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Medicaid Overdose: Bigger is not Better

By Brandon Demyan

Much has been made about the continual refusal by Governor Robert Bentley to expand Medicaid. In the push to pass the Patient Protection & Affordable Care Act (Obamacare), President Obama explained in 2009 that “we can’t simply put more people into a broken system that doesn’t work.” Medicaid was originally created to provide healthcare to pregnant women, children, and the disabled. Instead of reforming the broken system, Obamacare simply expanded Medicaid to include all able-bodied adults earning up to 138% of the federal poverty line.

In Alabama, hospitals that stand to reap massive windfalls have published studies touting the supposed economic benefits and job creation effects that expansion will have, according to their data.

A newly released study by the Manuel Johnson Center for Political Economy at Troy University (the Troy study) explores key areas that the earlier studies missed or ignored. Chief among them is the fact that there is an acute doctor shortage in Alabama, specifically in rural areas where a large proportion of the State’s uninsured live. States that have expanded will also have a higher need for doctors, further exacerbating the doctor shortage.

The Troy study also proved the earlier studies’ economic impact estimates to be inaccurate. Previous studies claimed that Alabama stood to gain a billion dollars in economic impacts from expansion. Troy’s research pointed out that those earlier studies disregarded Alabama’s unique tax structure and high concentration of rural areas which would significantly reduce any positive economic impact; assumed a large decrease in administrative costs which will likely not materialize; and did not account for Medicaid fraud, which currently costs the State of Alabama up to $5 million a year in improper payments.

Supporters of the Medicaid expansion in Alabama also maintain that our leaders have a “moral imperative” to add to Medicaid’s rolls. Would it be moral to legislate that everyone must have the best healthcare possible? Absolutely. Just the same that it would be moral to pass a law that everyone must have a house, a vehicle, and a full-time job. But, morality does not exist in a vacuum. It has to operate within financial realities, namely an ailing General Fund budget that already devotes over a third of its expenses to Medicaid. In fact, Medicaid’s rolls in Alabama have increased nearly 25% since 2008 – adding about 220,000 more people – and show no signs of slowing down.

Not only is Medicaid expansion fiscally irresponsible, but, more importantly, the health of patients is not improved. A recent study in Oregon found that when uninsured citizens were put on Medicaid, they increased their Emergency Room usage by 40%. Less than half of doctors in America’s largest cities accept Medicaid, which increases ER wait times to those that do. Because of those wait times, those on Medicaid may forgo normal doctor visits and check-ups when medical issues could be caught and given preventive attention.  Further, The New England Journal of Medicine discovered that two years after Oregon’s 2010 expansion, no significant improvements in measured physical health outcomes were attained.

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Increased wait times should come as no surprise as doctors who accept Medicaid are reimbursed approximately only 55% of what private insurers pay. As such, there is little financial incentive to continue to accept Medicaid and the numbers of doctors accepting it will likely continue to dwindle. The quickest route to ensuring “two Americas” within our health system is to expand Medicaid, forcing those with state-funded insurance to one class of medicine, and those with private insurance to another.

Healthcare in America is a complicated, complex subject. Our leaders must continue to develop and experiment with alternatives that deliver Alabama solutions for Alabama problems instead of a one-size-fits-all directive issued by Washington bureaucrats.

President Obama was correct in 2009 when he said “we can’t simply put more people into a broken system that doesn’t work.” Today, in 2014, he is more right than ever.

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The bill still has to pass on the House floor and in the Senate.