ICYMI: Medicaid’s Costly Expansion Overruns

chriswest2016 General Assembly

The Winchester Star: Our View: Medical Expansion
November 21, 2016

Some folks around Virginia — prominent among them Gov. Terry McAuliffe — have deemed House Speaker Bill Howell and the rest of his Republican colleagues in the General Assembly stiff-necked, and even heartless, for not succumbing to the dubious allure of Medicaid expansion. Every year Mr. McAuliffe makes it a budget priority; every year the GOP-controlled Assembly shoots him down.

Seems the latter has been on the right path all along. In fact, some people might call these legislators “prescient.”

How so? Well, a new report released last week by the Foundation for Government Accountability (FGA) shows how much actual enrollment in expanded Medicaid programs — enrollment, that is, from the ranks of able-bodied, prime-age adults — has exceeded projections.

Twenty-four states decided to take the feds’ “free money” — i.e., Washington picking up 100 percent of the tab for the first three years of expansion — what they’ve collectively witnessed is 110 percent more enrollees than expected. In three states — liberal bellwethers California, New York and Illinois — the numbers are up 322 percent, 276 percent and 90 percent, respectively. And these are states already carrying a heavy fiscal burden for social-welfare programs.

With Washington no longer bearing full monetary responsibility for expansion — the states will pick up a 5 percent share of the cost next year, then 10 percent by 2020, and who-knows-what further down the road — these 24 states may well rue the day they signed up for this alleged “freebie.” Fortunately, Virginia is not — and, best we can tell, will never be — part of this group.

“The report is further proof that Virginia’s decision not to expand Medicaid under the Affordable Care Act is the right decision,” Mr. Howell said in a statement last Thursday. “By not expanding Medicaid, we have protected the Commonwealth from the financial disasters being experienced in other states.”

Needless to say, every buck spent on Medicaid expansion means one less available for education, public safety . . . or even the care of the truly indigent by the current safety net.

As The Wall Street Journal wrapped up an editorial on the subject Thursday, “The governors who didn’t expand and withstood a hail of political and hospital censure are looking prescient.”

We’d include house speakers in that grouping as well.

The Wall Street Journal: Medicaid Explodes
November 17, 2016

On Donald Trump’s victory Republicans in Congress are primed for an ambitious agenda, and not a moment too soon. One immediate problem is ObamaCare’s expansion of Medicaid, which has seen enrollment at least twice as high as advertised.

Most of the insurance coverage gains from the law come from opening Medicaid eligibility beyond its original goal of helping the poor and disabled to include prime-age, able-bodied, childless adults. The Supreme Court made this expansion optional in 2012, and Governors claimed not joining would leave “free money” on the table because the feds would pick up 100% of the costs of new beneficiaries.

In a new report this week for the Foundation for Government Accountability, Jonathan Ingram and Nicholas Horton tracked down the original enrollment projections by actuaries in 24 states that expanded and have since disclosed at least a year of data on the results. Some 11.5 million people now belong to ObamaCare’s new class of able-bodied enrollees, or 110% higher than the projections.

Analysts in California expected only 910,000 people to sign up, but instead 3.84 million have, 322% off the projections. The situation is nearly as dire in New York, where enrollment is 276% higher than expected, and Illinois, which is up 90%. This liberal state triumvirate is particularly notable because they already ran generous welfare states long before ObamaCare.

The data are also an embarrassment to Kentucky (134% over) and Ohio (60% over) because the legislatures in those states rejected expanding. They were unilaterally overruled by Democratic Governor Steve Beshear and Republican John Kasich. Arkansas’s compromise Medicaid expansion was hailed as a “private option,” but 51% more people have signed up for this public option than voters were told at the time.

The Foundation for Government Accountability numbers exclude states that expanded recently like Alaska and Louisiana, where it is too soon to draw conclusions. The study also omits Delaware, Massachusetts and Vermont, which obtained Medicaid expansion waivers prior to ObamaCare.

New or enlarged entitlements always overwhelm projections, because of so-called “woodwork effects” where added benefits draw out people the budget gnomes weren’t expecting. But there’s enough experience now where these effects should have been built into the models. Governors ignored all this to make expanding seem less costly than it would be when the bill came due.

The state spending share of new Medicaid enrollment will rise to 5% next year and then to 10% by 2020, up from 0% today. The enrollment overruns mean these states will have less to spend than they planned for every other priority, especially the least fortunate. The Governors who didn’t expand and withstood a hail of political and hospital censure are looking prescient.