Loss of Medicaid isn’t a crisis. It’s a chance to make coverage better | Opinion

For decades, Medicaid has burdened taxpayers with billions of dollars in wrongly allocated payments while providing beneficiaries substandard care. Taxpayers and beneficiaries themselves would be well served by a swift process of redetermining whether those currently enrolled in the program are actually eligible — and reforms that make private insurance more affordable.

The size of Medicaid has swelled in recent years. During the pandemic, the federal government restricted states’ ability to “disenroll” people who no longer qualified, often because they’d moved up to a higher income level.

As a result, Medicaid enrollment increased by more than 23 million people between February 2020 and April 2023. Total enrollment was nearly 95 million at its peak.

Even in Texas, which did not expand Medicaid under the terms of the Affordable Care Act and has some of the tightest criteria for eligibility in the country, enrollment surged during the pandemic. Nearly 6 million people — about one in five Texans — had coverage through Medicaid and the state Children’s Health Insurance Program in May 2023.

After the COVID public health emergency ended last spring, states resumed “redetermination” procedures to establish Medicaid eligibility. Progressives are warning that millions of low-income Americans could end up losing Medicaid by mistake — say, by failing to respond to a letter requesting that they prove they’re eligible.

Such scaremongering is unwarranted. Anyone wrongfully disenrolled can sign up again. And in most states, including Texas, those folks can also get several months’ worth of retroactive coverage.

It’s far likelier that those being disenrolled shouldn’t be on the program at all.

According to the Congressional Budget Office, nearly 13 million Medicaid enrollees in 2022 weren’t eligible and had simply been kept on due to pandemic rules. Payments for these extra enrollees amount to waste.

And Medicaid’s issues with waste, fraud, and abuse run deep. In 2023, it distributed more than $50 billion in “improper payments” — expenditures for the wrong people or at the wrong amount.

Things were worse before redetermination. In 2021, Medicaid’s improper payments reached nearly $100 billion. That year, the program spent a staggering one in every five dollars incorrectly.

Even Medicaid’s proper payments are inefficient. The program, which now costs taxpayers north of $800 billion annually, spends nearly three times more per patient than employer-sponsored plans.

Many state officials are rightly trying to stop this waste through redetermination. Government shouldn’t squander money earmarked for the vulnerable on those who qualify for cheaper care elsewhere.

The Urban Institute estimates that most of the 18 million Americans projected to lose Medicaid during redetermination will get comparable coverage through the Children’s Health Insurance Program, the individual market, or some kind of employer-sponsored insurance.

Of the 3.8 million projected to become temporarily uninsured, roughly half will “have access to subsidized coverage, principally a subsidized exchange plan,” according to Brian Blase of the Paragon Health Institute.

There’s plenty the government could do to help disenrolled beneficiaries obtain quality coverage.

To start, the federal government could give low-income Americans vouchers to spend on employer-sponsored or other private health plans in lieu of the federal subsidies they’re already entitled to. Those funds could go into health savings accounts, or HSAs, where people can stow money tax-free for future health needs. Patients could access the money using a bank-issued debit card reserved for medical bills, as a paper published by the Paragon Health Institute recently proposed.

Incentivizing people to use HSAs would save money for virtually all taxpayers and prove especially valuable for lower-income Americans. According to one estimate, nearly seven in 10 Obamacare enrollees below 200% of the federal poverty line would benefit from an HSA option, with the average beneficiary saving around $1,500 per year.

Lawmakers should also expand ways for employers to offer coverage. That means loosening regulations so it’s easier for companies to purchase association health plans. These group plans cover multiple businesses, making insurance more affordable for startups and entrepreneurs with tight budgets.

Congress should also enshrine a Trump-era executive order that lets employers reimburse their employees for qualified health expenses, including Obamacare premiums. That way, employers can offer health benefits without purchasing a company-wide plan.

Medicaid should not be the largest health insurer in the country. The program exists to serve those who truly can’t afford care. States are rightly pushing a return to that original purpose by disenrolling those who don’t qualify.

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