The mainstream media and some liberal voices are using fear tactics to undermine efforts aimed at providing crucial transparency, accountability, and fairness in the Medicaid program. Ironically, clinging to the status quo might ultimately weaken Medicaid for those who truly rely on it.
A significant discussion in the House revolves around whether federal funding for Medicaid expansion should remain unchanged or align more closely with funding for other Medicaid populations.
This debate harks back to the days of Obamacare, where there was an attempt to incentivize states to expand their Medicaid programs through substantial federal funding. Those states that resisted were threatened with losing all their Medicaid funding. However, the Supreme Court intervened, nullifying the penalty but allowing the increased federal support to remain.
Currently, states that have expanded Medicaid receive federal funding covering 90% of the costs for this new group of enrollees. To better understand this funding shift, it’s essential to look at traditional Medicaid categories—like low-income pregnant women, children, elders, and the disabled—who only receive a federal match rate ranging from 50% to 76%, varying by state.
This funding model creates various distortions and unintended effects. Notably, since states get more federal support for the expansion, they are encouraged to prioritize enrolling this group over others.
Recent enrollment data reveals a significant shift. In 2013, before Obamacare, there were 61.1 million Americans enrolled. A decade later, that number surged to 85.5 million.
Additionally, the composition of enrollees has changed. In 2013, there were 27 million low-income children, 10 million adults, 5 million disabled individuals, and 4 million elderly people. By 2021, the expansion population outpaced all groups, except for children, reaching 19 million.
This funding approach has also led to higher care costs. The expenditure per enrollee in the new expansion group is considerably greater than that for non-expansion adults. The Congressional Budget Office estimates that Medicaid spent $3,630 per enrollee for traditional adults, while it spent $7,630 for those in the expansion category.
So, in addition to promoting higher enrollment away from traditional Medicaid groups, this model seems to also push costs higher, leading patients to more expensive care settings like emergency rooms.
Recently, hospitals expressed concerns over federal funding changes, warning that these might lead to closures. However, it’s crucial to recognize that Medicaid isn’t the only funding source for hospitals. They also receive funding from other public and private channels. Instead of using Medicaid as a temporary fix for financial shortfalls, if there are real funding issues, Congress should review funding sources and assess the specific needs of hospitals.
Research indicates that federal funding programs specifically designed to support hospitals caring for underprivileged populations lack transparency, highlighting an urgent need for clearer accountability regarding how these funds are distributed.
Changing the match rate back to a standard level doesn’t necessarily mean people will be removed from Medicaid. The Congressional Budget Office recently estimated that most individuals in the expansion group would likely remain on Medicaid or shift to alternatives like employer-sponsored plans or coverage through the Affordable Care Act exchanges.
Moreover, some states may discover they have more flexibility to customize benefits for this group. Two states, for instance, received federal waivers to include a similar population in their Medicaid programs while adhering to regular match rates. Congress and the administration could offer a clear pathway for states to transition with as little disruption as possible.
Fifteen years have passed since the introduction of Obamacare, and its goal to incentivize state Medicaid expansions has reached its limit. Currently, 41 states have opted for expansion, while 10 have chosen not to. It’s time for Congress to shift its focus away from prioritizing Obamacare enrollees over traditional groups and eliminate the incentive for states to favor able-bodied, childless adults at the expense of pregnant women, children, and the elderly.
