Medicaid Expansion – A Wolf in Sheep’s Clothing | Citizens Against Government Waste

Medicaid Expansion – A Wolf in Sheep’s Clothing

The WasteWatcher

CAGW is against the expansion of Medicaid.  It is a terrible healthcare system that is paid for by taxpayers and consumes on average 24 percent of a state’s budget.  The Congressional Budget Office predicts Medicaid under the Affordable Care Act (ACA), better known as Obamacare, will grow 8 percent and cost taxpayers approximately $554 billion by FY 2023.

Making sure low-income people have regular access to a primary care doctor to keep them well and steer them away from seeking expensive emergency room care were some of the reasons the president and politicians said it was good idea to expand Medicaid under ACA.  The health reform law expands Medicaid to all non-Medicare eligible individuals under the age of 65: children, pregnant women, parents and adults without dependent children, with incomes up to 133 percent of the federal poverty level (FPL).

To encourage the states to expand Medicaid, ACA provides for 100 percent federal funding for 2014-2016 and gradually decreases the amount to 90 percent in 2020 and beyond.  Twenty-five states and the District of Columbia followed the Siren’s song and took the federal money to expand Medicaid.  Two states are looking to expand post-2014 and 23 states have wisely chosen not to expand the government program.  Virginia is one of those states.  But that may change with the state’s new governor, Terry McAuliffe, and if enough Republicans can be persuaded to agree to the expansion.

But the Virginia state legislature and taxpayers should continue to oppose the move and here is why:

It is highly unlikely that the federal government will continue to fund Medicaid expansion that has been promised in ACA.  In fact, in December 2012, the Obama administration offered during the “fiscal-cliff” negotiations a new reimbursement rate that laid somewhere between the states’ current rates and ACA-promised rates.  While the administration backed away from the offer, is there no doubt with the federal debt now over $17 trillion, it won’t be long before Congress decides to cut the funding?

Virginia’s former-Attorney General Ken Cuccinelli, pointed out in a recent Richmond Times Dispatch op-ed that there has been little discussion about the explosion of new fraud that will occur if the state decides to go ahead with the expansion.  He said, “unfortunately, as a practical matter, there will be no one to investigate or prosecute that fraud within Virginia state government, and only nine people in the federal government.  Those nine are already tasked pursuing Medicare fraud in Virginia, thus they have no meaningful ability to police the new wave of fraud that would come with the proposed expansion of Medicaid.”

Why, you ask will there be no one to investigate fraud under Medicaid expansion program?  Currently, both Virginia and the federal government pay approximately 50 percent each of the state’s Medicaid costs.  If fraud is discovered and monies returned, the state and federal government split the recovered dollars.  But under Medicaid expansion, Virginia would have to use its limited resources to fight any new fraud but would get nothing in any recovered dollars because the federal government would fund the expansion at 100 percent through 2016.  Eventually, under expansion, the most the state would receive is 10 percent in recovered dollars starting in 2020.  Since there are not enough federal investigators to do investigative work, state officials will only pursue fraudulent activities occurring under the original Medicaid program because they would get 50 percent of the recovered dollars, a logical decision.

Cuccinelli notes that while Virginia has one of the best records in fighting Medicaid fraud and securing recoveries from criminals, the federal government estimates that 10 to 20 percent of Medicaid dollars are stolen.  He says at Virginia’s current level of “Medicaid spending, that’s more than 700 million taxpayer dollars annually.”  He says if Medicaid expansion is adopted expect “an explosion of un-policed fraud.”

Furthermore, a study just released by MIT and published in the journal Science shows that “adults who are covered by Medicaid use emergency rooms 40 percent more than those in similar circumstances who do not have health insurance.”  This is the exact opposite of what has been promised by President Obama under Medicaid expansion.

Last year, the Virginia legislature shrewdly understood expanding Medicaid as it is currently constructed was not a prudent thing to do.  They created the Medicaid Innovation and Reform Commission (MIRC) whose purpose is “to review, recommend and approve innovation and reform proposals affecting the Virginia Medicaid and Family Access to Medical Insurance Security (FAMIS) programs…”  The commission will look at reform proposals, progress in getting federal approval for Medicaid reforms, and implementation of reforms.

There are plenty of innovative reforms that have worked well in other states and hopefully MIRC is considering them.  These states have incorporated sound ideas that utilize consumer driven options such as Health Savings Accounts (HSAs) or a choice of utilizing different managed care plans as opposed to big government control.

It is highly likely that Virginians will see their state budget explode and their taxes increase if the state’s political leaders decide to simply expanding the current Medicaid program.  Worse, taxpayers will be paying for and patients will receive a lousy healthcare system in return.  We will be working to make sure they don’t go down this destructive path.

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