Socialism’s Promise: Medicaid for All

For an example of how government entitlements always expand and never contract, consider what’s been happening to Medicaid.

Designed to provide health coverage for low-income and disabled Americans, Medicaid was signed into law in 1965 during the Johnson Administration.

Today, Medicaid ranks second only to public school education as the largest budget item in most states. Nationally, Medicaid spending now exceeds a half trillion dollars a year ($574.2 billion in FY 2016).

The true cost is higher, though. Both Medicaid and Medicare pay providers significantly less than what they receive from private payers – and Medicaid pays about two thirds of what Medicare pays. That means less access to healthcare, since one in three physicians refuses to see Medicaid patients. It also means non-Medicaid healthcare costs need to be higher to subsidize Medicaid.

Initially, Medicaid covered 4 million Americans. This year, it’s projected to cover 73.5 million Americans. In spite of the more than $20 trillion spent on the War on Poverty over that period, Medicaid enrollment from year to year has almost always increased, regardless of the overall health of the economy. It has also increased even though the poverty level has remained about the same – about 15% of the population.

But the worst is yet to come.

Obamacare’s Medicaid Expansion

One reason for Medicaid’s ongoing expansion has been that the federal government paid about 57% of the cost, even as states developed their own Medicaid programs. The more people states enrolled in Medicaid, the more money they received from the federal government.

With the Affordable Care Act (ACA), though, the federal government pays 100% of the cost of newly eligible adults, with the percentage dropping to 90% in 2020. Anyone earning less than 138% of the federal poverty level is eligible.

As initially written, the ACA would have required all states to expand Medicaid or risk losing eligibility for any federal Medicaid payments. The Supreme Court ruled in 2012 that this coercive language was unconstitutional, but most states have found it difficult to resist free federal money.

This expansion of Medicaid and the related Children’s Health Insurance Program (CHIP) accelerates the shift from private insurance to government insurance, bringing the U.S. closer to the socialized medical system that is advocated by progressives. They typically call it a “single payer” system, since most rational people recognize that socialism doesn’t work.

Many states have been willing accomplices to the expansion of Medicaid, as parents of dependent children can exceed the 138% FPL salary cap in 32 states and still be eligible for assistance; childless adults can exceed that cap in 31 states and still be eligible. Eligibility levels for children in 19 states exceed 300% of the FPL.

Massachusetts, which is among the five states in the country that are in the worst financial condition, is among those with lax eligibility requirements.

While it is, of course, laudable that many states are taking care of their citizens’ healthcare needs, someone has to pay for it. That means higher taxes, less disposable income and more debt. It also means that other programs go unfunded. As the Government Accountability Office reported, “The increase in federal outlays for Medicaid and other health-related grant programs was offset by an approximately equivalent decrease in grants to state and local governments targeted for other areas such as transportation, education, and regional development.”

The expansion of Medicaid also leads to the replacement of private coverage with government coverage, which may have been the ultimate goal of the ACA.

“By 2021, 46% of all Americans will be dependent on the government for their health care,” according to the Heritage Foundation. “Of this group, 86.9 million will be on Medicaid/Children’s Health Insurance Program (CHIP), followed by 64.3 million on Medicare and 23.4 million enrolled in government exchanges. This will push U.S. health care closer to a government model.”

While advocates see socialized medicine as the answer to providing healthcare for all and at a lower cost, since healthcare providers and insurers would no longer be profitable, the Federalist calls such claims dubious.

“In fact, socialized medicine is immoral,” according to the Federalist. “It relies on coercion and results in shortages and long wait times, which means worse care. It is rife with inequality and inefficiency, leading to serious harms.”

For an example of what to expect, visit an emergency room. Today’s emergency rooms are crowded with Medicaid patients, who otherwise would have to wait to be seen by a doctor who is willing to take them.

Losing What You Don’t Have

Republicans seeking to slow down the Medicaid expansion that’s included in the ACA have come under fire for allegedly increasing the number of uninsured Americans.

As we previously noted, “An estimated 5 million Americans who are expected to become eligible for Medicaid would not become eligible. They would not lose their free, government-funded healthcare coverage; they just wouldn’t become eligible for it.”

Yet Medicaid expansion has become a key issue in the debate over whether to repeal, or repeal and replace, the ACA.

Little attention has been paid, though, to whether Medicaid is working. Clearly, many people who use it would be unable to afford long-term care or other healthcare they receive under the program. However, if Medicaid was created to provide healthcare for low-income Americans, why did we need the Affordable Care Act?

By 2013, more than 41 million Americans lacked healthcare coverage, according to the Kaiser Foundation. Doesn’t that indicate that Medicaid isn’t working? The ACA penalizes Americans who do not have health insurance and it provides free or heavily subsidized insurance for many Americans, so why, according to Kaiser, do we still have 28.5 million Americans without healthcare coverage?

Given the limited effectiveness of Medicaid, we should be asking what we need to do to make it more effective and more affordable, rather than seeking to expand it.

Ironically, though, according to The Wall Street Journal, GOP governors that have accepted the Medicaid expansion and are counting on that funding are now putting pressure on members of Congress to enable Medicaid expansion to continue.

The ultimate result may be that the ACA lives on, even as insurers abandon healthcare exchanges and premiums continue to rise. And even though repeal of the ACA was a key promise that Republicans made before the last election.

Single-payer healthcare may be in our future.

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