When someone tells me I can get something of value for “free,” I raise an eyebrow. When that “free” thing is coming from the government — and worth billions — I reach for my wallet.
So it goes with the question of whether Georgia should opt into Obamacare’s expansion of Medicaid.
In upholding most of the health reform law this summer, the U.S. Supreme Court did allow one concession to the states that sued to overturn it. The court ruled Washington could not threaten to take away states’ existing Medicaid funding if they declined to expand Medicaid. Each state must now decide whether to take part in the expansion and make anyone earning 138 percent of the federal poverty level eligible for Medicaid.
Georgia Gov. Nathan Deal in August said he would decline the offer on two grounds. First, the state can’t afford its share of the expansion’s cost. Second, Deal doesn’t believe a heavily indebted Washington will uphold its end of the bargain, possibly putting the state on the hook for even more than projected. Medicaid already accounts for more than $2 billion in state spending each year, or almost $1 of every $7 from the state’s general fund — and rising.
There’s no sign Deal is wavering on this decision, but Obamacare supporters keep making their case to the public.
They scarcely try to convince us the state’s portion of the expansion is affordable — though they do argue the state’s projection of $4.5 billion over 10 years is too high.
Instead, they focus on the federal money Georgia will forgo if we don’t participate. A recent study by the Kaiser Family Foundation, reported in the AJC this week, put the figure at $33 billion over the next decade. This, proponents say, is a matter of getting what’s due to us.
The gist of one of their key arguments is: We are going to pay the taxes levied by Obamacare, so we at least ought to get the funding it’s meant to provide us.
This argument assumes Obamacare will actually pay for itself, a dubious proposition given Washington’s history of missing high on revenue forecasts and low on cost projections. But that’s not my point today.
Instead, I want to point out that “we” isn’t always we. Sometimes “we” is they.
In the above example, the payers of the tax are indeed “we.” But “we” are not the beneficiaries. The beneficiaries are the health providers, mostly hospitals, who have their eyes on that $33 billion.
New Medicaid enrollees would gain some benefit, though even that’s limited because the number of doctors who don’t accept new Medicaid patients is large and growing. But many of these potential enrollees already receive care that simply isn’t paid for.
While no one’s calling this a hospital-bailout program, that’s what it boils down to.
But aren’t we already paying for these patients? What about that “care that simply isn’t paid for”?
Yes, we’re already paying for them, in part via higher insurance premiums. But not as much as you think: A study by the Urban Institute found uncompensated care accounts for just 1.7 percent of health premiums. The Medicaid expansion would reduce this by only a fraction. The Obama administration itself has said the Medicaid expansion would reduce the “cost-shifting” from the uninsured to the insured by just $1 billion a year – nationwide.
Compare that $1 billion a year in savings to the estimated $95 billion a year Obamacare would spend to expand Medicaid.
The reduction of cost-shifting may be smaller than one might expect because Medicaid payments often don’t cover the cost of treatment, which explains why so many doctors don’t accept new Medicaid patients. When you lose money on every patient, you can’t make it up in volume.
So don’t expect the Medicaid expansion to lead to smaller premiums in your private insurance. History tells us the opposite will happen. Expanding a broken program is of no real help to the uninsured or to taxpayers.
Perversely, the states that decline to expand their Medicaid programs may actually make Obamacare more sustainable by lowering its costs. But it should keep pressure on Washington to come up with real reform that benefits the uninsured and our health system more broadly.
– By Kyle Wingfield