Most everyone agrees that decreasing the number of the uninsured is an important goal of health care legislation. What is not agreed upon is the best way to achieve that goal. Obama’s health care plan depends on expanding the number of Americans enrolled in Medicaid – the government-run program for the poor and disabled. The Congressional Budget Office (CBO) estimates the Senate bill would account for about 50 percent of the reduction in the uninsured population at a cost of $395 billion over 10 years.
New research by Heritage’s health fellow Brian Blase presents evidence suggesting that Medicaid expansion would be both costly and do little to improve the health of the uninsured. Blase examines the “TennCare” program, a Tennessee public program enacted in 1994 that dramatically increased the expansion of Medicaid to Tennessee’s uninsured population. The TennCare program quickly added over half a million individuals to Medicaid, enrolling one-fourth of the entire state. And costs also skyrocketed. Per-capita Medicaid spending from 1994-2004 increased by 146 percent in Tennessee, which was over double the national average increase of 71 percent.
The most shocking result of Blase’s analysis was not just the increase in costs. It was the apparent lack of improvement in health outcomes in Tennessee in the years following TennCare’s enactment. Blase concluded that, relative to eight surrounding states, the quality of health care in Tennessee actually declined after the expansion of Medicaid. The decline in Tennessee’s mortality rate for 15-64 year olds – those most likely to be impacted by TennCare – compared less favorably after TennCare to the states surrounding Tennessee that before its enactment. On average, the mortality rates of the eight surrounding states to Tennessee declined by 5.2 percent from 1994-1998. Tennessee’s mortality rate declined by only 2.1 percent.
The lessons learned from TennCare should serve as a warning of what we should expect from a national program of Medicaid expansion. In short, it will be costly and will do little to improve health care quality in the United States. The notion of expanding coverage is meaningless if it does not improve the health of the uninsured. There are seemingly dozens of ways to increase insurance coverage with better results than a vast and costly expansion of Medicaid. Congress should strongly consider the weaknesses of the Tennessee’s experience before they prescribe the nation similar medicine to TennCare.
Rick Sherwood currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm
