. Part of this problem stems from a lack of access: because the government only reimburses doctors at roughly 60 cents on the dollar for physician charges, many doctors refuse access to Medicaid patients, or cap the number they're willing to see.

Frustratingly, this lack of effective care is coupled with enormous expense, as Medicaid is projected to consume larger and larger amounts of federal and state budgets.

  • On the federal level, President Obama's budget projects Medicaid costs will total nearly $4.4 trillion over the next 10 years alone.
  • Annual costs are expected to soar by 127 percent to nearly $600 billion in that period.
  • Further, the National Association of State Budget Officers reports that states Medicaid spending may exceed spending on anything else, even K-12 education.

Source: Stephen Moore and Peter Ferrara, "Medicaid Freedom of Choice," American Spectator, June 2012.

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