Expansion of Medicaid not a panacea for budget or health care

April 5, 2013 

We’re quickly approaching “budget time” in Olympia, and every proposal that comes out of the Legislature will undoubtedly utilize a tempting option called Medicaid expansion. While there are compelling reasons to support and oppose Medicaid expansion, it’s important for budget writers and the public to realize it is not a panacea.

Obamacare required all states to expand Medicaid to individuals and families earning 133 percent of the federal poverty level, which is $31,322 for a family of four. However, the U.S. Supreme Court ruled the mandate unconstitutional, allowing states to choose whether or not to expand Medicaid coverage and take the federal dollars that come with it.

Medicaid is a joint federal-state program providing health care services to low-income residents. In the current two-year budget cycle, our state will spend around $4.1 billion on medical services for about 1.2 million residents – 42 percent of all kids, 50 percent of pregnant women and 10 percent of seniors.

The main reason budget writers want to include Medicaid expansion is because the federal dollars that come with it will help plug our $1.3 billion shortfall for the next budget cycle. Former Gov. Christine Gregoire booked about $250 million in her final budget proposal as a result of Medicaid expansion.

There are other reasons to support it, including the expansion of medical coverage to more people. Our lowest-income individuals are often the most vulnerable and those with serious health issues.

With more people insured, there is potential that uncompensated care costs at local hospitals could be reduced as fewer people visit emergency rooms for non-emergency health issues.

We could also see an increase in jobs in the health care sector. And, the fact remains, because we’re talking about federal dollars, Washington taxpayers will be paying for it even if we choose to opt out of the expansion.

So why is there so much angst for this option around the state and nation? Because there are serious concerns and ample unknowns surrounding Obamacare’s directives.

First, while the federal government pays 100 percent of the Medicaid expansion initially, it phases down to 90 percent in just a few years. If – and this is a big if – the federal government upholds its obligations, Washington state would show a net gain in the years up to, and beyond, 2020. However, if the federal government makes the cuts the president has already proposed, it will leave the taxpayers of this state exposed to more financial obligations to continue funding the program.

In addition, Medicaid is notorious in the health care community for underpaying providers. As a result, more costs are shifted to those with private insurance. In fact, a 2008 study estimated the average American family with private health insurance paid $1,800 extra because of Medicaid and Medicare underpayments to providers.

Access to health care services is also an important issue. Because Medicaid’s payments are so low, Medicaid recipients are already having trouble finding physicians and other health care providers willing to accept new patients on the program. A dramatic increase in Medicaid patients will mean longer wait times for people seeking medical care.

At the end of the day, I’d like to see reforms implemented in the Medicaid system and more state control over how the federal dollars are spent. The federal government has not allowed our state the flexibility to create our own system to provide better care for citizens at a lower cost.

The writing is on the wall, folks. Medicaid expansion will most likely happen here in Washington. But it’s important for everyone to realize – both the public and elected officials – that Medicaid expansion is not a panacea for our budget problems or for providing health care service to our citizens.

It comes with serious risks and opens a Pandora’s box of issues that legislators will be dealing with for years to come.

State Rep. Joe Schmick, R-Colfax, is the ranking Republican on the House Health Care and Wellness Committee. He also serves on the Appropriations Subcommittee on Health.

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