Expanding Medicaid bad idea

By JAMES TAYLOR,

When policymakers debate “Medicaid expansion,” they are properly considering whether to expand Medicaid to able-bodied, childless adults earning up to 138 percent of the federal poverty level. For some reason, the ACA deemed this population as most worthy of coverage, offering a 90 percent funding match. No other population is eligible for this match – not children, not the disabled, not the elderly.

Medicaid “reform” is a bit harder to define. Some on the left want to “reform” and “expand” Medicaid by creating a “Medicaid for All” program. Some on the right would “reform” Medicaid by eliminating it altogether. In all fairness, neither the complete expansion nor the complete contraction of a program is a “reform.”

Seen in this light, it is clear that merely allowing Mississippi hospitals to act as another managed care provider is not a reform. This is not to comment one way or another on whether the hospitals’ “Mississippi True” plan is sound or not. It is simply to let people know that adding another managed care provider to the Medicaid insurance marketplace is a lot like adding another fast food provider to your town’s current offerings. Whether it’s McDonald’s or Burger King or Taco Bell, they pretty much all do the same thing and aren’t going to bring about a “reform” of anyone’s eating habits.

The second usage of the phrase “Medicaid reform” refers to a plan promoted by the hospitals called “Mississippi Cares,” which includes the hospital-run managed care plan. This plan would be based on a program signed into law by Mike Pence when he was governor of Indiana. Over the past few years, the “[insert state] Cares” plan has made the rounds in Republican states.

In fact, Pence’s Healthy Indiana Plan (HIP 2.0) is both an expansion and a reform, albeit a very mild reform. Five years in and HIP 2.0 is showing the limits of what states can accomplish by tinkering around the edges of Medicaid. To begin with, Indiana’s Medicaid work requirement is being challenged in court, as are similar requirements in other states. Second, the copays are quite low, albeit higher than traditional Medicaid. For these and other reasons, the plan is not paying for itself. In 2014, Pence’s office explicitly promised that “HIP 2.0 will not raise taxes and will be fully funded through Indiana’s existing cigarette tax revenue and Hospital Assessment Fee program, in addition to federal Medicaid funding.”

Yet, in 2019, Indiana increased taxes in order to help pay for higher-than-anticipated Medicaid costs. Indiana lawmakers also came very close to tripling the cigarette tax because, as the Indiana Hospital Association now readily admits, “The hospitals’ share of HIP 2.0 is increasing at an unsustainable rate and increasing the cigarette tax can help provide necessary relief to hospitals.”

Perhaps worst of all, Indiana’s health care costs for employer-based insurance plans are so high that out-of-state companies have adopted the watchword of “ABI: Anywhere But Indiana.” As a January 2019 report demonstrates, not even millions in profits from Medicaid expansion is preventing hospitals from shifting costs to consumers with private insurance.

Indiana’s experience with Medicaid expansion is the same as every other state’s: expensive and of arguable value for anyone but the hospitals. There is no reason to expect different results for Mississippi, even if expansion is cloaked in a veneer of “reform.”

Jameson Taylor, Ph.D., is Vice President for Policy at the Mississippi Center for Public Policy, the state’s non-partisan, free-market think tank.

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