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New report: Obamacare’s Medicaid expansion increases costs for the rest of us

New report: Obamacare’s Medicaid expansion increases costs for the rest of us

Wayne Hoffman
August 10, 2018
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August 10, 2018

More bad news arrived this week for supporters of Obamacare’s Medicaid expansion. A just-released Goldwater Institute study concludes an unfortunate side effect of providing free health coverage for able-bodied, childless adults is: Doing so likely increases the cost of healthcare for everyone else.

This finding comes on the heels of a separate study, released by the Foundation for Government Accountability, that found Medicaid expansion discourages people from working.

Arizona residents had been told that Medicaid expansion in their state would stop taxpayers and health insurance policyholders from having to absorb the costs associated with uncompensated hospital care. If that sounds familiar, it should. Progressives activists have been uttering similar untruths here in Idaho. Thankfully, the Goldwater report debunks that myth and issues an important warning for voters.  

The authors state, “Arizona bought the promise of Medicaid expansion on the basis that it would alleviate the supposed ‘cost-shifting’ claims that hospitals were passing their uncompensated care costs to private payers, resulting in higher insurance premiums.”

However, the authors’ contend, if cost shifting had been occurring, it still is, and more so. Research from 2007 asserted that uncompensated care drove up costs to private payers and Medicare by as much as 14 percent.

Now, more than a decade later, Goldwater used the 2007 study’s methodology to see if things have improved. The answer: Things are worse. Private payers and Medicare are now forced to remit 27 percent above the hospitals’ costs.

The Goldwater study notes, “Arizona lawmakers passed Medicaid expansion based largely on the claim that more people receiving health insurance under Medicaid would mean fewer uninsured seeking treatment, and therefore a dip in unpaid bills passed along to private payers in the form of higher insurance premiums.” The study continues, “Arizona’s expansion not only failed to deliver on its promise to alleviate supposed cost burdens on private payers, it exacerbated them.”

The new Goldwater study also looked at emergency room visits. Again, things have gotten worse. The study found, accounting for population increases, since Medicaid expansion occurred: Emergency room visits by Medicaid patients have nearly doubled, and total costs for Medicaid patients have nearly tripled. Meanwhile, emergency room use by people who are privately insured has stayed flat over 10 years and self-paying emergency room clientele has dropped by almost a third.

The report finds that urban hospitals have benefited significantly more from Medicaid expansion than rural hospitals. The study’s authors caution, “While further study and continued evaluation are needed, the big lesson for state lawmakers from Arizona’s experience is that the primary beneficiaries of Medicaid expansion are not the people, but the politically-connected hospitals.” Thus, vested self-interest may explain why the Idaho Hospital Association endorses the expansion initiative.

The results of Arizona's Medicaid expansion serve as warning signs that Idaho voters should heed as they consider Proposition 2, the Obamacare Medicaid expansion initiative on the November ballot. Other red flags that Gem State voters should consider come from states like California. There, early enrollment projections have been wildly exceeded. Now, California taxpayers are on the hook for billions of dollars in medical claims for people who enrolled during Medicaid expansion.

In the run up to Election Day, we must learn from Medicaid expansion states. To do otherwise is folly. Perhaps the most important lesson of all, one that’s subject to much distortion from Obamacare Medicaid expansion propagandists: Expansion won't hold the line on healthcare costs. Rather, Medicaid expansion will cost all of us more.

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