Over a three-month period last year, Medicaid enrollment declined by roughly 2 million, a new study in the journal Health Affairs reveals. The sudden contraction was mostly the result of a wind-down of COVID-19-era policies that prevented states from removing people from the program, even if they were not legally entitled to it.
At the time, Democrats portrayed this stark reduction in Medicaid's rolls as a humanitarian crisis and urged states to delay the unwinding. "I am deeply concerned with the number of people unnecessarily losing coverage," Secretary of Health and Human Services Xavier Becerra told governors in June of last year.
But judging from the new analysis, that crisis never materialized. For the most part, people who left Medicaid got coverage elsewhere.
The finding cuts against the left's assumption that every attempt to roll back the welfare state will lead to misery for its former beneficiaries.
The evidence behind this assumption has never been weaker. As the authors of the Health Affairs study note, even though Medicaid enrollment dropped by 2 million after states regained the ability to ensure that enrollees were actually eligible for the program — and disenroll them if not — "there was a much smaller, statistically insignificant decline in overall coverage..."
How is this possible? According to the authors, "[i]t appears that for many people, the availability of employer-sponsored insurance and other private coverage offset Medicaid coverage loss."
There are two lessons to draw from this series of events. The first is that, had the pandemic-era laxity in eligibility-enforcement continued, more than 1 million people who neither qualified for Medicaid nor needed government-run coverage would have remained wards of the American welfare state — and at outrageous cost to taxpayers.
Indeed, each full-benefit Medicaid enrollee cost state and federal taxpayers over $9,300 in 2022, according to the Medicaid and CHIP Payment and Access Commission. The program's total spending that year exceeded $805 billion — up from an already exorbitant $613.5 billion the year before the pandemic hit.
Given Medicaid's massive, growing, and unsustainable cost, allowing even a single ineligible enrollee to enroll in the program is a waste of scarce taxpayer dollars.
But there is a second lesson to draw from the Health Affairs study. Deliberate expansions of Medicaid have crowded out private coverage.
This is nothing to celebrate, as most Americans would much prefer a private plan to the coverage delivered through Medicaid.
Consider a recent survey by my own organization, the Pacific Research Institute, in which 84% of those with private individual-market coverage called it good or very good. Among those insured through an employer, three-quarters said the same about their coverage.
That's compared to just two-thirds of Americans with Medicaid.
None of this has stopped Democrats from trying to expand Medicaid further. As of March 2023, Obamacare has added more than 24 million Americans to Medicaid's rolls.
Ten states have yet to adopt that expansion. Cajoling them to do so is among Democrats' biggest policy priorities.
Doing so would make even more people dependent on taxpayers. According to a recent estimate from the Foundation for Government Accountability, should the remaining 10 states adopt Obamacare's Medicaid expansion, some 5.8 million people would be forced off their current private health plans and onto welfare.
The progressive dogma that any growth in Medicaid is a victory — and that any decrease in enrollment a self-evident disaster — is as simplistic as it is fallacious. The ongoing Medicaid unwinding has moved many Americans off the public dole and onto private health insurance.
Anyone who sees this transition as a tragedy and not a triumph has a warped vision of health policy.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.