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Medicaid expansion: a lifeline to the sinking Obamacare ship

Medicaid expansion: a lifeline to the sinking Obamacare ship

Fred Birnbaum
October 27, 2016
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October 27, 2016

The failures of the Affordable Care Act (ACA) are being recognized by the mainstream press. Among the current problems being highlighted: Consumers across the country face an average of 25 percent increases for their 2017 insurance plans.

In the political world, former President Bill Clinton said, “So you’ve got this crazy system where all of sudden 25 million more people have health care and then the people who are out there busting it...wind up with their premiums doubled and their coverage cut in half.” President Barack Obama barely concedes, six years after his ACA became law, it faces “growing pains.”

The ACA is failing to deliver lower-cost healthcare to Americans as promised. A major component of the ACA was Medicaid expansion. So, with all of ACA’s shortcomings, and a cornerstone of ACA being a bigger Medicaid program, one would think that talk about further expanding Medicaid would stop. But, no, proponents want to dig a much deeper hole.

Why do we have a hole in the first place? To begin, the ACA has not worked because it did not foster nor create a market for health insurance products.

The so-called marketplace for healthcare, whether purchased on a state or federal exchange or simply through a health insurance firm, is really a crony-capitalist contraption that often benefits large hospitals. Big hospitals have the scale to navigate the laws’ complexities and to gobble up smaller hospitals and independent practices – something we see today in the Treasure Valley.

The ACA is failing to contain costs because those who signed up for “free care” still have no incentive to curtail their use of medical services. This fact is highlighted by the New England Journal of Medicine’s update on the Oregon Medicaid study, which points out, emergency room use still has not decreased, as predicted by Medicaid proponents, when formerly uninsured individuals gain access to health care coverage.

The ACA has not worked as promised because: Medicaid isn’t the cost-effective system that expansion proponents proclaim. Idaho proponents assert, “For every dollar invested in Idaho’s Medicaid program, 97 cents is spent directly on health services for participants, with just 3 cents going to administrative costs incurred by the Idaho Department of Health and Welfare.” But, this financial math is half-baked.

To get a true accounting of Idaho’s Medicaid program, we must include all of the federal-level administrative costs plus all administrative costs embedded throughout the hospital and insurance systems. Bottom line: Any costs that Medicaid appears to be saving are simply being shifted to other elements of the system. We see this because overall medical costs in the US surpassed 18 percent of GDP in 2016 for the first time in history. That’s right, under the ACA, nearly 1 out of 5 dollars of all goods and services produced in the US is devoted to health care.

Despite these failures, why the push to expand Medicaid?

The answer: Obama and many on the left never wanted a market for health insurance or healthcare. Before he was president, Obama advocated for a government-run, single-payer system similar to those in Europe and Canada. Hillary Clinton has spoken for lowering the minimum age requirement for Medicare. And, Bernie Sanders states on his website: “The only long-term solution to America's health care crisis is a single-payer national health care program.”

 We can debate whether the ACA was originally designed to fail and give  politicians and others a perfect storm to advance a government-run, single-payer healthcare system. Regardless of original intent, that is what’s happening – and Medicaid expansion is the next step.

For those under 65 and not on Medicaid, the cost increases in their care plans are creating political pressure to do something. Rather than scrap the whole Obamacare contraption and replace it with market-oriented alternatives -- which would allow, among other things, the sale of insurance policies across state lines and the ability of citizens to buy policies that meet their needs -- the big medical establishment wants to ram Medicaid expansion through now, giving them a bigger seat at the table.

Historically, Medicaid was for poor children, pregnant women, and the disabled. The current push is to cover able-bodied adults with low incomes. Next, it will be for the middle-class. Then we will have the single-payer system that socialists like Bernie Sanders always dreamed of. It would be a shame if Republicans in Idaho enable this to happen.

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