Georgia is a wonderful place to call home, but like many other states it’s desperately lacking in a key area: affordable healthcare. Expanding Medicaid is a popular idea to extend health insurance to more low-income Georgians, but there are three good reasons why it would be a bad step for the Peach State.
1. Expanding Medicaid without fixing the individual markets would trap people in the welfare system
Nearly 60 percent of Georgia’s uninsured wouldn’t be impacted by Medicaid expansion because their family incomes are above the threshold established by the Affordable Care Act (ACA). Due to the design, the ACA has failed to make insurance available to the uninsured or affordable to average-income families.
Average medical insurance prices have increased by roughly 70 percent since 2014—and in some Georgia counties, they’ve more than doubled. For 2019, a quarter of Georgia counties have only one insurance company offering policies, and half of the counties have only two insurers.
Most of the uninsured—more than 728,000—are employed. The tragedy is a single person earning $8.30 per hour working full time without health benefits earns too much to qualify for Medicaid under any of the expansion proposals. But this worker would qualify if earnings dropped by five cents an hour.
Because of welfare “cliffs” like this, expanding the program doesn’t promote transitioning off public assistance to the private sector. If an employee earns $8.25 per hour and is offered a raise of five cents, they’d lose their qualifying Medicaid status. The financial incentives are stacked against participants, trapping them in the welfare system.
2. Expansion is prohibitively expensive
If Georgia had followed suit with other states who already expanded their Medicaid programs, revenue increases would have been to the tune of $562 million more in 2018. The Federal government promised to pay 100 percent of the expansion cost for calendar years 2014, 2015, and 2016. Since then, the federal reimbursement rate is dwindling. It’s currently 93 percent for 2019 and lowers to 90 percent in 2020.
Because states must pay part of the bill, it’s not surprising to learn expansion states are doling out even more in state dollars to fund Medicaid than non-expansion states. Based on data from the National Association of State Budget Officers, the expansion states spent 95.2 percent more of their own state funds on Medicaid in 2018 than they did in 2010. As a matter of comparison, non-expansion states spent 81.5 percent more.
Large program increases mean one of two things: higher taxes or cutting back half a billion dollars from other state programs, like education.
Let’s not forget the fiscal impact on the federal government.
According to the Peterson Foundation, health care, including Medicaid, is a key driver of the national debt crisis. Congress has simply been making promises it cannot afford.
3. Medicaid has the worst health care outcomes
In a recent report Transcending ObamaCare, Dr. Avik Roy observes Medicaid has bad health care outcomes. In fact, he reports the worst of any health insurance option in America—and surprisingly no better than those having no insurance at all.
Another study published in the New England Journal of Medicine astoundingly showed people on Medicaid in Oregon did not fare better in health outcomes than comparable groups who were uninsured. A third review by Columbia-Cornell on patients with clogged blood vessels made it unanimous with the same conclusion—Medicaid equals the worst health care outcomes.
Considering the bad health results for Medicaid patients, it makes little sense to expand the program without reforming it.
Gov. Brian Kemp is taking a common-sense approach by pursuing federal waivers to redesign the health insurance system and Medicaid. By using waivers, states have tremendous flexibility and the ability to capture dedicated federal revenue sources to support the program’s cost.
The solution for Georgia will be found in real reform of the medical insurance programs, along with a state-based consumer driven health insurance offerings. If done correctly, the redesign will solve the problem of pre-existing conditions, make insurance more affordable, achieve universal coverage, and not undermine the quality of care to which Americans have grown accustomed. Everyone will benefit, poor and rich alike.
A contributing scholar to the Georgia Center for Opportunity, Erik Randolph researches and writes on welfare reform. Further research on this topic is available on the Center’s website: https://georgiaopportunity.org/employment/welfare-reform.