The White House recently began a Spanish-language media blitz encouraging people to sign up for the Affordable Care Act (the ACA, or “Obamacare”)—which, for the lowest-income Americans, means Medicaid. Having a Medicaid card in your wallet is better for your health than having no coverage at all. But it’s also worse than just about any other form of health insurance in America.
Despite its high costs, Medicaid yields low-quality health outcomes for the millions of low-income Americans who must rely on it. In 2009, Senator Ron Wyden (D-Ore.) said, “Medicaid is a caste system. It is unfair to poor people and it is unfair to taxpayers.” For the Hispanic community—which includes many lower-income people and even more taxpayers—the senator’s comments ring truer than ever.
Medicaid produces poorer coverage, poorer care, and poorer health than private insurance. The ACA is massively expanding Medicaid, further stressing the resources available to enrollees. It also forces a substantial number of people out of private insurance and into a broken program.
Hispanics are especially likely to fall into Medicaid. According to a 2013 Kaiser Family Foundation report, 30 percent of nonelderly Hispanic-Americans were enrolled, compared with 15 percent of nonelderly, non-Hispanic Caucasian-Americans. According to the report, around one in four Medicaid enrollees is Hispanic; and roughly one-third of nonelderly Hispanics are uninsured altogether.
These numbers understate the importance of Medicaid for Hispanics—and of Hispanics for Medicaid. A recent Department of Health and Human Services study suggests that millions of uninsured Hispanics may qualify. The ACA aims to increase enrollment by about 15 million—a large share of whom may likely be Hispanic.
So why is Medicaid such a problem for Americans in general and Hispanics in particular?
Many who sign up for Medicaid are surprised to learn that it does not guarantee a critical component of health: access to care. Medicaid pays doctors and hospitals less than almost any other insurance program. So, many providers—often the best ones—refuse to accept Medicaid patients. Patients get lower-quality care, and they wait longer to get it. Many resort to seeking care in emergency rooms, where they encounter an entirely different set of problems. The ACA will inevitably worsen this problem by increasing demand for Medicaid services, while at the same time driving down the number of doctors willing to take Medicaid patients.
Even when a Medicaid recipient does get care, there is often little or no improvement to his or her actual health. A forthcoming book from the Mercatus Center at George Mason University, “The Economics of Medicaid: Assessing the Costs and Consequences,” cites a series of medical studies in which Medicaid patients who received care ultimately were no better off than the uninsured; in some cases, their health outcomes were worse.
Under the ACA. millions will lose access to private insurance coverage and instead find themselves with inferior coverage under Medicaid. For example, in any state that chooses to expand Medicaid, a family of four earning between $23,850 and $31,721 will lose eligibility for subsidized private insurance and, practically speaking, will have no choice other than to sign up for Medicaid.
Expanding health insurance coverage is a worthwhile objective, but society must never lose sight of the real goal: better health. Medicaid is a proven failure, and there are better, fairer approaches available. States must have greater power to address the specific needs of their local communities, and Medicaid should be structured so that recipients can shift into private coverage. We can—and we must—seek better alternatives rather than expand an ineffective and deeply unfair program.
— Dr. Robert F. Graboyes is a senior research fellow with the Mercatus Center at George Mason University and a coauthor of the forthcoming Mercatus Center book “The Economics of Medicaid: Assessing the Costs and Consequences.” Dr. Mario Villarreal is Economics Program Officer at the Institute for Humane Studies at George Mason University.