Irv Lichtenwald

Insuring America and The Expanded Role of Medicaid

August 15, 2017

Healthcare Industry 6 Minute Read

The expansion of Medicaid and insurance subsidies through the ACA meant 20.4 million more people had health insurance in 2016 than in 2010. According to the non-partisan Congressional Budget Office, somewhere just north of 20 million Americans would lose health insurance in the various repeal-and-replace scenarios that have been floated of late and rejected, for now. That number jumps to 30 million-plus if Obamacare is simply repealed.

What all proposed ACA-repeal legislation has in common is deep cuts to Medicaid. Indeed, the group most affected by any of the bills is poor Americans who receive Medicaid support.

“Federal Medicaid spending would be reduced by 26 percent by 2026, largely because of the phase out of federal Medicaid expansion funding, but also because of the imposition of per capita caps or block grants,” writes Health Affairs blogger Tim Jost in analysis of one legislative proposal, the Better Care Reconciliation Act released by the Senate budget committee on July 20. “The CBO projections of loss of coverage remain substantially unchanged from the earlier analysis … The number of the uninsured would increase by 19 million by 2020 and 22 million by 2026.”

In some instances, replacement legislation in Congress divides state and national politicians of the same party. Half of the states that took expanded Medicaid dollars have Republican governors. Total enrollees in ACA insurance marketplaces are highest in Republican controlled legislative districts.

“We are now able to provide health insurance to 700,000 people,” said Ohio Governor John Kasich, who maneuvered around his state legislature in 2013 to expand Medicaid. “Let’s just say they just got rid of it, didn’t replace it with anything. What happens to the 700,000 people? What happens to drug treatment? What happens to mental health counseling? What happens to these people who have very high cholesterol and are victims from a heart attack? What happens to them?”

As chief executives of state governments, Kasich and other governors are directly responsible for state management, a direct responsibility that members of Congress do not share. Ohio is in the eye of the opiate addiction storm—the most devastating substance abuse epidemic in American history—and badly needs the expanded Medicaid dollars.

The fundamental issue with Obamacare repeal is the expansion of so-called entitlements, the social safety net and federal spending. Once a social program is established and benefits are extended, it is extremely difficult to pull them back. If social security is the third rail of politics, expanded Medicaid may soon become rail 3A.

Why is there even a discussion of Medicaid contraction when there is clearly so much need? Because, for many, such handouts do not reflect how a nation built on a culture of independence and self-sufficiency should function. Because the perception of some is that programs like Medicaid create dependence and limit freedom.

“When the Democrats built Obamacare, they built a Berlin Wall to keep the American people inside,” wrote Utah Senator Mike Lee, a leading opponent of the ACA. “The Consumer Freedom Amendment I’m offering will tear that wall down and allow the American people to connect with willing insurers to buy the policy that is right for them.”

But Lee’s proposal, while submitted with honorable intent, still leaves a massive gap between the availability and affordability of health insurance. It may give some Americans freedom of choice, but it does not alleviate the Berlin Wall of poverty and poor health, to use Lee’s analogy. It holds the line ideologically while doing little to address the underlying problem.

And it defines ‘freedom of choice’ only in terms of what citizens are not coerced into buying. Many Americans do not feel free to search the labor market for a new job because they risk losing health insurance. Many hospitals are not free to deny service to those without health insurance.

The uninsured who must ultimately go to the ER for treatment are often not free to pay for both medical care and food. Insurance consumers are not free to pay a lower premium bill because they don’t like that prices have been driven up by the uninsured. As every other industrialized nation has proven, costs per citizen are significantly lower when everyone is part of the same risk pool.

Some would have us believe that the 3 percent of citizens paying more for insurance thanks to Obamacare are the only ones impacted. Certainly, their hardship deserves attention. But don’t the millions who can’t get insurance without the ACA deserve notice as well? And what of the Americans who ultimately pay for those that choose not to have insurance and get hurt? Costs accrue, regardless, and someone will pay for them.

That problem is a healthcare system that routinely leaves those most vulnerable at risk. Medicaid expansion was one solution to that problem. It is an imperfect solution, to be sure, with legitimate liabilities, but at least it is a starting point for ensuring all Americans are covered.

“Sickness is costly, it shrinks the workforce and makes it less produc­tive,” write Walter McClure, Alain Enthoven, and Tim McDonald in the Health Affairs Blog. “Good health, like education, expands the workforce and makes it more productive … Good public investment programs infeas­ible in the private sector, such as universal public education, return far more to national prosperity than they cost in taxes. If both sides of the aisle will work together to do it right, universal health coverage is just such an opportunity.”

American healthcare has crossed the Rubicon and must find ways to extend insurance coverage, not retract it. The costs of the uninsured seep into the healthcare system anyway, as do the costs to society of addiction and mental illness when intervention comes far too late.

We should not cling to the ACA because it was passed by Democrats, nor should we oppose other ideas because they come from Republicans. I am not saying that free-market solutions are off the table and we must look to big government to save us.

But we must pursue ideas that expand healthcare availability. Healthcare costs threaten to bankrupt the country and lack of care is destroying lives in record numbers. For now, Medicaid expansion is one way to extend coverage and improve lives—to invest in the health and productivity of our people. It should not be viewed as the end game, but until we can improve on it in a way that makes insurance more broadly available, we cannot eliminate it either. 

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