Is Medicaid expansion truly destroying America?

The Heritage Foundation--the conservative think tank that unwittingly brought us the Affordable Care Act--wants to let you know that Medicaid expansion under the healthcare reform law is destroying America.

That's how Heritage President Jim DeMint sees it, anyway. DeMint's about as free market as they come: He gave up his low six-figure job as a U.S. senator from South Carolina two years ago to become Heritage's president. DeMint was paid roughly $638,000 for nine months worth of work in 2013, putting him at around $850,000 per year, according to Heritage's most recently available tax return. Heritage is also sitting on assets of nearly $200 million, an eyebrow-raising sum given it is not a grantmaking organization.

Entitled individuals and institutions usually have predictable views on entitlements, so DeMint's commentary at is really no surprise. "We haven't heard enough about how expanding Medicaid will cause permanent damage to America, our healthcare system and our citizens," was how he introduced his 750-word opinion piece, which ran in both conservative and mainstream publications throughout the country last week.

DeMint's thesis: Since Medicaid usually pays rates below the cost of delivering care, it's caused cost-shifting by hospitals and other providers, who charge higher rates to those with commercial insurance. That much may be true, although the phenomenon of provider-based cost-shifting has been in dispute by economists for many years now and has even been linked to actually cutting costs on the commercial side. But DeMint has suggested that cost-shifting associated with Medicaid is an ongoing trend, and if expansion isn't rolled back it will eventually push everybody out of health insurance coverage and force doctors to only accept cash from all patients. He even suggested it could doom the Medicare program.

He also ignored the fact that hospitals--or any enterprise, really--will take some money for services, and that temporarily raising Medicaid payments to attract more doctors actually succeeded. 

Actually, the continued double-digit premium jack-ups from organizations like Blue Shield of California, the often unconscionable pricing practices of big pharma and reckless overutilization of expensive services have played much larger roles in making U.S. healthcare delivery the most expensive on earth.

No mention of that in DeMint's column. Likely many of those players have a role in the $102 million in grants Heritage received in 2013 (individual donors do not have to be disclosed on tax forms).

DeMint also ignored the fact that some two dozen states have refused to expand Medicaid. That's provided a clear macrocosm of what America's healthcare delivery system looks like with and without expansion. In those non-expansion states, rural hospitals are in constant danger of closing, and even larger hospital systems have filed for bankruptcy, according to the Houston Chronicle.

But perhaps the most telling difference came from a new study by Quest Diagnostics, the big laboratory company. The number of confirmed cases of diabetes rose 23 percent in states that expanded Medicaid, according to Quest's voluminous testing data. That suggests a whole bunch of at-risk patients never had access to basic medical services (a blood glucose panel is about the simplest test that exists).

By contrast, the rate of new diabetes cases in the non-expansion states has barely budged. Either this is a demographic miracle, or DeMint and company bank on a large enough loss of eyes and feet from would-be Medicaid beneficiaries in non-expansion states that they soon won't be able to protest their inability to access basic care.  

Which is not all that far-fetched, actually. DeMint's article concludes with the warning that "it's time for proponents of Obamacare and the expansion of Medicaid to understand that they are anything but compassionate. They are dooming many Americans to second-rate healthcare." No mention of all those millions of people in DeMint's free-market utopia who would have no access to healthcare at all.

I'm a pretty big free marketer myself, so I'll make the Heritage's board of directors an offer: I'll do DeMint's job, but only for $300,000 a year. That's more than enough to keep my family in material comfort, and Heritage can use that cost savings to burnish its claims of embracing fiscal prudence. It will also allow Heritage to boast job creation, as that extra money could be used to hire a few more executive assistants.

More importantly, you'll get a bunch of far more pithily written opinion pieces. And unlike those from the good senator from the Palmetto State, they'll actually contain facts. - Ron (@FierceHealth)

Related Articles:
Experts say rural healthcare in crisis
Most states to revert Medicaid pay to 2012 rates
Medicaid expansion leads to more diabetes diagnoses 
Blue Shield of California loses its tax-exempt status 
Study: Medicare cuts don't promote hospital cost-shifting
Hospital cost-shifting may be overblown 

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