Category: Medicaid

42 Percent of Immigrant Households Used Medicaid in 2012, Vs. 23 Percent of Native-Born

The Center for Immigration Studies’ latest report concludes that 42 percent of immigrant households, both legal and illegal, used Medicaid in 2012. Only 23 percent of households headed by a native-born American used Medicaid.

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Only 20 – 40 Cents of Each Medicaid Dollar Benefits Recipients

(A version of this column was published by Inside Sources on July 29, 2015, and syndicated to other media.)

Medicaid is the largest means-tested welfare program in the United States. Jointly funded by state and federal governments, its spending grows relentlessly whether the economy is adding or shedding jobs. Its ostensible purpose is to ensure access to medical care for households without enough income to pay for it. Yet new research suggests that only 20-40 cents of each Medicaid dollar improves recipients’ welfare. On the other hand, 90 cents of every dollar spent on the Earned Income Tax Credit (EITC) does so.

Medicaid’s Poverty Trap Illustrated

The tragic story of a disabled woman trapped in poverty by the hodge-podge of ways the U.S. finances health care illustrates why we need to sweep the whole thing away and give everyone a universal, refundable tax credit:

Medicaid Spending To Grow 6.2 Percent Annually For 10 Years

The Chief Actuary of the Centers for Medicare & Medicaid Services has published the sixth annual report on the welfare program’s financial outlook. Highlights include:

  • Over the next 10 years, expenditures are projected to increase at an average annual rate of 6.2 percent and to reach $835.0 billion by 2023.
  • Average enrollment is projected to increase at an average annual rate of 3.0 percent over the next 10 years and to reach 78.8 million in 2023.
  • Medicaid expenditures are estimated to have increased 9.4 percent to $498.9 billion in 2014, which includes the expenditures for newly eligible enrollees.
  • Average Medicaid enrollment is estimated to have increased 9.6 percent to 64.6 million people in 2014. Newly eligible adults are estimated to have accounted for 4.3 million of the 5.7-million enrollee increase from 2013 to 2014.

“Newly eligible” refers to those eligible as a result of Obamacare’s Medicaid expansion. What these figures show is that relatively healthy people signed up due to the expansion: The rate of spending increased slower than the increase in enrollment.

However in future, spending will increase exponentially while enrollment will increase on a flat trend line (as shown in Figures 2 and 3).

Only 20 to 40 Cents of Each Medicaid Dollar Benefits Recipients

One of the problems with Medicaid is that it does not appear to improve recipients’ health (although the evidence can be described as mixed). The best evidence on Medicaid comes from Oregon, which ran a lottery to allow eligible people to enroll. This approximates a randomized clinical trial, the gold standard of clinical research and hard to achieve when examining the real world. Plenty of research indicates that the Oregon Medicaid did not improve health outcomes very much.

The original researchers continue to publish results, and have written a paper that might offer the best explanation why Medicaid does so little. Only 20 to 40 cents of Medicaid spending actually goes towards patients’ welfare:

Medicaid Paid $9.6 Million for Dead Patients

From the statement of Seto Bagdoyan, Director, Forensic Audits and Investigative Service (June 2, 2015):

Approximately 8,600 beneficiaries received benefits worth about $18.3 million concurrently in two or more states –- even though federal regulations do not permit beneficiaries to have payments made on their behalf by two or more states concurrently.

…… our work raises concerns about whether payments made on behalf of certain beneficiaries were appropriate, including the following:

  • The identities of about 200 beneficiaries received $9.6 million worth of Medicaid benefits subsequent to the beneficiary’s death, based on our matching Medicaid data to SSA’s full DMF.

  • About 3,600 beneficiaries supposedly received about $4.2 million worth of Medicaid services while incarcerated in a state prison facility even though federal law prohibits states from obtaining federal Medicaid matching funds for health-care services provided to inmates except when they are patients in medical institutions.

  • Hundreds of thousands of beneficiaries had irregularities in their address and identifying information, such as addresses that did not match any United States Postal Service records and Social Security numbers that did not match identity information contained in SSA databases.

Further:  About 90 providers had suspended or revoked licenses in the state where they performed Medicaid services yet they received a combined total of at least $2.8 million from those states in fiscal year 2011.

The Human Face of Medicaid’s Poverty Trap

NCPA has long recommended a universal, refundable tax credit to replace welfare programs that impose effectively high marginal income tax rates on their dependents. A story from Chicago shows the human cost of Medicaid’s poverty trap:

McDonald’s grill cook Douglas Hunter is literally the poster child for a $15 minimum wage: The Chicago man’s picture and story are featured in the “Fight for $15″ national campaign.

Hunter’s minimum pay goes to $10 an hour in July, but a steep pay raise would bring unintended consequences for Hunter, a diabetic with multiple medical conditions whose care is covered by Cook County’s program for the uninsured and poor.

So any salary gains could be wiped out by the price of his medications and supplies, including two kinds of insulin at $403 a month and drugs to control high cholesterol and blood pressure that add an extra $330 a month.

And that’s not including the syringes, health checkups and eyeglasses he receives for free, allowing him to avoid choosing between maintaining his health and providing for his teenager.

At $15, he figures he’d need to reduce his total work hours to ensure his new income didn’t disqualify him from his current benefits. (Don Lee, “For this McDonald’s cook, wage hike could do more harm than help,” Los Angeles Times, June 1, 2015)

Banned from Medicare; Still Billing Medicaid

Yahoo! News has a special report about physicians who have been banned from billing Medicare or some state Medicaid programs because of fraud, but are still billing other states’ Medicaid programs:

 A doctor who took kickbacks from a Pennsylvania hospice involved in a multimillion-dollar fraud. An Ohio psychiatrist who billed for treating no-show patients. A Georgia optometrist who claimed he conducted 177 eye exams in one day.

Their transgressions vary. What these doctors have in common is that each was paid by a state Medicaid health insurance program after being kicked out of another state’s Medicaid system or the federal Medicare program.

More broadly, 32 states and the District of Columbia supplied data showing they paid at least $79 million to 269 of the 1,800 providers after their terminations elsewhere. But the data was incomplete. Extrapolating from what could be verified, Medicaid payments to banned providers could easily reach into the hundreds of millions of dollars.

Mind boggling incompetence? Or government business as usual?

Medicaid Block Grants = Unconstitutional Coercion?

Professors Sara Rosenbaum and Timothy Westmoreland have an interesting opinion piece in the New England Journal of Medicine with a curious response to the proposal that federal Medicaid funding should be re-structured as block grants (via the Patient CARE Act, proposed by some Congressional Republicans).

It is a pretty well established Republican proposal. It falls short of NCPA’s proposal to convert federal subsidies for health care into refundable tax credits. Nevertheless, it removes the perverse incentive for states to ramp up Medicaid spending beyond what is necessary to pull down more federal funds. In the current system, a state that spends one more dollar on Medicaid will attract between one and nine more federal dollars. This causes states to spend themselves into penury to recover federal dollars.

Ms. Rosenbaum and Mr. Westmoreland suggest that the same Supreme Court that ruled Obamacare’s expansion of Medicaid unconstitutional would do the same for block grants:

Medicaid Expansion Already Blowing Budgets

The Foundation for Government Accountability has examined every Medicaid expansion state with enrollment data available. The report:

discovered a systemic problem of under-projection and over-enrollment. The proponents of expansion have an incentive to keep their projections low when selling the massive welfare expansion to state lawmakers and the public, so the program appears less expensive than it really is.

The five states with the worst differences between projections and actual enrollment:

1) California’s enrollment more than doubled projections at 120 percent above projections.

2) Nevada missed the mark with enrollment, hitting 113 percent above projections.

3) Washington enrolled more than half a million people, exploding projections by 104 percent above projections.

4) Kentucky’s enrollment doubled projections in the first year by 100 percent above projections, costing taxpayers $1.8 billion more in the next fiscal year.

5) Illinois enrolled more than 600,000, exceeding projections by 83 percent above projections, raising the cost to taxpayers by $800 million.