NCPA - National Center for Policy Analysis

Expanding Medicaid Eligibility May Not Be Good for States

January 31, 2013

New provisions of the Patient Protection and Affordable Care Act (ACA) mandate that states expand their Medicaid coverage to cover individuals with incomes up to 138 percent of the poverty line. That expanded coverage might not be a prudent move for states, many of which are already financially-strapped, says Joseph Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute.

  • States have reason to doubt whether or not they will receive the federal funding promised to them in the ACA.
  • Adding millions of people into the health care system will stress our overleveraged system and reduce overall access.
  • Individuals earning between 100 percent and 138 percent of the poverty line will pay a 2 percent premium based upon their income under the ACA.
  • Indiana expects that full Medicaid expansion would cost it $2 billion over 10 years, according to Governor Mitch Daniels.

Medicaid beneficiaries use hospital emergency rooms 50 percent to 100 percent more often because of a lack of access to office-based physicians. More frequent use means raised costs for state governments, which pay one-third to two-thirds of Medicaid costs, with the federal government covering the rest.

  • Results from a 2008 survey of physicians indicated that only about half of doctors will accept new patients on Medicaid meaning that the new influx of Medicaid recipients will force everyone to wait longer to see the doctor.
  • The Congressional Budget Office estimates that the federal government will spend $642 billion to expand coverage under Medicaid and the Children's Health Insurance Program (CHIP) between 2012 and 2022.

A possible solution to expanding Medicaid eligibility under the current system is to give individuals a choice as to whether they prefer access to Medicaid or to private insurance. Subsidizing free choice may not be completely fair as sicker, more expensive patients may choose one type of plan. But the ACA isn't fair because it gives lower income people lower instead of higher subsidies.

If Medicaid expansion was not mandated, much of the money that will be used to pay for increasing eligibility could be used for promote a sound economy and a brighter future.

Source: Joseph Antos, "The Medicaid Expansion Is Not Such a Good Deal for States or the Poor," American Enterprise Institute, January 24, 2013.


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