Byron Schlomach

Medicaid Expansion: It's a Bad Idea

Posted on February 20, 2013 | Author: Byron Schlomach
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I recently wrote about reasons the Arizona legislature should reject efforts to expand Medicaid as part of the implementation of the federal health care law. The governor’s office took umbrage with the points I made, and after carefully reviewing their response, my conclusion remains that expanding the program is a bad idea.

The governor’s office says the expansion will only add 57,000 people to the Medicaid rolls, but this ignores the fact that Arizona rolled back its previously generous Medicaid coverage during the recession and can only be forced to restore our previous levels if we agree to the expansion. So in fact, by 2016, the Obamacare-suggested expansion means we will add back everyone that was previously eligible but frozen out of the program and the newly eligible population. That would add a total of 450,000 to Arizona’s Medicaid rolls. Already one-in-five Arizonans receives free health care through Medicaid; adding another half-a-million people into the program could financially wreak the state in the future.

An over-stated, oft-repeated industry statistic that uncompensated care represents a $2,000 per family hidden “tax” is also being used as a justification for this entitlement expansion. But the simple math on this figure doesn’t work out. The latest statistics put uncompensated care at about 6.1 percent of health care costs. If this percentage amounted to $2,000 per family, total health care costs per family in Arizona would be $33,000. And that would mean total health spending in Arizona is $82 billion a year, or about one-third of the Arizona’s GDP. Health care is not one-third of Arizona’s GDP.

The governor’s office is also justifying the expansion by claiming a rule change in the program that predates Obamacare requires the state to do it or we will risk losing all of our Medicaid funds. But this is simply not true. When the US Supreme Court ruled on the legality of the health care law last summer, they explicitly said the federal government cannot require states to expand programs at the risk of losing funding for previous coverage requirements. This rule change clearly violates the intent of last summer’s ruling, and would not likely hold up in court in light of the Supreme Court decision.

I certainly understand the lure of additional federal money flowing into the state, but expanding Medicaid is a bad idea for Arizona when all the facts are considered.

Learn more:

Goldwater Institute: Expanded Medicaid, Shrinking Wallets

Kaiser Family Foundation: Medicaid Enrollment: June 2011 Data Snapshot

Cato Institute: The PPACA’s Health Insurance Exchanges and Medicaid Expansion

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