5 Things You Need To Know About Medicaid

One of the topics in Tuesday’s healthcare debate between Sens. Ted Cruz (R-TX) and Bernie Sanders (I-VT) was Medicaid. Ezra Klein writes in Vox that a recent poll showed that only 47 percent of Republicans knew that the Medicaid expansion under Obamacare would vanish if the law is the repealed (although at least one of the Republican replacement plans keep the Medicaid spending levels in place).

Here are five things you need to know about Medicaid.

1. Medicaid was first signed into law in 1965 as part of Lyndon Johnson’s Great Society programs. Mark Levin explains in his book Liberty and Tyranny: A Conservative Manifesto that it originally only covered the poorest Americans, but as with most government programs “it has since evolved into much more, covering the elderly, people with disabilities, children and pregnant women.”

2. Medicaid’s Obamacare expansion will bankrupt states. In his most recent book Plunder and Deceit: Big Government’s Exploitation of Young People and the Future, Levin writes that Medicaid now includes “those making 138 percent of the poverty line–that is, an annual income of $16,105 for an individual and $32,913 for a family of four” in the 31 states and Washington, D.C. that chose to agree to the expansion. The problem is that Medicaid already swallows almost 26 percent of states’ budgets, and while the federal government agreed to pay the entire cost of the expansion for the first three years, their share of the burden decreasingly falls until the states likely have to pay for the full burden of the Medicaid expansion.

3. People on Medicaid suffer from worse health outcomes than those who don’t have insurance at all. This is because a lot of doctors don’t accept Medicaid since it drastically underpays doctors; leaving those on Medicaid forced to wade through the bureaucratic quagmire to find a doctor that does. There have been studies conducted that confirm this:

A University of Virginia study found that Medicaid patients hospitalized for major surgery were actually 13% more likely to die in the hospital than those without any health insurance. Likewise, the National Cancer Institute found that late-stage prostate cancer, late-stage breast cancer, and late-stage melanoma were actually much more common in Medicaid recipients than in the uninsured. And a Johns Hopkins study of patients receiving lung transplants found that Medicaid patients were 29% more likely to die within three years.

What’s more, a University of Pennsylvania study (published in the journal Cancer) found that colon cancer patients with Medicaid had a higher mortality rate than uninsured patients, and a higher rate of surgical complications. And these findings hold up even when you correct for age and socioeconomic status.

One heartbreaking example that demonstrates this was 12 year-old Deamonte Driver. He had a toothache that later turned into an infection that spread to his brain because his mother was unable to find a dentist that took Medicaid before the infection occurred. She also couldn’t find a neurologist to treat the infection; consequently Deamonte Driver had to be taken to the hospital, where he passed away from the infection.

4. Medicaid and Medicare are projected to be major drivers of the debt in coming years. According to the Committee for a Responsible Federal Budget, “federal health spending is the fastest growing part of the budget”:

Spending on federal health care programs is projected to rise substantially over the next thirty years. Medicare spending is expected to increase from 3.2 percent of Gross Domestic Product (GDP) this year to 5.7 percent by 2046, while Medicaid, the Children’s Health Insurance Program, and ACA subsides will grow from 2.3 percent of GDP to 3.1 percent. As a result, total federal health spending will increase by 3.4 percent of GDP over the next three decades.

The budget is expected to look something like this in 30 years:

With Medicaid being one of the key factors in the rise of federal health spending, reforming the program is clearly needed.

5. The best way to reform Medicaid is to block grant it to the states. Avik Roy has argued that block grants–giving money to the states without strings attached–provide states with flexibility to experiment with Medicaid reforms to better save money. Roy cites two examples of success with block grants in Rhode Island and Indiana:

Rhode Island was able to save $100 million, and slow the growth of Medicaid from 8 percent per year to 3 percent, by making a few tweaks to their program that they couldn’t before: shifting more Medicaid patients from nursing homes to home- and community-based services; automatically enrolling children with special needs and adults with disabilities into care-management programs; etc.

The best part is that, under a block-grant system, states can identify ways to save money while improving care, and other states can adopt best practices. Indiana, for example, took advantage of a waiver to introduce subsidized health-savings accounts into its Medicaid program, a reform that has been very popular with Medicaid enrollees—one survey showed a 94 percent satisfaction rate—and given Medicaid patients more control over their own health dollars. In theory, HSAs could allow Medicaid enrollees to pay market rates for needed care, improving access and health outcomes.

Roy also noted that block grants should be allocated on a per-capita basis, meaning that the amount doled out to the states is based on the number of patients in Medicaid to prevent states from spending the money in a wasteful manner.

Follow Aaron Bandler on Twitter @bandlersbanter.