| April 4, 2013
Avoiding the Medicaid Trap
The Venus Flytrap, using a sweet aroma, tricks unsuspecting insects into landing on its leaves. These leaves then quickly close, trapping the soon-to-be-consumed insect whose struggles only cause the plant to speed up the fatal process. In much the same way, some states have expanded their Medicaid program after being tempted by the sweet aroma of additional federal taxpayer dollars. Their judgment clouded by this temptation, they fail to see the trap—there is no guarantee that care will improve for their citizens or that federal dollars will continue to come in the door. The only guarantee is that the states are on the hook for millions of dollars.
As OCPA has pointed out many times, expanding Medicaid is the wrong thing for states to do. It does not fix the problem, and when the federal government decides to cut its contributions, Medicaid expansion will cost the states immensely. Many states, such as Florida, which would face over $4 billion in new spending by 2022, have realized this and are not willing to take the risk.
As we and others have been saying for a long time, Medicaid is not the best method of ensuring proper care and an increase in federal taxpayer funded coverage will not make things better. With Medicaid costs already increasing and access to care already decreasing for Medicaid patients, how can any of us truthfully believe handing out additional insurance cards will solve anything? Anyone attempting to make that argument is really telling you that they want the government to waste even more of your money and they want those with private health insurance to be saddled with premium cost increases caused by cost shifting.
It is worth remembering that citizens who do not live in a state which expands its Medicaid program will still have access to the federal insurance exchange. As Avik Roy recently pointed out in Forbes, in the long run the federal exchange will enable better care than Medicaid by reimbursing physicians at a better rate. While states like Oklahoma may not benefit from an increase in federal money, this means Oklahomans who qualify and wish to do so may still participate in taxpayer-funded health care. If federal standards and money are good enough for those advocating state expansion, surely an alternative that provides direct federal assistance is more than acceptable.
Looking past all of this to the impacts in other areas, Dr. Chris Conover recently calculated that for each new dollar of Medicaid spending, the economy shrinks by $0.44. In terms of the impact on jobs, he writes that “we lose 144 jobs for every 100 health sector-related jobs that are induced by expansion.”
The alarms are sounding and the lights are flashing, yet some are quickly flying into a trap. With the likelihood of massive cost increases, no increase in the quality of care, and the loss of jobs, how can any state seriously consider expanding Medicaid? Just as the Venus Flytrap lures unsuspecting victims with its pretty flower and sweet smell, President Obama and his cohorts are luring unsuspecting states in with the unsustainable promise of “free” taxpayer money. Many states are already heading into it, but Oklahoma, led by Governor Mary Fallin and legislative leaders, is wisely avoiding the trap.
By Derek Osborn