Opinionated @ CFE

Utah should decline Medicaid expansion

Jan
24

One of the hot-button issues to be discussed at the upcoming legislative session is whether or not to expand Medicaid as part of the Affordable Care Act. The Act provides 100% funding to begin with, then drops back to 90% (or possibly less) in future years. That big sack of money makes for a pretty tantalizing offer, but I don’t think it’s a good idea to take it. Here’s why.

The obvious problem is that most of the Medicaid expansion money is only available via federal borrowing. It’s pretty easy to rationalize that the money will be spent anyway, so we should get our share. It’s also easy to justify as being a relatively small amount of money compared to the current budget deficit. To be fair, I think this is probably one of the weaker arguments against the expansion, but I do think that, even as a largely symbolic gesture, it’s a good idea to put our money where our mouth is on federal spending.

A deeper problem (and, indeed, the core problem with the ACA) is that a Medicaid expansion is subsidizing an overpriced healthcare system rather than attempting to resolve the cost issues that make even routine procedures unaffordable. True, using a subsidy may alleviate the symptom for some, but there is no mechanism to try and curb costs. This is a long-term recipe for requiring more subsidies to maintain the same levels of care. This turns into a vicious downward spiral where both costs and subsidies for that cost continue to rise. The end result is that more people end up relying on Medicaid and the cycle continues.

Since the Medicaid expansion doesn’t appear to be serious about either controlling costs or providing flexibility in doing so, I see no reason why Utah should get involved with it. There are much better solutions out there, such as targeting hotspots, that can both curb Medicaid spending and provide a much higher level of care while driving down costs across the board. Let’s do something smarter than tossing a multi-billion dollar bandage on the problem.

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