OEDEL: Medicaid’s real beneficiaries

March 2, 2014 

A big legal and political issue this year in Georgia and several other states is whether to increase Medicaid’s covered population by about half. The Affordable Care Act invites such expansion. The U.S. Supreme Court now says that expansion is each states’ choice.

Half the states are expanding. The other half aren’t, at least not yet. Georgia’s Gov. Nathan Deal opposes expansion. That’s probably the cautiously correct call now, but the issues are complex, and there’s political pressure to expand.

Georgia’s General Assembly is considering House Bill 990, which would require any possible expansion to pass Georgia’s Legislature. Requiring broader-based approval of expansion is fair no matter what the ultimate decision may be, because the matter is important to all Georgians.

At the bill’s first hearing February 19, the discussion was mostly about costs. The projections were wildly different. Tim Sweeney of the Georgia Budget and Policy Institute, a left-leaning think tank, estimated expansion costs to Georgia of about $35 million annually. Sweeney also trumpeted big financial benefits primarily flowing from fat federal checks -- but Sweeney curiously made little mention of how individuals would benefit. Rather, he highlighted benefits to caregivers, hospitals and local government.

By contrast, Rep. Jan Jones, R-Milton, a bill sponsor, estimated expansion costs to Georgia would be more than 10 times higher, $400 million annually. Jones downplayed any federal windfall as implicitly unreliable and irresponsible.

Jones didn’t really discuss potential off-setting benefits. That tends to reinforce stereotypes about Republicans being Scrooge-like. Even if Jones is right about costs, we still can’t responsibly evaluate possible expansion unless we also consider potential countervailing benefits.

Ironically, Sweeney wasn’t discussing the benefits of Medicaid expansion to individuals for reasons that Jones might have mentioned. Medicaid is notoriously bad at improving health outcomes. For instance, Medicaid frequently covers HIV drugs only when people are already close to having full-blown AIDS, often too late. Conversely, according to the Centers for Disease Control and Prevention, Medicaid recipients get painkillers prescribed at twice the rate, and overdose six times more frequently, than the normal population.

Maybe Medicaid enrollees have more pain, but Oregon’s recent Medicaid experiment suggests that health outcomes are no different for people who got Medicaid compared with others similarly situated who got nothing.

So it’s no surprise that Sweeney artfully sidestepped discussing any benefits of Medi-caid expansion for lower-income people. As he implied, it’s more likely that the big winners would be caregivers, hospitals and local government coffers.

If Medicaid is so costly, why doesn’t it improve typical health outcomes more? That’s largely because Medicaid is instead preoccupied with shouldering staggering bills for the long-term disabled. The elderly disabled make up only about a quarter of the population covered by Medicaid, yet they get about two-thirds of all funding, according to the Kaiser Family Foundation. Much of the final third of Medicaid funding goes to six million disabled non-elderly adults and five million disabled children. Although about 26 million non-disabled children and eight million non-disabled adults are also covered by Medicaid (more than half of all Medicaid enrollees in 2010), they got only scraps off Medicaid’s table.

Medicaid’s overall numbers suggest that expanding the population nominally covered by Medicaid might not be expensive if the new additions don’t join the ranks of the long-term disabled. Even expanding Medicaid’s covered population by half would cost little if the new enrollees are treated like the non-disabled. But that’s only because they’d get little meaningful help from Medicaid.

In short, if you follow the money, the big winners of the Medicaid sweepstakes are the long-term care providers and disabled patients, the financially relieved families of patients in long-term programs, and hospitals that provide additional acute care (and will continue to do so by law regardless of whether Medicaid expands).

Whatever interest group might benefit most from Medicaid’s proposed expansion, one projection seems likely: New enrollees from the lower middle class wouldn’t gain much themselves. Before expanding Medicaid, therefore, we might fix Medicaid so it genuinely improves health outcomes for non-disabled enrollees, and rethink how to make caring for disabled enrollees more affordable.

David Oedel teaches at Mercer University Law School.

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