Medicaid expansion was sold as a cost-effective way to expand health coverage to millions of Americans, yet more than a decade after implementation it costs more than employer-sponsored insurance (ESI) in many states. This should reinforce concerns among policymakers that the poor design of Medicaid expansion has led to cost-overruns and excessive spending – often unrelated to actual care for enrollees. Americans should question if a compassionate health care safety net should spend more than the cost of the private coverage people receive as part of employment.
Experts thought Medicaid expansion would be a cheap way to expand coverage
The Affordable Care Act (ACA) included a massive expansion of Medicaid coverage to able-bodied, working age adults generally without dependents. The law’s authors typically justified this route over alternatives (private insurance, Medicare, etc.) by its purported efficiency. In their defense, this is what they were told by most experts. Per ACA chronicler John McDonough:
“The Congressional Budget Office…estimated much higher costs to cover individuals through an exchange rather than Medicaid because the latter pays medical providers much less than private insurers can get away with and because Medicaid administrative costs are much lower.”
This was not a view exclusive to the CBO.
