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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Legislative auditors said Wednesday they can’t confirm that the Medicaid application backlog numbers state officials have reported are correct.

Applications have been backlogged for about a year following the rocky rollout of a new computer system, an administrative decision that funneled all applications through a single state agency and a larger-than-expected influx of applications during the Affordable Care Act open enrollment period.

The auditors said the Kansas Department of Health and Environment gets the backlog number from Accenture, the contractor that built the new software platform known as the Kansas Eligibility Enforcement System, or KEES.
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The Affordable Care Act has expanded Medicaid and has added to its unsustainable spending trajectory, according to a report from the Mercatus Center.

“Before the Affordable Care Act, the federal government provided states with an open-ended reimbursement of at least half of each state’s Medicaid expenditures,” the report states. “Because of the federal reimbursement, both state Medicaid spending and federal spending (through the reimbursement) have increased significantly since the program’s inception.”

According to the report, experts did not account for how states would respond to the reimbursement rate and underestimated the number of enrollees and their related costs.

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In new research published by the Mercatus Center, I analyze the causes and impact of the much higher-than-expected enrollment and spending associated with the Affordable Care Act (ACA) Medicaid expansion. Though unpredicted by Washington experts, the results were predictable. The federal government’s 100% financing of state spending on expansion enrollees has led states to boost enrollment and create high payment rates. (See this 2-minute Mercatus video for additional information on this significant development.)

In states that have expanded, enrollment and per enrollee spending are nearly 50% higher than predicted. While interest groups within the states—particularly hospitals and insurers—benefit from the higher spending being charged to federal taxpayers, substantial evidence suggests much of this new spending is wasted or provides little value for its intended recipients.

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