The Baucus Medicaid Provisions: The Senate’s Massive Welfare Expansion

Americans across the political spectrum who are being promised health reform will, if Congress gets its way, be stunned to find themselves in a welfare office applying for Medicaid and then searching desperately for doctors who will accept their Medicaid card.

Medicaid does not have enough providers in the existing program; adding more people to a flawed system would only compound the problem.

Under the Senate Finance Committee proposal, through Federal Poverty Level eligibility adjustments, the number on Medicaid/SCHIP (State Children’s Health Insurance Program) will top 90 million.  The majority of these individuals will be young and healthy.  Keeping them on welfare rolls will shift even more costs to individuals and families buying health insurance, as doctors and hospitals recoup their losses from Medicare/SCHIP by charging more to the privately insured.

Individuals covered through Medicaid, the new exchanges and current employer coverage would be paying significantly different amounts for their health coverage.

Most disturbing, however, is why the Finance Committee reversed course and put more people into Medicaid and SCHIP rather than covering them through tax credits and allowing them to get private health insurance if they want it.  In truth, the committee probably elected to expand Medicaid not because it is better but because it is cheaper–at least on paper.

Medicaid pays providers 20-25% less than does the private sector, forcing doctors and hospitals to subsidize Medicaid through lower rates.  This deters providers from participating in the program, creating a lack of access that itself is a form of rationing.  Of course, putting more people into Medicaid will ultimately make the access problem even worse.

Although final decisions have not been made, states have been warned by congressional staff of the potential to put millions more onto Medicaid beyond the current Congressional Budget Office (CBO) estimates of 14 million.  How much federal support will be available to help states cover Medicaid/SCHIP benefits is also up in the air.

The burden of expanding Medicaid will also fall on the states.  The CBO estimates that the Finance Committee plan will cost states $33 billion over 10 years.

States also face an erosion of their authority to manage their Medicaid programs, as Congress is adding new federal mandates to cover certain benefits and conform their programs to federal standards.

The true cost to taxpayers in the states will become apparent only over time.  Many state officials cannot afford their current Medicaid programs; they certainly cannot afford to add 14 million more individuals.

Medicaid is already crowding out resources for other state and local priorities such as education, child welfare, public health, and investment in transportation systems and infrastructure.  More money for Medicaid means less money for these other priorities.

The Baucus bill will not lower the cost of health care as the American people were led to believe it would.  Simply forcing more people into Medicaid is not reform.  Expanding Medicaid will ultimately shift even more costs to providers and the private sector.  It is a giant step backward from what was promised and it comes at the cost of everything else.

**This article is excerpted from “The Baucus Medicaid Provisions: The Senate’s Massive Welfare Expansion” by Dennis G. Smith.  Mr. Smith is a Senior Fellow in the Center for Health Policy Studies at The Heritage Foundation.

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~ by hunter7taylor on January 8, 2010.

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