Medicaid Solutions For the Poor


The Obama administration is proud of Medicaid. They expanded Medicaid through ObamaCare to millions of more Americans. The original law as passed forced all 50 states to expand its Medicaid program but the Supreme Court struck down this mandate in NFIB v. Sebelius.

Now states have the choice to expand Medicaid or not. Thus far, 25 states plus the District of Columbia have expanded Medicaid per ObamaCare, 6 states have expanded Medicaid through an alternative plan, and 19 states have declined Medicaid expansion. This map tells you where your state stands.

Medicaid expansion by state 2016

The White House gloats over the number of newly insured under ObamaCare. But over 70% of the newly insured have Medicaid. Is this something to be proud of?

Medicaid Flaws

Most people assume that having Medicaid is better than having no insurance at all. This would seem intuitive – but only if you don’t know anything about Medicaid. Numerous studies have demonstrated that Medicaid patients have inferior outcomes when compared to those with other health insurance – and even to those who have no insurance at all!

The Oregon Healthcare Experiment, an ongoing study of Medicaid outcomes since 2008, has shown no difference in outcomes when compared to the uninsured in measurements of high blood pressure and diabetes control. Furthermore, those on Medicaid use hospital emergency rooms for primary care 40% more often than the uninsured.

That’s because the uninsured can negotiate discount rates for treatment in any doctor’s office but those on Medicaid cannot because this is illegal. This gives the uninsured better access to healthcare.

It is this poor access to healthcare that explains the poor healthcare outcomes for those on Medicaid. According to the Merritt Hawkins annual survey, 55% of doctors in major metropolitan areas refuse new Medicaid patients. Even of those who have signed up to accept Medicaid, 56% of primary care doctors and 43% of specialists refuse to see new patients.

What accounts for these poor numbers?

Poor reimbursement rates – it’s that simple. Doctors generally lose money when seeing Medicaid patients. All doctors do a certain amount of charity work but if that becomes too large a portion of their business they will soon be out of business.


Scott w. Atlas, M.D., senior fellow at the Hoover Institute, offers some solutions.

  • First new Medicaid should include a private-insurance option with catastrophic coverage but without the coverage mandates of ObamaCare.
  • Second new Medicaid should establish Health Savings Accounts (HSAs) for each enrollee using part of the current federal dollars in Medicaid. With these dollars patients would have incentives to follow healthy lifestyles to avoid unnecessary expenditures of their HSA funds.


When these two changes take place, doctors will receive payments from the same private insurance companies that cover their other patients. If these insurance companies pay doctors a more reasonable rate than Medicaid, more doctors will participate in the new system. The distinctions between Medicaid and private insurance will disappear, giving patients greater access to doctors – which will improve their healthcare outcomes.

This situation is similar to the current food stamp program. When actual stamps were used, many retailers refused to accept them because they were difficult to manage and distinguished the poor from more affluent customers. But when the system changed to EBT cards, the poor were welcomed like other customers with credit cards. Access to retailers improved.

Atlas believes that ultimately traditional Medicaid would be eliminated as new enrollees moved into private coverage. The two-tier system of healthcare would become a single tier with all patients receiving the same benefits – but paid for in different ways. Furthermore, he notes studies have shown that pairing HSAs with high-deductible coverage reduces healthcare costs. Patient spending averages 15% lower in high-deductible plans, with even more savings when paired with HSAs (up to 30% less spending).

It’s time we fixed the broken system of Medicaid – instead of just expanding a bad healthcare model. With these changes the government would deserve to be proud of a real accomplishment in improving the healthcare of millions of Americans.

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