Avik Roy Op-Ed in Detroit News

Patients suffer as program becomes more costly

(Editor's Note: The Detroit News on April 18, 2013, ran an op-ed on Medicaid expansion in Michigan by the Manhattan Institute's Avik Roy, who was also the guest speaker at the Mackinac Center's Issues and Ideas forum on Obamacare and Medicaid held in Lansing the same day. The live video webcast is available at noon at Below is the text of The Detroit News piece.)

Not long ago, I found myself on a bus with a family friend, a doctor who works at Henry Ford Hospital in Detroit. We were happily chatting about a variety of topics when I made the mistake of asking her about her experience with Medicaid, America's government-run health care program for the poor.

Her face turned dark.

"I've heard that our hospital loses more than 70 cents for every dollar we spend caring for Medicaid patients," she said. "It only seems to get worse, not better. Sometimes we don't even bother to bill Medicaid for our costs."

In Michigan, on average, Medicaid pays doctors 47 cents for every dollar that private insurers pay. More and more physicians have stopped taking new Medicaid patients altogether, because doctors who used to never think about these things are being forced to choose between shutting their doors to Medicaid patients or going broke.

A provision in the Affordable Care Act — also known as Obamacare — expands eligibility in the Medicaid program to adults with incomes of up to 138 percent of the federal poverty level. Washington has tempted states to sign on to this plan by promising to cover 100 percent of the additional costs for the first three years, and 90 percent beginning in 2020 and thereafter. The Heritage Foundation has estimated this will cost Michigan taxpayers $1.3 billion over the next decade, including $407 million in 2022 alone.

Gov. Rick Snyder, paradoxically, has said he expects the program to save Michigan $575 million through 2020 by shifting those costs onto the federal budget. Snyder's optimism hinges on faith in the dubious future funding promises of a fiscally stressed federal government. The experience of states that have already started down this path should serve as a warning to Michigan legislators to proceed slowly.

As fiscal pressures force an increasing number of doctors to stop accepting Medicaid, it has become harder for people on Medicaid to get a doctor's appointment. That, in turn, has made it harder for Medicaid patients to get the timely care needed to diagnose cancer and heart disease while these problems are still responsive to treatment. Study after study shows that the health outcomes for Medicaid patients are far worse than those for people with private insurance, and indistinguishable — at best — from those with no insurance at all.

It's a noble and worthy goal to provide health insurance to those who can't afford it. I myself support universal coverage; the wealthiest country in the history of the world should be able to protect every American from catastrophically large medical bills. But giving someone a card that says "health insurance" on it means nothing if that card doesn't come with access to help when it's needed. Health insurance isn't the same thing as health care.

It's arguably the worst aspect of Obamacare that half of its expansion of health insurance coverage is done through Medicaid, instead of the law's private insurance exchanges. While exchange-based coverage will be unnecessarily costly, due to the many mandates and regulations that Washington has imposed, it is likely that exchange-based insurance plans will provide access to doctors that is similar to that found in the traditional private insurance market.

On the other hand, implementing Obamacare's Medicaid expansion will burden Michigan taxpayers in two ways: By committing the state to a massive increase in health care spending, and by increasing the cost of health insurance for middle-class residents already struggling with rising premiums.

Thanks to the Supreme Court, Michigan has a choice to expand Medicaid or go an alternate route. Fortunately, our state has several worthy alternatives to expanding the Medicaid program. Neighboring Indiana has, for many years, run the most innovative low-income health insurance program in the country, offering subsidized health savings accounts and high-deductible health insurance to those who would ordinarily enroll in the traditional Medicaid program.

"Healthy Indiana," as it is called, is so popular — earning 98 percent support among its enrollees — that former Gov. Mitch Daniels put all of Indiana's state employees into the program. Iowa governor Terry Brandstad has proposed a "Healthy Iowa" program modeled after Indiana's.

Advocates of Obamacare's Medicaid expansion claim that it's an "all or nothing" choice: Enlarging a broken, wasteful federal program, or leaving many Michiganians without health insurance. But as state legislators learn more about their real options, they'll learn that there are far better ways than Medicaid to care for the uninsured, and far better ways than Medicaid to protect the interests of hard-working taxpayers.