Medicaid Expansion Woes

 

Medicaid expansion under ObamaCare was supposed to insure those Americans without healthcare insurance. It was not supposed to take privately-insured patients and add them to the taxpayer’s burden.

But that’s exactly what’s happening in many states that have expanded their Medicaid rolls under ObamaCare. The best example is Louisiana.

Chris Jacobs, writing in The Wall Street Journal, says the trouble started in 2016 when Democratic Governor John Bel Edwards was elected. Edwards immediately pushed through a bill accepting the ObamaCare Medicaid expansion, which increases the eligibility of able-bodied single adults up to 138% of the federal poverty limit.

But the expansion didn’t stop there. An audit released last year exposed ineligible Medicaid beneficiaries, including at least 1,672 people who made more than $100,000 on their Medicaid rolls.

But the real story is the number of people who have dropped their previously held private insurance coverage to accept the government-paid Medicaid. The Louisiana Department of Health estimates between 3,000 and 5,000 people per month drop their private insurance and enroll in Medicaid. This figure is conservative because it doesn’t count those who enrolled in Medicaid first, and then dropped private coverage.

The Health Department’s internal spreadsheet information comports with other coverage estimates. A survey by Louisiana state University researchers found that, from 2015-17, enrollment in private insurance fell precipitously among low-income Louisiana residents eligible for Medicaid under the expansion. The number of people covered by private health insurance declined by tens of thousands, even as Medicaid enrollment skyrocketed by more than 141,000.

ObamaCare was never sold to the American people as a way to take people off private insurance and put them on government insurance. But that may have been the intention all along. In 2007, MIT economist Jonathan Gruber, an architect of ObamaCare, concluded that some coverage expansions would see rates of “crowd-out” – government programs squeezing out private insurance – approaching 60%. Eight years later, Louisiana’s Legislative Fiscal Office estimated that crowd-out would cost taxpayers between $900 million and $1.3 billion over five years. In reality, Medicaid expansion has vastly exceeded these initial projections so the true cost is undoubtedly higher.

Jacobs says the impact of this situation on a national level is staggering. Estimates suggest that your federal government is spending billions annually funding Medicaid for people who previously held private insurance.

Montana officials recently released a study boasting of 8,700 workers who would have employer-sponsored coverage but for Medicaid expansion, claiming that expansion provided “cost savings to businesses” of up to $114 million. Jacobs says, “Only in a bureaucrat’s mind would more government spending, taxes and government dependency represent ‘cost savings.’”

This debacle in Louisiana, Montana, and other states that have accepted the Medicaid expansion under ObamaCare should be a warning to those who have resisted the change. This is just another attempt by Progressives to place all Americans under the control and dependency of the federal government for all their healthcare.

Saving Medicare

 

Medicare is popular. Now that I’m personally on Medicare, I’m not as enthusiastic as I was before. It’s certainly not inexpensive even though I’ve been subsidizing it for the last 50 years. Like Social Security, you have to keep on paying for it in taxes as long as you’re working. But it does have its usefulness and most doctors still accept Medicare, though that could change quickly if provider fees keep declining.

So the important question for us all is how to keep Medicare financially solvent. While Democrats are pushing for Medicare For All, a far bigger expense than the current system, right now we have to figure out how to keep Medicare available for seniors for years to come.

John F. Early, writing in The Wall Street Journal, has some recommendations that should receive bipartisan support. Some background statistics are first needed so we can all grasp the severity of the problem.

Medicare spent 3.6% of gross domestic product (GDP) in 2016, more than six times the share it consumed in 1967, the first full year it was implemented. Early says the forecasts he has analyzed show that the share of GDP will rise to at least 9% within 75 years – and that’s the best-case scenario. Others suggest Medicare could spend more than twice that.

A spending jump to 9% would require a roughly 17.4% increase in all federal taxes or a 30.5% cut in other entitlement and discretionary spending, or some intermediate combination – otherwise we’d be likely to see a Greek-crisis level of debt within 18 years. If the worst-case scenario applies, we would need to raise taxes by 36.33% or cut 91.76% of other spending. And all this assumes Congress doesn’t do something stupid like passing Medicare For All in the meantime.

Three Fixable Problems

Early says the Medicare eligibility age is too low. It has remained at age 65 since its inception in 1967. That year the average 65-year-old American was expected to live 14.8 more years. In 2016 the average 65 year-old lives 19.3 more years – roughly a 30% increase in life expectancy. The government has not adjusted for this change.

He recommends incremental increases in the age of eligibility; approximately 3-4 months per year. This would synchronize with the rise in Social Security’s full retirement age so that both would reach 67 by 2027. This gradual rise could continue until 2072 when the eligibility age would be 73 and the average length of coverage would then return to the original duration of 14.8 years. After that point, the threshold could rise more slowly, having made up the difference that has accrued over the past 50 or so years.

The second problem is the rise in the proportion of the working-age population classified as eligible for disability under Social Security– which is covered by Medicare. There has been a four-fold increasesince 1972. The solution is to restore the original disability standard – which has become lax – so that people qualify for benefits only when they are “unable to work any job in the economy.”

The third problem is the rise in consumption of medical services. The average beneficiary today consumes six times more medical services than in the previous generation, even without counting the drug benefit introduced in 2006. This is because beneficiaries pay 68% less in deductibles than the previous generation and coinsurance rates are steeply discounted.

Since 1989, 20% of beneficiaries who are designated as low-income have been excluded from paying deductibles, coinsurance or premiums. These people consume 42% more services than other beneficiaries, even when adjusted for health status. (The increased use of services is not related to their health.)

The solution to this problem is adjustment of deductibles and coinsurance to fit those in the private market. Early says the current Medicare deductible for professional services is 11% of the average commercial insurance product. He suggests this needs to rise to 25% of the average commercial rate for the next 20 years and then up to the full average rate over the following 10 years. Coinsurance can remain at the below-market rate of 20% for 30 years, but after that Medicare will also require low-income beneficiaries to bear some cost increases.

This may seem like a bitter pill to swallow but the changes Early recommends are gradual and should be tolerable for most families. Remember, Medicare is not a program for the poor; it is a healthcare system for seniors. With the rising popularity of Medicare Advantage programs, most seniors find this very affordable. With these adjustments, those seniors should be able to count on Medicare for generations to come.

Popularity of ObamaCare Shifts

 

ObamaCare has never been popular – until now. Not once during the debate in Congress nor in the time leading up to its passage into law on March 23, 2010, did ObamaCare have more supporters than opponents. Even after passage, when House Speaker Nancy Pelosi insisted people would love it when they got to know it, did it garner more than 50% support in the RealClearPolitics averages.

A Kaiser Family Foundation poll released in December 2016, after Trump won the presidency but before Obama left office, found the ACA still only had a favorability rating of 43% with 46% opposed. But recent polls show ObamaCare has now grown in approval to 50% with 39% opposition.

What happened? Did the law somehow get better? No, all that has changed thanks to the media, Democratic demagoguery, and Republican failures to communicate. That’s likely the single most important reason Democrats took back control of the House of Representatives in the 2018 mid-term elections.

You can blame some Republicans, like the late Senator John McCain, Senators Lisa Murkowski, Susan Collins, and Rand Paul for failure to deliver on campaign promises to repeal and replace ObamaCare. That has left President Trump and Republicans in Congress trying to improve this nine-year-old health law around the fringes.

As usual, the Democratic plan is scare tactics. Democrats insist Republicans want to do away with important protections like coverage for pre-existing conditions and keeping children on their parents’ plans up to age twenty-six. Actually, there’s bipartisan agreement on both ideas but the media has made it possible for Democrats to demagogue this issue successfully.

But the real problem is most people aren’t affected by ObamaCare, or at least don’t know it, and they are fearful of change. About 180 million Americans get their insurance through their employer. Although ObamaCare has forced all insurance rates skyward, these Americans have hardly noticed. Their employer is paying the higher prices and they don’t feel the pain.

However, the reality is that they are paying the price through lower wages, or deferred raises, because employers can’t afford to offer them more. Despite the growing economy and widespread employment, wages have risen slower than expected due to the burden of ObamaCare. These people are fearful of any change that might cause them to lose their current healthcare insurance.

This is precisely why Medicare For All has little chance of ever seeing implementation because it threatens the status quo – the private health insurance of those 180 million Americans. This radical new healthcare idea may be popular among progressives but it will never garner much support from middle America.

Politicians on both sides of the aisle should come together to discuss real healthcare reform that protects pre-existing conditions, covers most Americans, and keeps prices down by eliminating unnecessary regulations in ObamaCare that only force up prices for everyone. Unfortunately, party politics make this an unlikely scenario before the next presidential election – and maybe even for years thereafter.