Medicaid Expansion Not Always The Best Answer

By Kyle Wingfield

Georgia did not expand its Medicaid program under the Affordable Care Act, as everyone knows. Except that, in a manner of speaking, it did.

Since the Affordable Care Act was passed, Georgia has increased its Medicaid rolls by almost the same number of people projected under expansion. Spending on Medicaid, including both state and federal funds, likewise has increased by about the same amount as projected under expansion.

Oddly enough, the many benefits promised if the state expanded the program have not been realized. That mightn't seem so odd to opponents of the idea, some of whose warned negative impacts actually have come to pass.

First, let me explain. It is true that Georgia has not raised the income ceiling for Medicaid to 138% of the federal poverty level, as envisioned in the Affordable Care Act, aka Obamacare. But it is also true that Georgia nevertheless has seen a comparable surge in Medicaid enrollment.

Between 2010, when Obamacare was passed, and September 2020, the most recent month for which data are available, enrollment grew by more than 490,000 – an increase of almost one-third. That compares to projections that expansion would increase enrollment by about 650,000 per year during the first decade.

Similarly, Georgia's total spending on Medicaid has grown by about $4 billion during that time. The projections for expansion were about $4.5 billion per year during the first decade.

In other words, while Georgia did not expand eligibility, the results have been about the same, in terms of new spending and enrollment.

Now for that aforementioned oddity. Proponents of expansion claimed a bump in Medicaid spending would boost the economy: creating tens of thousands of jobs, increasing sales taxes by millions of dollars and – perhaps most often invoked – saving rural hospitals. Yet, the bump Georgia did experience appears not to have had those effects.

Yes, healthcare employment increased during the past decade. But it grew at a slightly slower clip (28%) than during the previous 10 years (30%).

Meanwhile, state sales tax revenues have not even kept up with inflation. If there was a hidden boost from all this Medicaid spending, it is well-hidden indeed.

Finally, the rural hospital closures have slowed but not ceased; two more closed their doors in 2020. Two of the main drivers in this sad trend, Georgia's declining rural population and the low percentage of rural patients with insurance that pays the full cost of the care they receive, aren't helped by a surge in Medicaid coverage. Because Medicaid pays less than the full cost of care, it most likely would mean the hospitals simply saw more patients on whom they lost money.

At best, this would only slow the bleeding, not stop it. That's why the notion that more Medicaid would lead to more doctors and financially healthier hospitals – without a significant increase in reimbursement rates, which are never factored into the expansion's costs – has always been fanciful.

But there is one prediction about expansion that has come true: Medicaid has swallowed the state budget.

I've heard complaints lately about a decline in state spending per capita since before the Great Recession. Comparing the peak before one recession to what we hope is the low point after another one is rather unorthodox, but let's go with it for the sake of argument.

This supposed decline is true only in a narrow sense: Including only state funds, and adjusting for inflation, Georgia plans to spend about $67 less per person in the next budget than in 2008. Including federal funds, however, spending will be higher.

Yet, even as real state spending per capita has fallen slightly, it has risen by $76 per resident for Medicaid. Expansion would have piled more spending on top of that. Even without expansion, Medicaid has crowded out new spending for most other state programs.

The answer is not to sink another $4.5 billion per year, and hundreds of thousands more enrollees, onto this broken program. It's to seek better ways to improve healthcare access for all Georgians, in a way Georgia can actually afford.

Kyle Wingfield is president and CEO of the Georgia Public Policy Foundation, found online at www.georgiapolicy.org.