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 and well-being than having no coverage at all. But it’s also worse for your health and well-being than just about any other form of health insurance in America.
The fundamental problem with Medicaid is that, despite its high costs, it 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 and Medicaid
Hispanics are especially likely to fall into Medicaid. According to a 2013 Kaiser Family Foundation (KFF) report, 30 percent of nonelderly Hispanic-Americans were enrolled in the program, compared with 15 percent of nonelderly, non-Hispanic Caucasian-Americans. According to the report, around one in four Medicaid enrollees is Hispanic, and close to one-third of nonelderly Hispanics are uninsured altogether.
These numbers understate the present and future importance of Medicaid for Hispanics—and of Hispanics for Medicaid. According to another 2013 KFF report, almost 14 million uninsured Americans who are eligible for Medicaid and related public programs are not enrolled. And a recent study by the Department of Health and Human Services suggests that millions of uninsured Hispanics may qualify for Medicaid. The ACA aims to increase Medicaid enrollees 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 enrolling in the program 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 give up in frustration and 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.
For those who work for small businesses that cannot afford to provide insurance, Medicaid is also the likely fallback. Eligibility depends on income and family size, so those just starting to climb the economic ladder and those with larger families are likelier to end up in Medicaid. In industries like construction, where income rises and falls, employees may find themselves on Medicaid in some months, but not in others; many will bounce back and forth between Medicaid and private insurance—sometimes several times per year—as their income fluctuates or family members move in or out of the house.
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 in achieving this goal, and there are better, fairer approaches available. One approach would be for the federal government to give states greater power to address the specific needs of their local communities. Another would be to structure Medicaid so that recipients could shift into private coverage and care. 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.