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The True Cost of Medicaid

Quick Facts

  1. Medicaid’s health care outcomes for the population it serves are terrible and unacceptable in any civilized society.
  2. The costs of Medicaid for states are growing at an unsustainable rate, a problem accelerated as millions more Americans are added to the system under President Obama’s health care law.
  3. Medicaid’s system is purposefully designed to be resistant to flexibility and positive, forward-thinking reform.

Studies and Reports

  • The University of Virginia finds it is better to be uninsured than to be on Medicaid: A large survey by UVA which compensated for several major factors found startling data last year. As Avik Roy writes: “surgical patients on Medicaid are 13% more likely to die than those with no insurance at all, and 97% more likely to die than those with private insurance. The Virginia group evaluated 893,658 major surgical operations from the Nationwide Inpatient Sample database from 2003 to 2007. They divided the patients up by the type of insurance—private insurance, Medicare, Medicaid, and uninsured—and adjusted the database in order to control for age, gender, income, geographic region, operation, and comorbid conditions (having 2 or more diseases simultaneously). That way, they could correct for the obvious differences in the patient populations (for example, older and poorer patients being more likely to have ill health).” The researchers found “Medicaid patients were almost twice as likely to die as those with private insurance; their hospital stays were 42% longer, and cost 26% more. Compared to those without health insurance, Medicaid patients were 13% more likely to die, stayed in the hospital for 50% longer, and cost 20% more. It is hard to see how this problem doesn’t get significantly worse when Obamacare’s expansion of Medicaid is fully phased in.”
  • An Easy Path to Billions—Medicare and Medicaid Fraud: This 60 Minutes report provides examples of the sizeable fraud and ludicrous criminal operations that are robbing the nation’s taxpayers: “The tiny medical supply company billed Medicare almost $2 million in July and a half-million dollars while 60 Minutes was there in August, but we never found anybody inside, and our phone calls were never returned.”
  • Jim Capretta and Tom Miller write: “Medicaid remains separate and not equal to the rest of the insurance system for working-age Americans. Its current structure provides no coordination or transition between Medicaid coverage and private health insurance. A move to replace both traditional Medicaid assistance and the tax preference for employer-paid health insurance with defined contribution payments would open up new possibilities for more beneficial coordination between both types of coverage. Integrating coverage options for the poorest Americans into the choices available to those with higher incomes will not be easy, in light of broader fiscal and political constraints, but it should proceed with all deliberate speed. Moving toward defined contributions across Medicare and Medicaid, as well as employer-based plans, involves a complex transition well beyond just hitting new budgetary targets. … Nevertheless, it’s clear that taking the defined contribution route to health reform would create tremendous competitive pressure on the entire health sector to deliver more for less. Any player that did not step up would risk losing market share. That’s the way to slow rising costs while also improving, not compromising, quality.”
  • Pennsylvania Medicaid Waste Estimated at a Quarter of a Billion Per Year: States routinely underestimate the levels of fraud in their states, as Pennsylvania experienced earlier this year, this article from Health Care News notes: “A new state government report shows fraud in Pennsylvania’s Medicaid program may have cost taxpayers more than $1 billion over the past four years—more than three times what the state had previously reported. An audit by Pennsylvania Auditor General Jack Wagner found improper Medicaid eligibility determinations on nearly 2,000 randomly selected Medicaid applications between 2005 and 2009. The audit found a 14.7 percent fraud rate, three times the rate anticipated by the Pennsylvania Department of Welfare.”
  • A University of Pennsylvania study published in Cancer found that for patients undergoing surgery for colon cancer, the mortality rate was higher for Medicaid patients than for the uninsured or those with private insurance, and the rate of surgical complications was highest for Medicaid patients as well.
  • A Columbia-Cornell study in the Journal of Vascular Surgery examined outcomes for vascular disease found that patients with clogged blood vessels in their legs or clogged carotid arteries fared worse on Medicaid than did the uninsured.
  • A study of Florida patients published in the Journal of the National Cancer Institute found that Medicaid patients were 31% more likely to have late-stage breast cancer and 81% more likely to have late-stage melanoma than the uninsured.
  • Aging America’s Achilles’ Heel: a 2005 report from Stephen A. Moses, president of the Center for Long-Term Care Reform, a Medicaid state representative for the Health Care Financing Administration and senior analyst for the inspector general of the U.S. Department of Health and Human Services: “While Social Security and Medicare have spurious “trust funds,” Medicaid draws its financing from general tax revenue without even the pretense of a trust fund. Medicaid is the principal payor for long-term care (LTC), especially nursing home care. LTC is an 800-pound gorilla of social problems that lurks just around the bend. If we wait to deal with Medicaid and LTC until after we handle Social Security and Medicare, it will be too late.”