Report: Obamacare Adds to Medicaid’s Unsustainable Spending Trajectory

• September 19, 2016 2:41 pm


The Affordable Care Act has expanded Medicaid and has added to its unsustainable spending trajectory, according to a report from the Mercatus Center.

"Before the Affordable Care Act, the federal government provided states with an open-ended reimbursement of at least half of each state’s Medicaid expenditures," the report states. "Because of the federal reimbursement, both state Medicaid spending and federal spending (through the reimbursement) have increased significantly since the program’s inception."

According to the report, experts did not account for how states would respond to the reimbursement rate and underestimated the number of enrollees and their related costs.

In 2015, a newly eligible Medicaid enrollee cost 49 percent more than they did in 2014, costing an average of $6,366. According to the Congressional Budget Office, Medicaid spending is projected to grow by $232 billion between 2016 and 2024. Additionally, the budget office finds that more people are enrolling in Medicaid and is projecting that estimates are 50 percent higher than they were before the expansion took effect in 2014.

"The ACA’s Medicaid expansion is exacerbating the already unsustainable spending trajectory of the program that has led to a significant crowd-out of other priorities—such as education and infrastructure—at the state level," the report states.

Finally, the report notes that enrollees did not have significantly better physical health. "Researchers analyzing the Oregon Medicaid quasi experiment found that expansion enrollees did not have significantly better physical health on any of the three metrics assessed (blood pressure, cholesterol, and blood sugar)," the report states. "The same researchers estimated that enrollees only valued Medicaid at 20-40 cents for every dollar of program spending on their behalf."

Published under: Obamacare