Last week’s newsletter highlighted the fiscal impact on North Carolina if the legislature agreed to opt for Obamacare’s Medicaid expansion. This week, I’ll touch on three critical human costs:

1.   Private coverage crowd-out 

If North Carolina were to expand Medicaid, approximately 180,000 North Carolinians who are currently benefiting from a heavily subsidized private coverage plan with incomes between 100-138% of the federal poverty level (FPL) would be thrown onto the program — one with a track record inferior to private health insurance. As a result, expanding eligibility levels for government health insurance programs crowds out access to private coverage. Studies indicate that the crowd-out effect contributes to the fact that six out of ten people on Medicaid once had private coverage. Expanding Medicaid would add an additional 500,000 enrollees to our state’s Medicaid program.

The heavier the Medicaid caseload, the more providers will have to make up for being paid below market levels by negotiating higher payment through private carriers — ultimately passing on these costs to consumers in the form of higher premiums. The Galen Institute explains:

In 2008, Milliman, the leading health insurance consulting firm, estimated that the average American family with private health insurance paid $1,800 more in premiums because of this cost-shifting phenomenon. By dramatically expanding Medicaid, states will impose a hidden tax on tens of million people with private insurance

2.  Deteriorating Access To Care

People often interchange health coverage and health care, but they are two very different concepts. At present, one in four physicians in North Carolina does not accept new Medicaid patients. Granted, Medicaid acceptance rates rank above average compared to other states, yet access to care can deteriorate with more patients on the program. Medicaid was originally designed for low-income mothers, children, pregnant women, elderly, blind, and disabled — our nation’s most vulnerable citizens. Qualifying for Medicaid was originally based on the condition of either having a severe disability or dependents.

Expanding eligibility for Medicaid puts traditional program enrollees at risk. They will have to compete with half a million more people for adequate access to health care — 82 percent of whom are able-bodied childless adults. The Foundation for Government Accountability cites this statistic from the Urban Institute in the chart below:

3.     Health Outcomes

Medicaid fails the poor. Avik Roy, Senior Fellow at the Manhattan Institute and Forbes Opinion Editor, even wrote a book about it. It is called, “How Medicaid Fails The Poor.” Roy extrapolates on this by referencing the 2008 Oregon Health Insurance Experiment (OHIE), the gold standard of studies in which a randomized control trial tested whether Medicaid is significantly effective when measuring blood pressure, high cholesterol, hemoglobin levels, and long-term cardiovascular risk between a cohort of patients on the program compared to a similar number of patients who remained uninsured.

Two years later, the authors detected that, overall, Medicaid had no significant effect on measured health outcomes between the patients randomly assigned to Medicaid compared to those not having insurance.

Just looking at the background story of how the OHIE came about points out Medicaid’s recurring health care cost and access problems. In 1993, Oregon expanded its Medicaid program to the working poor. It wasn’t too long until actual enrollment exceeded projected enrollment, causing a state budgetary crisis. Oregon therefore froze its Medicaid enrollment, and eventually reopened it to allow for an additional 30,000 new eligibles to apply for a Medicaid lottery out of a waiting list of 90,000 people.

Funding a problem doesn’t solve a problem. There are ways to make health care more affordable and accessible with less government intervention. You can read about them here, here, and here.

Click here for the Health Care Update archive.

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