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  • Message to the President: Expanding Medicaid Will Not Reduce Federal Spending

    Last night in the State of the Union address, President Obama stated that “the only way to tackle our deficit is to cut excessive spending wherever we find it—in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes. This means further reducing health care costs, including programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficit. Health insurance reform will slow these rising costs.”

    Is it possible that the President has already forgotten that the health care law included a massive expansion of the broken Medicaid entitlement? According to projected national health expenditures from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS), Medicaid spending in 2019 will be $896.2 billion. Without the health care law, CMS projects that the amount would have been $802.4 billion.

    This means that the President’s health care law will increase Medicaid spending by 12 percent or about $100 billion annually. The extra spending comes from the additional 18 million or so individuals—mostly non-disabled and non-elderly adults without children—who will now have taxpayers paying their health care bills through the Medicaid program.

    Two central components of the law expand eligibility to the government-run Medicaid program and offer costly subsidies to an estimated 20 million individuals to purchase health insurance. With an increasing amount of health care subsidization, taxes will increase, but so will the demand for health care services. This problem is exacerbated because there is very limited out-of-pocket payment for Medicaid. The subsidies and the increased third-party payment will cause health spending to grow, not slow.

    Medicaid is a broken program for many reasons. First, national spending on Medicaid has more than quintupled over the past two decades, and about 16 percent of the population is currently enrolled. A primary reason state budgets are out of whack is this explosive Medicaid growth and states’ responsibility to finance a portion of its programs costs.

    Despite the massive increase in spending, many physicians fail to participate in the program because of low payment rates and a frustrating amount of paperwork. This causes many Medicaid beneficiaries to receive basic care services in the emergency room.

    There is evidence that Medicaid provides beneficiaries with a low quality of care. A recent study from the University of Virginia found that Medicaid patients have worse surgical outcomes than individuals without insurance, even controlling for a multitude of personal characteristics.

    Instead of doubling down on Medicaid and its existing structure, Washington should consider major structural reform for this troubled program. To start, the open-ended federal reimbursement of state Medicaid spending, which creates perverse incentives for states to grow their programs unsustainably, must be reformed. Then, taxpayer-financed assistance should be targeted to truly deserving individuals using market-based principles that better align incentives of providers, recipients, states, and taxpayers. This is the path to put Medicaid spending on a more sustainable course.

    The President should re-read his law if he believes its passage either improved Medicaid for those on it or reduced Medicaid spending growth.

    Posted in Obamacare [slideshow_deploy]

    8 Responses to Message to the President: Expanding Medicaid Will Not Reduce Federal Spending

    1. Walter Rykard, Alexa says:

      Medicaid is the real reason our health insurance premiums are going up, a Hospital can only stand to treat and deliver babies for illegal immigrants they are a business and they have to pay for the millions of dollars it cost them to treat all this people without insurance and on Medicaid, then there is the tort law that has been tried to change since Bush one and Quail was in office, May God Bless and help us, from the people running our government in Washington D.C.

    2. Walter Rykard,Alexan says:

      Medicaid is the real reason our health insurance premiums go up and the free medical care that is given to illegal immigrants, They can only loss so many millions of dollars, Then there the tort reform that has been tried to be changed, AS long as this Administration is n office our Nation could go bankrupt if things are not changed, NOV was a good start but we have to keep it up for the next two years and stand up to be heard call, write, e-mail fax do all we can to let this president know we are not happy with him and his democrats trying to push our great Nation to Socialism. May God Bless and help us.

    3. buddypaul says:

      When my husband and I planned for an early retirement we were both in our 50's. Not only were we retiring, but we were moving to Nashville, TN. Since we resigned from our jobs, we knew we would have to buy health insurance and dental insurance in Tennessee. We purchased a PPO family plan, for just my husband and me, through Wise Health Insurance. We paid for the family plan ourselves, initially, the cost was a little less than $400 a month for both of us. Our co-pay was very reasonable at $25 each per office visit.

    4. George Colgrove, VA says:

      Salvation Army – by the numbers (from their 2010 annual report)

      Total Centers of Operations = 7821

      Personnel = 171,400

      Members = 400,100

      Volunteers = 3.4 million

      Advisory organization members = 58,900

      Meals Served = 64 million

      Lodgings Supplied = 10.3 million

      Total items distributed = 102.7 million

      Total people served 29.4 million (about 10% of the US population)

      Total budget = $3.12 billion.

      82% of that budget went towards program services – the rest went to management or fundraising.

      75% of that funding was by donations by the public – went down $100 million in 2008.

      25% was from the release of net assets

      When you look at the efficiency of the Salvation Army, they spend $106 per person served.

      If we apply this level of efficiency to the federal DHHS with a total 2011 budget of $2.1 trillion the DHHS could have served 19.8 Billion people! The USA has only 310 million with roughly 45% (140 million people) getting some form of welfare.

      Just using the federal budget (and not the additional trillions of dollars spent by the states on entitlements), we as a nation are spending $15,000 per person served (very conservative estimate!). Ever wonder what would happen if that money were left on the streets.

      I would far more prefer organizations like the Salvation Army and Good Will to take care of these human services programs. Effective and efficient private sector programs like these have been in place since the mid 1880’s . How FDR was able to get us into this mess escapes me.

    5. Dennis Georgia says:

      When we stop the illegals from getting medicare and medicade then spending will come down. As it stands now they get all the health care with no co-pay or bills at the end. Those in power need to understand that both were meant to help those that did not have money to buy insurance, those on SS that drew $400-$500 per month. Yet we see all people getting pregant and having us the tax payer foot the bills for care, the more mouths the more food stamps they get, when seen at the grocery store they eat better than those that work for a living. This is just wrong and a waste of my money.

    6. Casaubon, Houston says:

      Yall are looking at it wrong. You can always count on people to act in their own self interest. There is no reason repub or dem for the illegals to move away from their …shadow economy. Fear of punishment, jail, or deportation hasnt yet been a deterrent. To be honest they got it good, low to no taxes, cash based economy, social services and basic inferstructure that even in its worst forms is golden compaired to where they came from, mobility, and reduced social responsability. The dems are trying the grass is greener here amnesty approch (which isnt better then what they have now)and the reps are trying to drive em into the desert. We should try to dry up the grass their feeding off now and they'll move on their own.

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