Some Trump administration officials, and even President Trump himself, reportedly favor allowing states to partially expand Medicaid, the program for low-income Americans jointly funded by the federal and state governments. Any expansion is a bad idea, for both fiscal and moral reasons.
Obamacare enabled states to enroll able-bodied, childless adults who make less than 138 percent of the federal poverty level (just more than $17,200 for an individual in 2019) in Medicaid, the healthcare entitlement originally reserved for pregnant women and children, the blind, and low-income elderly people. Thirty-six states and the District of Columbia have expanded Medicaid, but 14 red states have held out.
Now, some of those holdouts are reconsidering. They are thinking of expanding the program to adults earning up to 100 percent of the poverty level.
Full Medicaid expansion has proven outrageously expensive. The federal government initially funded 100 percent of the cost of the program for any state that elected to expand its Medicaid coverage. But that financial support started waning in 2017 and will drop to 90 percent by next year, leaving state taxpayers on the hook for the remainder.
Costs have exceeded analysts’ initial projections. In 2015, beneficiaries enrolled through statewide expansions cost roughly 50 percent more than the federal government expected — more than $6,300 each. Medicaid costs are expected to continue increasing.
Ironically, under partial expansion, state taxpayers would face an even greater burden since the federal government would only contribute its regular Medicaid match rate, which ranges from 50 to 76 percent depending on the state.
Widening the scope of federal welfare programs is a terrible idea. Nearly 73 million Americans are already enrolled in Medicaid and the Children’s Health Insurance Program, up from 56.5 million prior to the implementation of Obamacare, according to the Kaiser Family Foundation. That’s more than a fifth of our entire population. And 61 percent of Medicaid beneficiaries are able-bodied, working-age adults. Of that cohort, half don’t work.
Giving people something for nothing encourages dependency on the nanny state. Four decades ago, only 10 percent of able-bodied, working-age Americans depended on a federal welfare program. By 2016, that share had doubled.
Partial Medicaid expansion would exacerbate the problems we already have with federal welfare: cost and dependency.
Medicaid should be reformed, not expanded. The Centers for Medicare and Medicaid Services has been toying with the idea of block-granting Medicaid, so that states can manage their own programs as they see fit. Implementing state work requirements for able-bodied individuals, which is underway in some states, is a good idea.
By limiting spending, these solutions would encourage states to be better stewards of taxpayer dollars and spur reforms that reduce mass dependency on government programs.
Sally C. Pipes (@sallypipes) is a contributor to the Washington Examiner’s Beltway Confidential blog. She is president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The False Promise of Single-Payer Health Care (Encounter 2018).