Conservatives Beware: Medicaid is Our “Sleeper” Entitlement Program

Prelude:  I’m not sure how to explain to people what we’re looking at right now regarding Medicaid expansion, but I’m going to try to do it anyway, because this is an important factor that has to be taken into consideration as it pertains to what lies ahead.  Take this in the context of just another reason to keep O-care front and center. 

Do you remember back in 2009 when the conversation about O-care first began?  The argument being presented by the Dems was that we have 32 million people uninsured in our country and that this needed to be resolved.

What they didn’t tell everyone at the time was their primary vehicle of expansion for resolving this issue is the expansion of Medicaid enrollment.  Of the 32 million people they mentioned, approximately ½ or 16 million people were targeted to be enrolled in Medicaid.

Then we have to add into the scenario that we’ve lost approximately 6 million jobs since 2008.  So rather than 16 million people, we could easily be looking at 22 million people (not including the dependents of those who may have lost their health insurance via a subscriber’s loss of their job).

To do a little benchmarking, in June of 2009, 46.9 million people were enrolled in Medicaid.  This was before the rise of unemployment really began to take its heaviest toll.

According to the Center for Medicare and Medicaid (CMS) data for National Health Expenditures (NHE) report for 2009:

NHE accounted for 17.6% of GDP (it has since increased to 18%)

Medicare spending equaled $502.3 billion (20% of NHE)

Medicaid spending equaled $373.9 billion (15% of NHE)

Doing a little basic math, if 46.9 million were enrolled in Medicaid in 2009 at a cost of $373.9 billion, the cost per person within the Medicaid program was approximately $7,972.  Suppose we add the potential increase in enrollment of 22 million to the 46.9 million provided in the 2009 data.  This equals 68.9 million people.  Then multiply this by the cost per person of $7,972 and we see that this increases costs of the Medicaid program to $549.2 billion dollars. This exceeds the current amount we are investing into Medicare each year!

Mandated expansion of Medicaid has already begun.  It wasn’t slated for implementation until 2014, but because of the reductions in disproportionate share hospital (DSH) payments that are incorporated into the formula for Medicare and Medicaid reimbursements, and the fact that DHHS has scheduled these reductions to begin in 2013, regardless of what states and/or health care organizations might wish for…this doesn’t leave the state or health care providers with a lot of options.

The necessary increase in taxes at the state level to cover the required expansion of Medicaid has been projected to reach approximately 34% average per state.

Medicaid is our “sleeper” entitlement program that genuinely deserves a higher level of scrutiny than it has been receiving so far.   

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