by Jordan Roberts
Director of Government Affairs, John Locke Foundation
Chris Jacobs of the Juniper Research Group penned a revealing Op-Ed in the Wall Street Journal on the experience that Louisiana had following the expansion of their Medicaid program. Of course, Medicaid expansion is a policy proposal that some in North Carolina would want to happen. Here is some of what Jacobs wrote:
An audit released last year exposed ineligible Medicaid beneficiaries, including at least 1,672 people who made more than $100,000. But Louisiana’s Medicaid expansion has revealed another waste of taxpayer funds, both in the Pelican State and nationwide: the money spent providing coverage to people who already had health insurance.
Via a public-records request, the Pelican Institute obtained data demonstrating that thousands of Louisiana residents dropped their private coverage to enroll in Medicaid under the expansion. A spreadsheet compiled by the Louisiana Department of Health put the count between 3,000 and 5,000 people a month, and that doesn’t count those who enrolled in Medicaid first, then dropped private coverage.
That masses of Louisiana residents canceled their private coverage to enroll in “free” Medicaid should surprise no one. In 2007 Massachusetts Institute of Technology economist Jonathan Gruber, who later became an architect of ObamaCare, concluded that some coverage expansions would see rates of “crowd-out”—government programs squeezing out private insurance—approaching 60%. Eight years later, Louisiana’s Legislative Fiscal Office estimated that crowd-out would cost taxpayers between $900 million and $1.3 billion over five years. Because enrollment in Medicaid expansion vastly exceeded initial projections, the true cost may rise far higher.
Federal budget analysts have yet to quantify the effect of crowd-out on Medicaid expansion—but they should, because estimates suggest that Washington is spending billions annually funding Medicaid for people with prior health coverage. Montana officials recently released a study boasting of 8,700 workers who would have employer-sponsored coverage but for Medicaid expansion, claiming that expansion provided “cost savings to businesses” of up to $114 million. Only in a bureaucrat’s mind would more government spending, taxes and government dependency represent “cost savings.”
There’s a lot to unpack here. First, it really something for state officials to boast about expanding an expensive, taxpayer-funded program as “cost savings to businesses.” Second, many of these consequences from expanding Medicaid are not seen or measurable until some time after the implementation. As such Louisiana couldn’t have known how far off the projections would be. They had no idea how many people would drop private insurance to join the free government health insurance program.
Increased costs to taxpayers and crowd-out are problems often arise from expanding the scope and size of public health insurance programs. These are concerns that I have written about (see here and here) as some of the main reasons as to why North Carolina should continue to reject such proposals. While there is an acknowledgment that many individuals in our state struggle to afford and access healthcare, expanding Medicaid is not the best path. Instead of shifting who bears the costs of inflated healthcare, policymakers should target the problems that have created such high costs.