Obamacare Blows Up Medicaid Costs in States That Expanded It

(Quin Hillyer, Liberty Headlines) One of the four main sponsors of last week’s last-ditch effort to replace Obamacare is putting a spotlight on one of the law’s main problems, which last week’s failed Senate bill would have fixed.


Ron Johnson Photo by Gage Skidmore (CC)

Conservative Republican Sen. Ron Johnson of Wisconsin had joined Dean Heller of Nevada as one of the two less-frequently named sponsors of what was commonly called the Graham-Cassidy bill. The bill would have taken all the federal funding for Obamacare, including for its expansion of Medicaid, and used a per-person formula to divvy the money up and send it back to the individual states as “block grants” that the states could use to design their own health-care systems.

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Liberals particularly criticized the inclusion of Medicaid in the block grants, claiming the overall funding level would have the effect of causing major cuts in Medicaid. The claim was true only within the rules of the Washington budget game whereby liberals say that slowing the rate of increase of a program somehow amounts to a “cut” in the program.

That’s where Johnson came in, with a series of letters that effectively highlighted the problem of exploding Medicaid costs. The letters make the case that it is the crazy-high expense of the program, not the attempt to better manage the costs, which is indefensible.

The key paragraph is worth quoting in full.

“Federal Medicaid expenditures totaled $246 billion in fiscal year 2009, increased to $299 billion in fiscal year 2014 and are projected to rise 96 percent to $588 billion by 2025. A primary cause of this increase is the ACA Medicaid expansion. Current CMS and other data show original Medicaid expansion per-enrollee spending and overall enrollment projections were significantly understated.  In 2014, CMS predicted per-enrollee spending on newly eligible adults in 2015 would be $4,281, but the actual amount was $6,365 (49 percent higher). Accordingly, CMS increased per-enrollee projections for fiscal year 2023 from $5,076 to $7,027 (38 percent higher).”

Doing the arithmetic on that $53 billion growth in just the five years from 2009 to 2014 shows that the growth rate exactly doubled the inflation rate. If Medicaid costs merely kept up with inflation, the total by 2014 would have been just $272.5 billion, not $299 billion.

In addition to seeking a better understanding of how costs rose so rapidly, Johnson tacitly makes the case that with better management, Medicaid’s cost growth should be kept far closer to the ordinary inflation rate, without under-serving the needy.

Johnson’s letters were sent to the Center for Medicare and Medicaid Services and to the governors of eight states experiencing high Medicaid cost growth. Right now, the federal government pays only about half of Medicaid’s costs; The states handle the rest. And state-level spending is increasing at an even faster rate than federal spending.

Part of this increase is caused by incentives and mandates included in Obamacare. Yet, as the Rural Health News Service (among many other outlets using similar language) reports, “states have found that Medicaid is consuming larger shares of their annual budgets, often crowding out other needs like fixing roads.”

Still, the idea behind giving state’s total control rather than partial control over Medicaid spending – an idea central to the Graham-Cassidy bill – is that states will innovate and find ways to get more bang for the buck while perhaps doing an even better job serving the truly needy.

“States have actually been quite good at delivering health coverage efficiently through Medicaid,” Larry Levitt of the Kaiser Family Foundation, a health research group, told The Atlantic.

A source intimately involved with the Graham-Cassidy bill’s development – not from Johnson’s office – tells Liberty Headlines that while the bill failed to garner enough support to pass before the Sept. 30 budget deadline, it or a very similar bill remains very likely to be revived for either the 2018 or 2019 budget years. The source says several of the Republican senators not yet on board were actually closer to “yes” than had been reported.

Whatever information Johnson garners from his letters, then, may yet be helpful in the long-running effort to find an effective, quality-enhanced way to replace Obamacare.

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  • misterguru

    That is the whole purpose of Obamacare…to break the bank and bring in socialized medical insurance like Venezuela. Obamacare is not health care it is health insurance. The actual care has diminished under ObozzoCare and the costs have not gone down as Obumo promised, but they have gone way up. I say repeal without replace. At least things were better when we did not have it.

    • J_in_TX

      Thanks for calling it what it is, insurance. It is not healthcare. Healthcare is what you do to keep yourself healthy. Sickcare is what happens when you go to the doctor.

      • Gregg Parker

        Thank you!!! …I say that every day and still it goes right out the ears of the people I tell… amazing,,,

  • Paul

    So it was not a repeal and it protected all of the freeloaders while taxpayers foot the bill and pay for their own insurance as well. Let it fail!

  • J_in_TX

    I said, before Dems shoved Obamacare down our throats, there is not enough money in the treasury to fully implement and fund it. This is just more proof I was right.

  • Jeffrey Gerolmo

    Did anyone think that a program that was already bankrupting the country would become more sustainable if eligibility is expanded by 4 1/2 times ?

    • Dianne Entwistle

      Very good love the sarcasm! Leave it to the Washington brain trust to take things from bad to worse.

  • Janet

    Problem in CA is that we are already using so many funds, including Medicaid to finance Healthcare for illegals and not the taxpaying residents and/or needy residents of the state. CA is headed towards bankruptcy unless somehow Brown and his cronies at the state level are removed from office. If they aren’t passing another spending bill, they are passing another tax bill on the people and too many just don’t understand the burden that this has on families and the elderly. CA is out of control and the Sanctuary nonsense is probably going to send us over the ledge.

  • Gregg Parker

    Under Clinton we would be expanding the government role and would be inches from having their single payer system. The whole lie about what was being done was to that end. Globalist pigs

  • Yarbles

    Repeal and Flush!

    Oh, and don’t forget to wipe.

  • brooksmd

    Hmmm, didn’t many Republican governors fight against Medicaid expansion under Bozocare because states would eventually have to pickup the tab?

  • Cat Woman

    Everyone should read “Agenda 21”, a fiction book about the UN Agenda 21. Yes, it is fiction based on what the UN Agenda 21 wants to happen. Now there is also UN Agenda 2030, which is worse than agenda 21. Look it up on Google. That’s what I did. I also read the book!

  • MIKE6080

    and the great thing about that is that the feds will pay less and finally it will all fall on the states taxpayers

  • Christian_Prophet

    So providing health care to all Americans is something to be criticized. Let’s take your healthcare away. The people writing these articles of hate have no compassion and are NOT Christian. In fact, given that Jesus Christ spent most of his time healing the sick is evidence that the republican party and its efforts at reducing healthcare coverage in America – the ANTI-Christ.

    • Mario Fernandez

      Jesus healed without the government,and did it free, you are the a fool, for thinking that BozzoCare is good.

  • Washington Watchdog

    Tell all the unhinged libs in the country this. They just think the ACA will go on forever. Obama did a great disservice by pushing through a plan that was not thought out completely. “We have to pass it to see what is in it,” Pelosi said. When they read it, they found a mess of taxes, etc., and a plan that would implode in 2018.

  • Deb

    Let Obamacare fail as we said all along it would. Then pass ONE BILL stating we can purchase health care insurance across state lines.

  • carol vance

    Stop using my Medicaid for unnecessary things stop paying for illegitimate babies born let the parent are the father of the child pay for the child stop paying for illegitimate birth if you are a young girl 17 18 years old you get pregnant you walk into a doctor’s office you are put on Medicaid if you don’t have insurance no people on Medicaid should be able to work so many hours to get Medicaid many people are getting Medicaid that never worked a day in their life

    • Fedup

      This is going to upset you even more. I work for my state’s Medicaid agency. I work in the department that enrolls the providers in the program so they can accept patients who are on Medicaid. That’s just to give you a background of how I know this. I recently learned that Medicaid in my state (I can only speak for the state I live and work in) covers all costs, including surgery, for transgenders. My co-worker is the enrollment specialist and agrees that it should not be covered because we both feel it should fall under “cosmetic surgery” because that is all it really is! Medicaid does not cover braces for a person over the age of 21 but they will cover everything related to something that is NOT medically necessary???? Where is the sense in that??? Our tax dollars going to pay for someone who FEELS like something they clearly not??? Buy some makeup and pantyhose if you want to “feel” like a woman when you’re clearly a man but don’t use my tax dollars to whack off your weenie!!

  • Eric Slimmer