As congressional Republicans work to coalesce around a reconciliation spending plan, policymakers have a unique opportunity to implement long overdue reforms to Medicaid, including redressing an injustice that hasn’t received the attention it deserves: For more than a decade, the Affordable Care Act’s (ACA) Medicaid expansion has shifted resources away from the most vulnerable Americans – single moms, infants, and the disabled – in favor of able-bodied adults without dependents. Congress has the capability to reverse this and ensure our safety-net programs focus on the most vulnerable.
Ensuring access to timely, high-quality care for patients on Medicaid has been a long-standing challenge. Prior to the ACA, studies showed that Medicaid patients had inferior access to care and worse health outcomes than comparable individuals with private insurance. A 2010 study in the Journal of Hospital Medicine reported that Medicaid patients hospitalized for a heart attack, stroke, or pneumonia had significantly higher mortality than privately-insured patients, even after adjusting for other relevant differences. Meanwhile, a 2012 analysis in Health Affairs found that nearly one-third of physicians nationwide would not accept new Medicaid patients. The 2007 death of Deamonte Driver, a 12-year-old boy on Medicaid who died of an infection after weeks of unsuccessfully searching for a dentist willing to treat his abscessed tooth, remains a potent reminder that Medicaid often does not deliver for its most vulnerable charges.
Yet instead of heeding these warning signs and taking steps to improve the program for the truly needy, Congress has flooded the broken Medicaid system with nearly 17 million new enrollees under the ACA’s Medicaid expansion. Predictably, as new enrollees compete for a limited pool of providers, access to care for traditional Medicaid enrollees has eroded. Medicaid expansion sharply increased program enrollment (by more than 30% in some states) without a commensurate increase in the number of health care providers serving Medicaid patients. In 2011 through 2013, 73.0% of physicians nationwide accepted new patients under Medicaid, a percentage that improved only slightly to 74.0% in 2014 through 2017, the early years of the expansion. Medicaid expansion also increased the strain on hospital emergency department and ambulance services, causing delays in critical care.
To make matters worse, the ACA’s enhanced federal matching rate for expansion enrollees – combined with the wide array of budget gimmicks states use to evade their obligations to fund Medicaid – create strong political incentives for states to boost enrollment in the expansion group. Some states have gone so far as to set higher provider payment rates for expansion enrollees than for traditional enrollees, giving doctors and hospitals an explicit financial incentive to discriminate against traditional enrollees. Unsurprisingly, expansion has been far more costly than its proponents promised, surpassing projections by $574 billion from 2014 to 2023 according to one analysis by the Foundation for Government Accountability.
The effects of these policy blunders are well-documented. Below, I summarize the findings of a number of studies exposing the negative consequences of Medicaid expansion on the neediest Americans.
Diverting resources away from children and the aged
- A 2022 study from the Mercatus Center at George Mason University (co-authored by me) found that per capita Medicaid spending on children grew much more slowly in expansion states (5.9%) than in non-expansion states (22.7%) from 2013 to 2019, implying that expansion enrollees likely consumed services that low-income children would have otherwise received. If expansion states had kept pace with non-expansion states in the growth of per capita Medicaid spending on children, the average child on Medicaid in an expansion state would have received an additional $504 in health care services in 2019. Growth rates in Medicaid spending per capita on the elderly and the disabled were also lower in expansion states than in non-expansion states, though these differences were smaller.
Declines in mental health
- A 2023 analysis from the Mercatus Center at George Mason University (co-authored by me) estimated that Medicaid expansion led to an 11% increase in symptoms of depression among near-elderly adults who had been on Medicaid before expansion and remained on Medicaid after expansion was implemented. These negative effects were largest among rural residents and those living in areas without enough mental health providers, indicating that reduced access to psychological and psychiatric treatment may be an explanatory factor.
Longer wait times for appointments
- A 2017 study in the New England Journal of Medicine analyzed health surveys of low-income individuals conducted before and after Medicaid expansion. The authors reported: “In expansion states as compared with non-expansion states, we found significant increases in respondents delaying care because appointments were not available soon enough or because wait times were too long. This may have resulted from additional strain on medical providers to absorb new demand for medical care or may reflect provider reluctance to accept Medicaid patients because of low reimbursement rates.”
- A 2019 meta-analysis in Inquiry: The Journal of Health Care Organization, Provision, and Financing reviewed 34 “secret shopper” studies (in which simulated patients with different insurance plans call physician offices and attempt to schedule an appointment) found that access barriers for Medicaid enrollees substantially worsened post-expansion. “In all studies prior to Medicaid expansion, Medicaid patients had a 2-fold lower likelihood of securing an appointment compared with privately insured patients. In all studies after Medicaid expansion, Medicaid patients had a 3.2-fold lower likelihood of securing an appointment compared with privately insured patients.” Put differently, pre-expansion Medicaid patients were 50% as likely to obtain a doctor’s appointment as the privately insured, while post-expansion Medicaid patients’ chances declined to just 31% relative to the privately insured.
- A 2021 paper in Inquiry: The Journal of Health Care Organization, Provision, and Financing on the impact of expansion on low-income parents who were eligible for Medicaid before the ACA found that “Medicaid expansion was associated with increased delays in care due to a lack of transportation,” as well as “some evidence that the expansion increased inability to find a doctor in the later years of the expansion.” Many Medicaid recipients rely on Medicaid-funded non-emergency medical transportation (NEMT) to visit the hospital or doctor’s office, but shortages of shuttles and drivers are a persistent challenge in many states. Medicaid expansion increased the demand for already-strained transportation services.
Slower ambulance response times
- A 2019 study in the Journal of Health Economics found that the ACA – mainly through Medicaid expansion – increased average ambulance response times by more than two minutes, or approximately 24%. Rapid medical transport is a key determinant of survival in motor vehicle accidents and other emergencies, especially in rural areas.
Greater delays in the emergency room
- The results from the 2008 Oregon Health Insurance Experiment show that expanding eligibility to low-income adults led to a 40% increase in emergency room use, including increases for non-urgent conditions that could be more efficiently treated in a primary care setting. There is similar evidence that the ACA’s Medicaid expansion strained emergency departments.
- A 2021 analysis in Health Services Research of all acute care hospitals with emergency departments in the U.S. estimated that Medicaid expansion led to a 10% increase in the amount of time spent waiting to be seen, as well as a 15% increase in the proportion of patients who left without seeing a provider. Emergency department crowding is linked to many adverse outcomes, including higher mortality.
Conclusion
As federal policymakers consider reforms to Medicaid, the costs and benefits of the ACA’s expansion are once again attracting attention. While expansion’s enormous fiscal costs and disappointing health effects have been widely reported, its negative effects on the traditional Medicaid population cannot be ignored. By extending Medicaid’s scope far beyond its original mandate, the ACA sacrificed the well-being of those who needed public assistance the most. To correct this problem, Paragon has developed a reform to end the discrimination against traditional enrollees by phasing-out the enhanced expansion match rate – a reform that would not only improve access to care for traditional enrollees, but also save the federal government hundreds of billions of dollars over the next decade.
