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Obamacare's Medicaid Expansion Poses Challenge To Trump

President-elect Donald Trump’s began to suggest how he will address Obamacare and the spiraling cost of health care plans Tuesday through his nominee to head the Centers for Medicare and Medicaid Services.

His selection, Seema Verma, is an Indiana health care consultant who was instrumental in designing the state's unique expansion of Medicaid under the Affordable Care Act. The complex plan includes many provisions to ensure that participants do not game the system. It includes tighter safeguards than those in other states on how and when people can sign-up for coverage, the benefits they receive and the payment of premiums.

Conservatives have hailed the approach as adding accountability and taxpayer protection.

“I think you will see the trend of the federal government turning toward the Indiana HIP plan,” former Republican state senator Patricia Miller told the Washington Post. 

A study by the Kaiser Family Foundation, however, found that approaches like the one in Indiana “act as barriers to obtaining and maintaining coverage for low-income groups.”

There is little disagreement that Medicaid expansion under Obamacare has proven to be more expensive and popular than expected. According to a newly released study by the Foundation for Government Accountability (FGA), more than twice as many people than projected have signed up for Medicaid in the 24 states that loosened enrollment restrictions for able-bodied adults under the ACA - a total of 11.5 people instead of the projected number of 5.5 million.

Proponents of the expansion say the high enrollment of able-bodied adults demonstrates that Medicaid is the only realistic health care option for many working-age people.

“The number of people who have enrolled in expanded Medicaid shows that there’s a need for health care among people who may not be able to get coverage through an employer or the Marketplace,” Steve Wagner, executive director of the Universal Health Care Action Network of Ohio, said.

What people need, Wagner added, is access to preventive care to keep from needing more serious and expensive care later.

“Many people with chronic health issues, who may still be considered able-bodied by Medicaid, need health care to manage their condition and stay healthy enough to work,” he said. “People without insurance rely on the emergency room for care, so expanded Medicaid reduces uncompensated care costs for hospitals.”

Critics, however, say Medicaid expansion prioritizes the wrong group of people.

Based on a report by the Kaiser Family Foundation, an estimated 582,000 people were on Medicaid waiting lists in 2014 with an average wait time spanning over two years.

These people included seniors, children with developmental disabilities, and other vulnerable individuals.

Nicholas Horton, senior research fellow at the Foundation for Government Accountability and one of the authors of the FGA study, said the bigger story is that states are trapping more and more adults in welfare and diverting more resources away from the truly vulnerable.

“When you offer something to people for free, they're going to take it,” Horton said. “This is a program where the states, along with the federal government, have told able-bodied adults that all they have to do is stay unemployed, quit their job, or reduce their hours in order to get 'free' health care.”

People who may have been working just to keep insurance through their employer, are now able to quit and enroll in Obamacare expansion.

“These are all factors that could be contributing to this enrollment explosion, but again, the real story is not why – it's what impact is this having and the answer to that, unfortunately, isn't good. It's saddling taxpayers with even more of a burden than promised and it's taking even more resources away from the truly needy.”

Jason Pye, Director of Public Policy and Legislative Affairs and Director of Communications for FreedomWorks, said he was not surprised by the number of able-bodied enrollees because the State Children's Health Insurance Program had a similar outcome.

When the program was passed by Congress in 1997, 60 percent of children who were eligible for the program already had private health insurance coverage.

“When Congress considered expanding the program in 2007, the (Congressional Budget Office) noted that 77 percent of children eligible for expansion already had private health insurance coverage,” Pye said. “The crowd out effect is real, but it's often ignored by politicians pushing bad policy.”

In addition, taxpayers in states that have adopted the expansion have had to pay a steep price.

In Illinois, state officials initially projected that 342,000 able-bodied adults would enroll for the expansion, with expansion costs set at $2.7 billion for the first 2 years. In actuality, more than 650,000 able-bodied adults had enrolled for the state’s Obamacare expansion by April 2016 – nearly 3 years after the Illinois General Assembly authorized the expansion – with expansion costs ballooning to $4.7 billion during that timeframe.

“Thankfully, Congress is set to repeal the law entirely," Horton concluded.