Medicaid Is the Elephant in the Room

My patients, and the rest of the American public, are doing the health insurance math and realizing the numbers are staggering.

So is the Office of the Actuary in the Centers for Medicare & Medicaid Services. In a new report, recently published in Health Affairs, the office projected that U.S. health care spending will accelerate to an average growth rate of 5.8 percent per year, and that by 2020 the total amount spent for services will be a whopping $4.7 trillion, almost double what it is now and 20 percent of the gross domestic product.

The government portion of this vast expense is a staggering 50 percent, with 30 percent of that coming from the federal government.

At the center of this enormous disaster sits an expanded Medicaid, a bloated product that pays for all kinds of services including dental, eyeglasses, brand new wheelchairs to replace ones that work well, fancy assisted-living arrangements, and as many doctors' visits you want, provided you can find the doctor to take care of you.

Not surprisingly, the Office of the Actuary report reveals that in 2014, when Obamacare expands Medicaid to the point where it will ultimately accept at least 16 million more people, there will be an associated increase of 20 percent in Medicaid spending. Currently the federal government pays about 57 percent of Medicaid costs. Obamacare will pay close to 100 percent of the costs of the new enrollees for the first three years, 90 percent thereafter. This is without considering the billions of dollars that will be spent by the states to administer the expanded program.

There will also be millions more Medicaid patients from the ranks of the unemployed, as well as those who are still employed but are dumped on the state exchanges but can’t afford to pay the premiums. Medicaid is one of the primary reasons that many states are facing bankruptcy and are challenging Obamacare in the courts, hoping to dismantle it in order to survive.

The essential problem with Medicaid is that it is too easy to overuse; too easy to jack up the bill on the government dime. It's easy to be altruistic and say that the country’s poor should be taken care of, easy to claim that Medicaid is a manifestation of our charitable spirit, but from a more practical point of view, this amount of care is choking our economy and contributing substantially to our federal deficit.

It is clear that S & P looked frowningly at Medicaid as they made their decision to downgrade the U.S. credit rating.

What can be done?

Even as Medicaid-provider payments are increased to compete with Medicare and private insurance, excess services must be curtailed. Co-pays for non-essential services would go a long way toward discouraging overuse and saving money.

Most of the Medicaid patients I know seek their care in the hospital and hospital clinics where an established network of providers takes care of them. Most of these patients would be taken care of in these hospitals whether they had Medicaid cards or not. In fact, the law mandates that sick people can’t be turned away. But with a Medicaid card, studies show that they are more likely to seek medical help unnecessarily.

I believe that one of the roles of government is to ensure that its citizens have access to basic health care services. But Medicaid doesn’t provide that access. Only expanding the National Health Services Corp and building the clinics and facilities to care for the poor would ensure that basic services were available for all.

How ironic that hiring actual doctors and nurses to care for the poor while cutting back rather than expanding Medicaid might actually save money and help to reduce the federal debt.

Marc Siegel MD is an associate professor of medicine and medical director of Doctor Radio at NYU Langone Medical Center. He is a Fox News Medical Contributor and author of The Inner Pulse; Unlocking the Secret Code of Sickness and Health.