Who Has the Moral High Ground on Medicaid Expansion?

 

Is Medicaid expansion under ObamaCare the morally right or wrong thing to do? People have strong opinions on both sides of this issue. Who has the stronger moral argument?

Former HHS Secretary Kathleen Sebelius took a strong stand on this issue recently when she called the decisions of Kansas and Missouri to turn down Medicaid expansion under ObamaCare as “morally repugnant and economically stupid.” These are strong words for someone who served previously as the governor of Kansas from 2003 to 2009. Let’s analyze her positions.

Medicaid Coverage

Medicaid expansion under ObamaCare is covering able-bodied, working-age, childless adults earning below 138% of the federal poverty level (FPL) or $16,240 for a single individual. Before ObamaCare, only Vermont and the District of Columbia chose to cover these same individuals.

Brian Blase, writing in Forbes, makes a pertinent point: “If it is a moral imperative for states to provide Medicaid to able-bodied, working-age, childless adults under the ACA, one would think that it would have been a moral imperative before the ACA as well – regardless of who was footing the bill.”

Since HHS Secretary Sebelius was governor of Kansas for six years, why didn’t she consider Medicaid expansion to these same adults a moral imperative before ObamaCare?

States Must Make Tradeoffs

Blase makes another important point: States must make tradeoffs when they consider how to spend their tax dollars. In addition to considering Medicaid expansion, they must allocate taxpayer dollars to other important spending goals such as education, infrastructure, and transportation. Since states must balance their budgets, unlike the federal government, they must balance their priorities between all these competing needs. When more money is spent on Medicaid, there is less for education, infrastructure, and transportation.

The National Debt

Then there is the moral dilemma of uncapped federal reimbursements and out of control federal debt. When states expand Medicaid, the money is not free. It must be borrowed by the federal government, adding to the national debt, which now exceeds $19 Trillion. In 2015, the Obama administration spent $320 Billion reimbursing states for Medicaid spending. This figure equals nearly 9% of all federal spending, nearly triple what was being spent on Medicaid in 1990. What is the moral responsibility for passing such debt onto the next generation?

Medicaid Value

There is also the issue of the value received by Medicaid beneficiaries. A recent study by economists at MIT, Harvard, and Dartmouth found “that Medicaid’s value to recipients is lower than the government’s costs of the program, and usually substantially below” estimating that recipients only benefit by 20 to 40 cents for each dollar of spending. Instead of benefiting lower-income people as intended, the study found that large institutions, such as hospitals, nursing homes, and insurance companies, receive the most benefit from Medicaid. (see earlier post Medicaid Benefits Others More Than Patients)

This study is in addition to earlier studies such as the Oregon Healthcare Experiment, which have shown Medicaid patients have no better healthcare outcomes than the uninsured when measuring benchmarks such as control of blood sugar and hypertension. Furthermore, they use hospital emergency rooms 40% more often than the uninsured. That’s largely because getting into a primary care office is more difficult with Medicaid than with no insurance at all.

Medicaid Expansion Economically Harmful

Lastly, there is Sebelius’ remark that failure to expand Medicaid is “economically stupid.” In reality, those states that have expanded Medicaid under ObamaCare have experienced much higher than anticipated enrollment and therefore much higher than anticipated spending. More than twice as many people in California, Colorado, Illinois, Kentucky, Maryland, Nevada, Washington, and West Virginia enrolled as expected. The Associated Press reported that Medicaid costs are much higher than anticipated in these and many other states, leading to budgetary problems and necessary tradeoffs.

Those who advocate Medicaid expansion usually argue in favor of “taking the free government money” since other states will do likewise. But we live in a national, as well as global, economy where decisions in one state have a ripple effect. Economist Robert Book has written, “Every dollar of increased spending must ultimately be a dollar of decreased spending by a taxpayer elsewhere in the economy.”

There is also the impact that Medicaid expansion has on the availability of federal subsidies on the ObamaCare exchange. In states that have not expanded Medicaid, people between 100 and 138 percent of the FPL qualify for large subsidies to purchase exchange plans. If states expand Medicaid, people in those states will lose eligibility for those subsidies.

Finally, there is the disincentive for some low-income workers to work more and earn additional income because they will lose eligibility for Medicaid. Book points out that total GDP and employment will probably decrease from Medicaid expansion “because taxation itself has a negative effect on economic activity, over and above the amount of tax collected.” He estimates a reduction of $174 billion in economic activity over a 10-year period if all states expand Medicaid. He also estimates Medicaid expansion by all states will result in a loss of more than 200,000 jobs from 2014 to 2017.

It’s easy to claim the moral high ground and sound self-righteous doing it. But the inconvenient truth is that Secretary Sebelius’ stance on Medicaid expansion is not supported by the facts. Now that you know these facts, which position do you think has the moral high ground?

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