The Wheels Are Coming Off Proposed Medicaid Expansion

Stanley Feld M.D.,FACP,MACE

I have repeatedly said President Obama’s goals are correct. His strategy is wrong. I have thought at times that he wants his healthcare reform act to fail so he can replace it with a system of complete socialized medicine. His proposed changes will not repair the healthcare system.

President Obama’s healthcare reform act as it relates to Medicaid is a good example of how the house of cards could collapse.

1. The federal government cannot afford to increase its budget deficit with added entitlements.

2. In 2014 President Obama is going to increase the Medicaid entitlement to an additional 16 million uninsured people.

3. His plan is to decrease reimbursement to physicians and hospitals for Medicaid services.

4. Reimbursement for physician services is too low presently. Some physicians have figured out a way to make a living on reduced Medicaid reimbursement. Many of these physicians are being investigated for Medicaid fraud.

5. Physicians are dropping out of accepting Medicaid compounding the physician shortage for services to Medicaid patients.

6. The result will be limiting access to care and a rationing of care.

7. Meanwhile the healthcare insurance industry is expecting a 40 billion dollar windfall profit at the expense of the federal government, state governments, physicians, hospital systems, Medicaid patients and taxpayers.

President Obama’s plan absolutely makes no sense. It does not repair the dysfunction in the healthcare system.

Individual states have figured it out. Thirty three states have requested that they be permitted to limit Medicaid expansion.

“The signatories say that swell in enrollment will make the program unmanageable. Another problem for states: An extra $26 billion they got from the federal government last year to prop up Medicaid expires in June.”

The federal government pays 57% on average of states’ Medicaid costs. States cannot afford to pay the remaining 43% because Medicaid costs and enrollment are rising each year.

“Medicaid enrollment rose to 47.8 million people in 2009 from 42.6 million in 2008, according to the Census Bureau”.

Just imagine what the effect of adding 16 million to the Medicaid entitlement rolls will do to state budgets. Investors are not interested in buying bonds from states that will fail on their debt obligations.

States have to balance their budget by law. Most state legislators and governors have not balanced their budgets. California, New York and Massachusetts have been the worst offenders.

Most states are in a trap because of the growth and inefficiencies of state government agencies. Adding to the inefficiencies are the liberal pension plans to state employees. The pensions are excessive because the salaries during work were supposed to be lower than the private sector. The expansion of Medicaid just makes budget deficits worse.

“Under the current requirement, a state effectively can’t change its Medicaid eligibility rules until it has one of the new health-insurance exchanges created by the overhaul law”.

The only choice states have is to cut services. Arizona has started to limit Medicaid coverage for organ transplants. Last week Governor Brewer said she is considering dropping Medicare coverage completely.

Texas Governor Rick Perry has threatened to pull out of Medicaid.

Texas estimates that it will cost an additional $9.1 billion to retain its current Medicaid service levels through 2013.

In 2014 the additional costs will escalate even further. If Texas tried to cut those costs it would have to cut provider rates by 48%. Provider rates are below the provider expenses presently. Reducing provider rates by 48% would increase the shortage of Medicaid providers even further

In New York, Democratic Gov. Andrew Cuomo is considering a cut of about $2.1 billion in the state’s projected spending on Medicaid in the upcoming fiscal year.

At least a half-dozen states have publicly discussed withdrawing from the Medicaid program altogether.

The long term state government inefficiencies and funny bookkeeping in order to keep states afloat are finally catching up.

America is on about page 900 of “Atlas Shrugged”. The added weight of expanding the Medicaid entitlement could be the last straw.

President Obama’s healthcare reform act has also challenged states’ rights. States are hesitant to relinquish its states’ rights to the executive branch of the federal government. President Obama has total regulatory control over a healthcare reform act. States do not want to hand over that power.

The judicial challenge by over thirty states protesting the constitutionality of the insurance mandate is about states’ rights. It is also about local state government representing the interest of its citizens freedom of choice.

The issues in the healthcare bill are complex. They are presented by the traditional media in a confusing manner. President Obama created a bill that will not repair the healthcare system. It will make our healthcare system worse.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.