I wrote recently that the right way to think about expanding Medicaid — currently a hot topic among candidates for statewide office in Georgia — is not merely as a way to add coverage for those truly in need. Rather, it’s a step toward health care fully run by the government.
Today I want to give you another example of why that’s true.
Earlier this year the left-leaning Urban Institute estimated the cost and effects of expanding Medicaid under Obamacare in Georgia and the other 18 states that so far have opted against doing so. The oft-touted headline from the study for our state is that the number of uninsured Georgians would decline by about 473,000.
But a closer examination of the study shows something else going on as well.
You see, it’s not that 473,000 Georgians would be added to Medicaid, according to the study. That’s the number of uninsured Georgians who would gain coverage. The number added to Medicaid would, in reality, be much higher: 726,000.
Who are the other quarter-million people? They’re Georgians who already have private insurance and would be shifted onto Medicaid’s rolls. They represent more than one-third of the potential new Medicaid recipients. Across all 19 non-expansion states, almost 40 percent of potential new recipients are people who already have private insurance.
Practically speaking, then, Medicaid expansion is as much about shifting people out of private insurance and onto a public plan as it is about reducing the ranks of the uninsured.
Perhaps that’s why enrollment in the states that did expand has outpaced initial projections. It’s also one reason the projected cost of expansion in Georgia is so high relative to the benefit. How high? The study put the annual price tag at more than $3 billion in federal tax dollars, plus $246 million for state taxpayers. About three-quarters of currently uninsured Georgians would remain without coverage. That’s about 1 in 7 Georgians overall.
That’s what happens when a plan to help the uninsured also ensnares, and pays for, a quarter-million people who already have coverage.
This overreach could become even more expensive than advertised. The economist Herb Stein is credited with the observation that something that can’t go on forever, won’t. And with federal budget deficits fast approaching $1 trillion a year, one must wonder how much longer Congress will continue bearing 90 percent of the cost of Medicaid-expansion recipients. The federal match for traditional Medicaid is closer to 2:1. At that level, Georgia’s share of the cost of Medicaid expansion could soar to more than $1 billion per year.
But the cost isn’t measured only in tax dollars. Private insurance is superior to Medicaid for getting actual access to care, because fewer doctors accept new Medicaid patients due to the program’s low reimbursement rates. It’s already hard to find a doctor in Georgia who accepts new Medicaid patients, and it’s bound to be harder with hundreds of thousands of additional people competing for those scarce appointments. And there aren’t likely to be a whole lot of new providers flocking to Georgia to serve a population on which they lose money.
To overcome these problems, the state would have to raise its reimbursement rates significantly — a huge additional expense that expansion proponents typically don’t mention.
Medicaid’s low reimbursement rates also drive up the cost of private insurance, because providers charge higher prices for private patients to help offset their losses on patients with Medicaid or no insurance. That leads to a vicious cycle in which fewer people have private insurance, which means more care needs to be subsidized, which drives up the price of private insurance even further, and so on.
We should look for ways to add more people to affordable private insurance, not fewer. Medicaid expansion would do the opposite.
Kyle Wingfield is president and CEO of the Georgia Public Policy Foundation. Contact him at firstname.lastname@example.org.