No Oil for Pacifists: Be Careful What You Wish For

Obamacare's perverse incentives and abdication of cost control make the new law "the worst of all possible worlds." And progressives soon will realize that the same description applies to the law's methodology for realizing their cherished dream of reducing the uninsured population, says the Heritage Foundation:

In order to cover low-income uninsured citizens, Obamacare expands eligibility for Medicaid to include all Americans that fall under 133 percent of the federal poverty level. However, Medicaid is a low-performing, low-quality federal program that fails to meet the needs of its beneficiaries. For example, Medicaid’s failure to cover the cost to providers of seeing Medicaid patients has greatly reduced the number of doctors who will see Medicaid patients.

As a result, Medicaid beneficiaries have become even more reliant on emergency care than the uninsured. According to the Centers for Disease Control’s National Center for Health Statistics, Medicaid patients comprised 25.5 percent of all emergency room visits in 2006, while the uninsured made up only 17.4 percent. What is more, the emergency room visit rate among Medicaid patients was higher than that of the uninsured: Medicaid’s emergency room visit rate was 82 per 100 Medicaid patients, while that of the uninsured was 48 per 100 uninsured patients.

Increasing the number of Americans reliant on Medicaid will further compound its current shortfalls. States are currently facing serious budget cuts due to decreasing revenues, a trend that is expected to continue in the years to come. Though under new law, the federal government will cover the cost of expanding benefits in the initial years, states will have to pay the additional administrative costs of the expansion. And after 2017, the states will begin to pay a portion of the benefits expansion as well.

This increasing financial burden will force state legislators to make budget cuts, either to other state programs or to Medicaid itself, which would mean reduced benefits or even further reduced physician reimbursement rates. Both of these outcomes would be disastrous for Medicaid beneficiaries’ access to quality care. Under new law, the federal government will pay to increase primary care physician reimbursement rates to equal those paid by Medicare--but only for two years, leaving Medicaid in the same lurch it started in.