Any Republican attempt to replace the Affordable Care Act must address Medicaid, which has literally become the 800-pound gorilla in the health-care policy room. Simply rolling back the ACA’s Medicaid expansion would spike the number of uninsured Americans and expose Congress and the Trump administration to withering criticism. On the other hand, leaving Medicaid unchanged exposes the federal budget to the program’s unsustainable cost trajectory: Federal Medicaid spending has doubled over the past decade.

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President-elect Donald Trump on Tuesday morning picked the founder and CEO of a health policy consulting firm, Seema Verma, to serve as Administrator of the Centers for Medicare and Medicaid Services.

“I am pleased to nominate Seema Verma to serve as Administrator of the Centers for Medicare and Medicaid Services,” said President-elect Trump in a statement. “She has decades of experience advising on Medicare and Medicaid policy and helping states navigate our complicated systems. Together, Chairman Price and Seema Verma are the dream team that will transform our healthcare system for the benefit of all Americans.”

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A new study by Jonathan Gruber, one of the ACA’s chief architects, suggests that roughly two-thirds of new Medicaid enrollees in 2014 were eligible for the program under previous state eligibility criteria—meaning that they were not made eligible by the ACA. Gruber’s results, combined with much higher than expected Medicaid enrollment and spending over the past three years, has profound implications for the distribution of program costs and the effect of a repeal of the ACA. This means that the federal government has likely paid billions more each year than the law allows for the expansion population while states have spent billions less. Additionally, Gruber’s results suggest that if the ACA were repealed, a lot fewer people would likely lose coverage than previously thought.

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On Donald Trump’s victory Republicans in Congress are primed for an ambitious agenda, and not a moment too soon. One immediate problem is ObamaCare’s expansion of Medicaid, which has seen enrollment at least twice as high as advertised.

Most of the insurance coverage gains from the law come from opening Medicaid eligibility beyond its original goal of helping the poor and disabled to include prime-age, able-bodied, childless adults. The Supreme Court made this expansion optional in 2012, and Governors claimed not joining would leave “free money” on the table because the feds would pick up 100% of the costs of new beneficiaries.

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States are beginning to turn to hospitals to cover the cost of Medicaid expansion once the federal match begins to drop next year. The Affordable Care Act provides 100% federal financing for those made newly eligible for Medicaid under the law. The federal match rate falls to 95% in 2017, 94% in 2018, 93% in 2019, and then 90% in 2020 and beyond. Starting next year, eight of the 32 states that have expanded Medicaid planned to use provider taxes or fees to fund all or part of the states’ share of costs, the report said. These states have chosen to implement a new or modify an existing provider assessment specifically for the purpose of covering the costs of expansion.

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A new study in the New England Journal of Medicine suggests that the assumption that the ACA would lead to lower Emergency Room use was wrong as Medicaid expansion in Oregon produced a spike in ER visits. A surge in ER use will likely produce adverse health consequences for many and may be contributing to skyrocketing Medicaid expansion spending, which was 49% higher per enrollee in 2015 than the government expected.

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While health plans struggle to make profits off individuals buying commercial coverage on public exchanges under the Affordable Care Act, the insurance industry still sees promise in the law’s Medicaid expansion.

Take Wellcare Health Plans’ announcement that it has signed a deal to buy the Arizona operations of Care1st Health for $157.5 million in a deal that will add 114,000 Medicare and Medicaid beneficiaries in the state’s largest market, Maricopa and Pima counties.

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The cost of expanding Medicaid under President Barack Obama’s health care overhaul is rising faster than expected in many states, causing budget anxieties and political misgivings.

Far more people than projected are signing up under the new, more relaxed eligibility requirements, and their health care costs are running higher than anticipated, in part because the new enrollees are apparently sicker than expected. Rising drug prices may also be a factor.

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Medicaid expansion is a poor use of taxpayer dollars. Blase rebuts Dr. Aaron Carroll, a long-time supporter of the Affordable Care Act’s (ACA) Medicaid expansion, writing in The New York Times to encourage further expansion.  Carroll doesn’t not address new data showing government spending on Medicaid expansion enrollees is nearly 50% higher than the government projected, nor that Medicaid enrollees obtain only 20 to 40 cents of value for each dollar the government spends on their behalf.

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Medicaid expansion will not cure hospitals’ financial woes, according to a report released by the Congressional Budget Office. To put it bluntly, hospitals made a horrible deal by endorsing Obamacare in 2009. They agreed to annual reductions in their Medicare payments forever in exchange for a one-time increase in the number of insured patients. But Medicaid’s payment rates are below hospitals’ average costs, [and] the use of hospitals’ services among the newly insured will increase by about 40 percent as a result of having insurance.” If Medicaid pays hospitals less than their average costs, then inducing additional patient demand by expanding coverage could actually exacerbate hospitals’ shortfalls, not improve them.

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