Sally Pipes: Expand Medicaid? Democrats' plan would increase waste, fraud and debt

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If Democrats can't get "Medicare-for-all," it seems they'll settle for "Medicaid-for-most."

Last month, the House of Representatives passed a bill that would supposedly "stabilize" ObamaCare by lavishing billions of dollars on Medicaid. To pay for that effort, the bill's proponents envision cutting Medicare by nearly $450 billion over 10 years.

Democrats are also lobbying states to expand the program to able-bodied, low-income adults. Despite a Republican governor and Republican-controlled state legislature, voters in Oklahoma approved Medicaid expansion June 30. Missouri voters will consider a similar measure Aug. 4.

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These expansion efforts may seem like a smart way to extend health coverage to vulnerable Americans. But Medicaid is plagued by waste and fraud – and doesn't even provide beneficiaries quality coverage.

Medicaid, which will turn 55 on July 31, has ballooned since its creation. The program initially provided health coverage to low-income individuals and families – and eventually grew to cover the blind, disabled and other vulnerable populations. As of 2018, one of every six dollars of health care spending goes through Medicaid – nearly $600 billion.

Under ObamaCare, states gained the option to cover everyone earning up to 138 percent of the federal poverty level – a bit over $17,000 this year. To entice states to expand Medicaid, ObamaCare covered 100 percent of the cost of new enrollees from 2014 to 2016. Today, the federal government covers 90 percent of those costs. So far, 37 states and the District of Columbia have expanded Medicaid.

Medicaid expansion ended up bigger and costlier than states initially assumed. By 2016, 11.5 million able-bodied adults had enrolled in Medicaid under the ObamaCare expansion, more than double initial projections. On top of that, the cost of covering a single member of the expansion population was 49 percent higher than originally estimated.

By 2018, the expansion population exceeded 15.5 million. All told, the program covers nearly 71 million people – more than one in every five Americans.

Despite all this spending, Medicaid enrollees post worse health outcomes than people with other forms of coverage – and even the uninsured.

Because of these factors, many states have seen costs skyrocket. Kentucky spent twice as much as it planned on the first two-and-a-half years of Medicaid expansion, while Ohio went $4.7 billion over budget in the first few years of its expansion. Other expansion states have scrambled to come up with their share of the money by raising taxes and forcing doctors and hospitals to pay "provider fees."

The House bill would infuse yet more money into the program. For example, it would require state Medicaid programs to cover eligible individuals for 12 months at a minimum even if they become eligible for coverage elsewhere during that period – say, at work. According to the Congressional Budget Office this provision would cost the federal government nearly $217 billion over 10 years.

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Such "continuous coverage" requirements have proven to encourage Medicaid fraud. A 2018 study found that Louisiana's continuous coverage provision allowed individuals to remain "eligible" for Medicaid despite earning up to $145,000. A subsequent audit found more than 1,600 of Louisiana's Medicaid enrollees earned over $100,000. Removing these individuals from the state's Medicaid rolls saved taxpayers $400 million.

Unfortunately, this level of waste and fraud is nothing new to Medicaid. Around one in five federal Medicaid dollars is spent improperly, usually on someone ineligible for benefits who remained in the program. Each year, improper payments in Medicaid amount to about $75 billion.

Despite all this spending, Medicaid enrollees post worse health outcomes than people with other forms of coverage – and even the uninsured. A landmark study of individuals who received Medicaid via lottery in Oregon found that enrollees were no healthier after two years than similar individuals who had remained uninsured.

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Medicaid underpays doctors. So they tend to limit the number of beneficiaries of the program they're willing to see. Putting even more people on Medicaid will exacerbate that problem. People may have coverage but won't be able to secure care.

Only in government would a program that spends one in five dollars erroneously be a candidate for expansion. Yet that's what Democrats have in mind. Their plan doesn't serve the interests of taxpayers – or the program's beneficiaries.

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