Problems with Expanding Medicaid for the Uninsured

Abstract

Many proposals for financing health care for the uninsured recommend expanding the Medicaid program. They often advocate extending Medicaid to all those under the poverty level and standardizing program benefits. However, the proposals have ignored important problems that must be resolved if the plans are to be successfully implemented, the most serious being the fiscal impacts that such proposals would have on states. The current Medicaid matching formula fails to reflect either the size of a state's Medicaid program or its ability to pay for it. As a result, the proportional fiscal effort that expansion proposals would require of states would greatly exceed that required of the federal government. Additionally, the fiscal impact would vary widely and have little relationship to a state's current Medicaid program generosity. Besides fiscal problems, significant differences exist between Medicaid and private plans in the areas of benefits, cost sharing, managed care, cost containment, and provider payment. Under a national system of health care, these differences would limit program economies, and create problems with perceived equity, continuity of care, and migration effects.