Medicaid Expansion


States Should Flatly Refuse Obamacare’s Optional Medicaid Expansion

States will soon be asked to swell their unaffordable Medicaid programs under the auspices of the Obamacare unaffordable health regulation. When the federal department of Health and Human Services comes calling, states should politely decline.


There’s a basic, fatal flaw with all these schemes, a simple reason why states should refuse: free stuff isn’t free.

1) Any money from the federal government is simply money taken from a state’s citizens—federal income tax.
2) It comes with conditions that restrict that state’s ability to provide vital services.
3) Money, time, service, efficiency, and flexibility are lost in favor of politics and waste.

It’s never cheaper, more flexible, or more effective to have a middleman divert part of your money to political causes, then parcel the rest back to you on their terms. It’s never free, it always costs more, and it always comes with conditions that make it harder to accomplish the job at hand.

What should states do? The best, easiest, most flexible, least expensive, most effective approach is and will always be for states to keep their own money at home, and use it directly to service their citizens’ needs. If a state’s citizens can agree they have a need—if their hospitals need support—then they can raise the appropriate taxes and attend to that need, in their state, as they see fit. Interposing Washington only adds waste, delay, politics, inflexibility, loss of quality, and loss of control.


Particularly with respect to the Medicaid expansion decision at hand, there’s a simple, commonsense reason why states shouldn’t expand their Medicaid programs under the pressures of the PPACA: it’s a trap. Medicaid is already one of the states’ most expensive programs. Expanding Medicaid under Obamacare greatly increases a state’s Medicaid rolls and its cost, permanently, with no retreat.


First, the feds promise to pay most of the costs for a time, but, there’s no guarantee they’ll actually pay, and plenty of reason to think that they won’t: the feds are already borrowing unsustainably to fund current programs. Eventually, programs will have to be cut. Further, long after states are committed, new Congresses change the rules. And, last but not least, the bait is actually . . . money from the state’s own citizens. The feds aren’t giving states anything they don’t already have.


There’s more. By law, Obamacare exchanges aggressively seek out and add people onto Medicaid that Obamacare doesn’t pay for.

Specifically, the PPACA directs that

[if] the Exchange determines that such individuals are eligible for any such program, [then the exchange will] enroll such individuals in such program;” —PPACA § 1311(d)(4)(F)

While Obamacare promises to pay the added Medicaid costs certain new people (those who qualify because of relaxed eligibility standards), there are currently legions who previously qualified for Medicaid but not enrolled (such as those receiving private insurance through their spouse or employment). States who agree to expand their programs are committing to the expense of adding these people, greatly expanding their Medicaid rolls. These added costs are NOT covered by Obamacare, the expense is huge, and the states’ commitment is permanent.


Once a state bites on Obamacare’s Medicaid bait, the feds jerk the line and set the hook, making sure those states never escape. The law’s maintenance of effort provisions prevent a state from ever turning back.


Obamacare’s Medicaid expansion is rather like unwrapping a birthday gift and finding a baby elephant inside—it’s the most expensive free thing you’ll ever get, it lives forever, and grows over time until it eats you out of house and home. Smart states will just say “no.”


Medicaid Expansion is Not Mandatory

“the Supreme Court … ruled that the PPACA Medicaid expansion is now essentially optional, and the federal government can’t penalize states by withholding existing Medicaid dollars for declining to expand Medicaid.”  — Virginia Gov. Bob McDonnell

Gov. McDonnell tells GA members no special session necessary on health care
By Prue Salasky
July 10, 2012,0,3489531.story

Bob McDonnell Preps For Fiscal Cliff Effects In Virginia
Richmond Times-Dispatch  |  By Olympia Meola and Jim Nolan Posted: 12/18/2012 7:39 am EST  |  Updated: 12/18/2012
McDonnell also said he would refuse to expand Medicaid coverage under the Affordable Care Act, and reiterated his position not to create a state-based health exchange to implement the act.


FEDS Dictate, States Obey!

“Medicaid is currently administered federally in a cumbersome, inflexible manner. Today, states have little authority to be creative in administering the Medicaid program….  A great expansion of Medicaid, without significant reform of the current so-called, “federal-state partnership” is not responsible. Before an expansion decision is made, we must discuss with HHS the necessity of including clear and fair rules and state flexibility in decision making for the Medicaid program. …”  –Virginia Gov. Bob McDonnell

McDonnell July 10, 2012 letter to state legislators –


Virginia Gov. Bob McDonnell letter to HHS:  Excessive Cost of Medicaid

“Most states have seen a budget crushing expansion in Medicaid during the past decades. According to JLARC, the Virginia budget has shown a 1600% increase in Medicaid spending over the past three decades, going from 5% to 19% of the state budget. This is an unsustainable trajectory that demands improvement and greater efficiency.”

Points reiterated in McDonnell December 14, 2012 letter to HHS


Background from Grace-Marie Turner of the Galen Institute –

Obamacare’s health insurance subsidies and Medicaid expansion above the poverty line are massive new entitlements.  The original Obamacare legislation said that if people meet certain criteria, they will be automatically eligible for the subsidies.  As such, spending on them is automatic, just as on food stamps, Supplemental Security Income, and other welfare programs. Congress does not appropriate a set amount of money for such programs. Rather, program eligibility criteria drive spending. Whoever qualifies (meets the eligibility criteria) gets a check. Obamacare subsidies work the same way. The spigot is wide open with no cap on ultimate spending.


Resisting Temptation:  Immediate Failure of the Hawaii Plan

“Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.”

“Gov. Linda Lingle’s administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan.”

“The Republican governor signed Keiki Care into law in 2007, but it and many other government services are facing cuts as the state deals with a projected $900 million general fund shortfall by 2011.”

Hawaii Ends Universal Healthcare 7 Months After Start
Associated Press
October 18, 2008.,2933,440561,00.html


Medicaid “woodwork” Problem a Hidden Time Bomb

“[A]n even bigger problem for states is what’s being called the “woodwork effect.” Harvard’s Ben Sommers and Arnold Epstein, in a 2010 article for the New England Journal of Medicine, estimated that only 62 percent of people who are eligible for Medicaid today have actually signed up for the program. As the below chart shows, participation rates are below 50 percent in large southern states like Florida (44 percent) and Texas (48 percent).”

“Here’s the kicker: this “woodwork” population, that was already eligible for Medicaid but not enrolled, won’t get the Obamacare 90-100 percent funding rate. Their expenses will be covered under the traditional FMAP percentage, meaning that states will be on the hook for 43 percent of the costs.”

“Nationally, Sommers and Epstein estimate that more than 9 million uninsured Americans were already eligible for Medicaid, pre-Obamacare, while failing to enroll. “Although only a portion of these people are likely to enroll in Medicaid” now that the program has been expanded, “adding them to the program’s rolls would nonetheless cost states billions of dollars in increased spending.”

“Why States Have a Huge Fiscal Incentive to Opt Out of Obamacare’s Medicaid Expansion”, Avik Roy, Contributor, Forbes, 7/13/2012


 Crowding Out Other State Services

As Mississippi’s Governor explains it:  “States throughout the nation are now looking at the enormous and growing percentage of their budgets already consumed by Medicaid expenses, and many simply cannot fathom shouldering the additional burden of even more Medicaid spending. Mississippi is certainly among those states opposed to expanding the program

“As governor, I cannot imagine directing money away from our children’s education, our ability to keep our citizens safe and our ability to provide for ourselves through job creation in favor of funneling more money into a program that addresses none of these other critical needs.

“According to a Milliman report requested by the Mississippi Division of Medicaid, an estimated 400,000 people could be added to the Mississippi Medicaid rolls if we accepted the Obamacare expansion. Such an expansion could result in 1 in 3 Mississippians being on Medicaid and would balloon the state’s associated cost burden.

“such cost increases would obliterate Mississippi’s budget and force us into the position of choosing which other services to kill or maim in favor of funding Medicaid.”


Medicaid Patients Have Worse Health Outcomes

“Studies consistently show that patients on Medicaid have the worst health outcomes of any group in America—far worse than those with private insurance and, in some cases, worse than those with no insurance at all.”

“A landmark study published in the Annals of Surgery examined outcomes for 893,658 individuals undergoing major surgical operations from 2003 to 2007.[3] The authors of the study, who hailed from the department of surgery at the University of Virginia, divided their patient population by the type of insurance they held—private, Medicare, Medicaid, and uninsured—and adjusted the database in order to control for age, gender, income, geographic region, operation, and comorbid conditions. That way, they could correct for the obvious differences in the patient populations (for example, older and poorer patients are more likely to have ill health).”

“They then examined three measurements of surgical outcome quality: the rate of in-hospital mortality; average length of stay in the hospital (longer stays in the hospital are a marker of poorer outcomes); and total costs.”

“The in-hospital death rate for surgical patients with private insurance was 1.3 percent. Medicare, uninsured, and Medicaid patients were 54 percent, 74 percent, and 97 percent, respectively, more likely to die than those with private insurance.”

“The average length of stay in the hospital was 7.38 days for those with private insurance; on an adjusted basis, those with Medicare stayed 19 percent longer; the uninsured stayed 5 percent shorter; and those with Medicaid stayed 42 percent longer.”

“Total costs per patient were $63,057 for private insurance; Medicare patients cost 10 percent more; uninsured patients 4 percent more; and Medicaid patients 26 percent more.”

“In summary: Medicaid patients were almost twice as likely to die as those with private insurance; their hospital stays were 42 percent longer and cost 26 percent more. Compared with those without health insurance, Medicaid patients were 13 percent more likely to die, stayed in the hospital for 50 percent longer, and cost 20 percent more.”

“Other studies have found similar results.…”

“The Medicaid Mess: How Obamacare Makes It Worse”; Avik Roy, Senior Fellow, Manhattan Institute, No.8 March 2012

N.B. – the same author cast doubt on a later Harvard story purporting to support the opposite conclusion:  “Economists Claim Medicaid’s Health Outcomes are Great. Or Do They?” Avik Roy, Contributor,Forbes,8/01/2012


Transformation into Middle-Class Entitlement

Few people realize it, but Obamacare transformed Medicaid from a poverty program into a middle-class entitlement. People making 138 percent of the federal poverty line would be eligible in those states that choose to expand their Medicaid programs.  Millions could be added to the rolls.  This would be bad for any number of reasons:  it would bust the bank, cause the federal government to borrow even more money than it already does, and harm the poor by overwhelming the program with middle-class beneficiaries.

Moreover, it would further inculcate the despicable culture of dependency on government that the Obama administration and its Progressive allies are deliberately seeking to foster with the ultimate aim of displacing as many private choices as possible with the iron fist of government.

The Democrats hope to achieve a permanent political majority through middle-class entitlements.  Not only should this be resisted as cynical politics, but bread and circuses for the masses would destroy the character of the average person, turn everyone into “perpetual children” (de Tocqueville’s phrase), and hasten the decline of a once great people.  It’s insidious and utterly destructive, as history shows, and those in governance should heed the warnings history provides.


 Harming the Poor

“One of the most tragic failings of ObamaCare is that it will make it harder for many of the most vulnerable citizens – patients with no option but Medicaid – to get care.

Medicaid is cumbersome, complex, and wasteful – already the worst health care program in the country. But rather than making changes to improve or modernize this program designed to finance care for the poor, the Obama administration is trying to convince states to add at least 16 million more people to Medicaid, including families making more than $30,000 a year.

“That means the poorest and most vulnerable patients enrolled today will be competing with millions of new Medicaid patients for appointments to see a limited number of physicians. Those who have the greatest need and nowhere else to go are likely to have the hardest time getting care….

“First, there simply aren’t enough doctors to handle this influx of new patients….  A recent article in Health Affairs found that nearly one-third (31%) of physicians are not accepting any new Medicaid patients…. A Medicaid card clearly will not guarantee access to a physician.

“Longer waiting lines for emergency rooms are inevitable…. Safety-net hospitals that provide care to the poorest and most vulnerable in our society already are stretched to the limit financially….  To help pay for its expanded coverage, the health law cuts existing payments to hospitals that provide care to a “disproportionate-share” of uninsured patients….  States already are restricting access to drug services for existing Medicaid beneficiaries.”


 A Bad Program with Unknown Consequences

U.S. Governors and the Medicaid Expansion — No Quick Resolution in Sight (New England Journal of Medicine)

“…In the aftermath of the 2012 election, it is uncertain how this process will play out, but what the states decide will play a critical role in the future of the U.S. health care system.

…More than half the governors opposing expansion predicted that the federal government would renege on the generous terms of the ACA and scale back its share of Medicaid spending. Newly elected Governor Mike Pence (R-IN) compared the expansion to “the classic gift of a baby elephant. . . . The federal government says, ‘We’ll pay for all the hay — for the first few years.’ ”

…governors expressed concern about the lack of state flexibility or their belief that Medicaid may foster dependence among beneficiaries… Others argued that Medicaid itself is the problem, calling it a “broken program”… Rick Perry (R-TX) said that adding uninsured Texans to Medicaid is “not unlike adding a thousand people to the Titanic.”

“U.S. Governors and the Medicaid Expansion — No Quick Resolution in Sight”; Benjamin D. Sommers, M.D., Ph.D., and Arnold M. Epstein, M.D.; New England Journal of Medicine, January 16, 2013.


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