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Conference Call: Does Medicaid Expansion Really Save Lives?

On the call:

Chris Conover | Adjunct Scholar, American Enterprise Institute

Avik Roy | Senior Fellow, Manhattan Institute

**Due to a technical malfunction, the beginning of this conference call did not record. Audio begins during Chris Conver’s response to this question:

“In layman’s terms, can you talk about where the “Medicaid expansion saves lives” numbers come from, and whether they’re accurate?”

Chris Conover

…avoidable deaths each year among low-income Americans who remain uninsured. The apparent precision of these predicted numbers makes this study sound far more scientifically accurate and valid than it really was.

The higher figures are based on a study that compared three states that substantially expanded adult Medicaid eligibility since 2000; New York, Maine, and Arizona; with neighboring states that didn’t do an expansion. So, this Health Affairs study simply took the average results from all three states and extrapolated them to the entire nation without telling you that in the original study on which this was based, only one state, New York, actually demonstrated a statistically significant decline in mortality attributable to Medicaid.

This is equivalent to a doctor telling you that the blue pill will reduce your risk of death even though two out of three patients in the clinical trials of that drug showed no benefit whatsoever. It’s worse than that, since New York’s Medicaid program ranks #8 in the country according to Public Citizen. The states where Medicaid had no apparent effect on mortality ranked #13, Maine, and #24, Arizona.

Thus, most states that have not expanded Medicaid are much more likely to get results like Maine’s and Arizona’s than New York’s. That is, their characteristics are more similar to the patients who didn’t benefit from the blue pill than the one in three patients who did.

Moreover, we don’t even have a lot of confidence that the apparent mortality benefit in New York even can be reliably attributed to Medicaid. The study did not measure actual mortality experience of people with and without Medicaid. Instead, it looked at county level non-elderly death rates for all causes before and after Medicaid expansion and then tried to make those counties as statistically comparable as possible.

Taken at face value, the study implies that Medicaid expansion reduces external causes of death; such as injuries, suicides, homicides, substance abuse; by 50%. Now it’s not impossible for health insurance to reduce mortality risk due to such causes, but it seems highly improbable that Medicaid coverage would allow such causes of death to be cut in half, yet that’s what the study implies if you believe the results at face value.

There’s another good reason that the mortality reduction observed in New York might simply be a statistical artifact. New York was being compared to Pennsylvania, which Avik has shown differed in important ways by having a lower poverty rate and far lower rate of ethnic or racial minorities. Since Medicaid appeared to produce the biggest mortality gains among ethnic and racial minorities, it’s easily possible that using a state more comparable to New York would have eliminated the apparent mortality gain that instead was attributed to Medicaid.

Now, the second study that was used to predict that Medicaid expansion would save over 7,000 lives was even more flawed. The first problem is that this study actually estimated the mortality benefits of giving uninsured people private coverage, not Medicaid. Avik has documented the huge body of scientific evidence that rather consistently shows that private coverage is superior to Medicaid both in terms of providing access to care but also improving health outcomes. It is wholly inappropriate to claim or imply that Medicaid expansion could achieve comparable results as private health insurance coverage.

Unlike the quasi-experimental Health Affairs study, which compared two groups before and after Medicaid expansion, this study compared two groups at one point in time and then observed how many had died by a later point in time. Now, it tried to make the uninsured and those with private coverage as statistically comparable as possible, but it couldn’t control for important factors such as drunk driving, speeding, failure to use seatbelts, etc., and on every metric of health risk that the study did look at; obesity, lack of exercise, smoking, and drinking; the uninsured live riskier lives than those with private coverage.

There’s no way to decisively rule out the possibility that the apparent mortality gain from having private insurance instead results from these unmeasured differences in lifestyle. Not surprisingly but disappointingly, the Health Affairs authors never tell you that there was a nearly identical study done with a sample nearly 70 times as large that showed no statistically significant difference in mortality for those with employer-based coverage compared to those who were uninsured.

The bottom line from where I sit is that I can state with great confidence that the Health Affairs study has grossly overestimated any mortality gains to be had from Medicaid expansion. The evidence that Medicaid even has a positive effect on adult mortality risk is far more thin than the single payer advocates who wrote this study have led you to believe. The quasi-experimental results from the Medicaid expansion study from a scientific point of view are somewhat stronger than the observational results from the second study, but even as they relate to the single state where a statistically significant reduction in mortality was associated with Medicaid expansion, we cannot be certain that this result was genuine.

It is certainly inappropriate to extrapolate that one rosy result to states that are much more likely to have outcomes that are more similar to the two states where Medicaid produced no statistically significant improvement in mortality.

Christie Herrera

Thanks, Chris. Avik, I want to bring you in here. Can you talk to us about your book, How Medicaid Fails the Poor, and can you give us your opinion on how someone can claim that Medicaid expansion saves lives when we know, and a whole host of research tells us that health outcomes in Medicaid are so poor.

Avik Roy

Let me just start by summarizing Chris’ commentary in a less polite and more blunt way than Chris would ever do, because he’s a gentleman, and that is this, that anyone who makes the claim that Medicaid improves health outcomes is either not accurately or honestly representing the medical literature or doesn’t know the medical literature.

The medical literature is overwhelming on this point. It’s overwhelming on the point that Medicaid at best doesn’t improve health outcomes and at worse may be slightly worse. So why is it? Why is it that Medicaid does so poorly?

Intuitively, it makes no sense. We spend $450 billion a year on this program. How is it possible, that with all that money, Medicaid performs so poorly on health outcomes? That’s the subject of this slim volume, How Medicaid Fails the Poor, which I published through Encounter Books. It’s a $4.00, 48-page book. It takes an hour to read. It’s really more like a long magazine article. I think it’s very digestible for this audience if you’re interested in learning more about these issues. In there I review some of the data that Chris talked about in his remarks.

Let me try to do this. Let me try to explain it in a kind of a flow chart. Imagine if I was sitting in front of a screen and trying to describe a flow chart on a blackboard. Start with this: When the Medicaid program was designed in 1965, it was designed along highly ideological left-wing lines, which means, you’re paying for this program, and the poor are not expected to pay for anything. In fact, the way Medicaid is designed, the beneficiaries of the program, it’s required by law, that the beneficiaries have minimal-to-zero financial obligations for their own care. It’s effectively all free to the end user.

The end user can’t really have meaningful co-pays. The end user can’t have meaningful deductibles. It’s all paid for by the government. What has that resulted in? The other thing, actually, I should mention about Medicaid is that it’s jointly run, of course, as you all know, by states and the federal government. Those are the two key elements of the Medicaid design that are distinctive and relevant to this discussion.

The first, that the poor are not expected to pay anything; the second, that it’s jointly funded by the states and the feds. How does that play out? Because the poor don’t pay anything, they have no co-pays, no deductibles, nothing, there’s almost no way to steer these individuals into more cost-efficient care. For those of us who have private insurance, for example, if you have high cholesterol, if you get diagnosed by your doc for high cholesterol, the insurance company that the doc sends your prescription to is going to say, well, listen, if we start you off with a generic cholesterol-lowering drug, your co-pay is going to be 5 bucks, 10 bucks, whatever, but if you insist on having a branded drug that may only be incrementally better than the drugs that are generic today, then we’re going to make you pay a co-pay of say 40 bucks, 50 bucks, whatever, or we may not even reimburse for it at all.

In that way, insurance companies steer you towards more cost-effective, less pricy care. In the Medicaid program, nobody can do that, because the federal government prohibits, through this congressional statute, the ability of insurers or the government, the state governments, to run their programs in such a way that, for example, if you go to the emergency room. If you’re on Medicaid and you go to the emergency room to get non-urgent care, the co-pay in theory on a private plan would be much higher than it would be for getting that care through a normal doctor. But the Medicaid program isn’t allowed to charge you a meaningfully higher co-pay to go to the emergency room to get that care.

So what happens? A lot of people on Medicaid go to the emergency room because they know they’ll get treated right away. What has happened as a result of that? The Medicaid program has been over-budget in every state and now we pay that $450 billion a year because the beneficiaries of the program have no incentive to use the health care system efficiently, because these co-pays and deductibles are fixed by law to be basically near zero.

So what ends up happening as a result of that? States go over budget, and they can’t afford to keep funding the Medicaid program. The only things they’re effectively allowed to do without much interference from the federal government is pay doctors and hospitals less money to provide the same amount of care. Everything else, like charging co-pays, is either prohibited expressly, or it’s blocked by federal bureaucrats at HHS.

The only thing politically and from a technical standpoint, and legally, that states have really…The thing about the squeaky wheel gets the grease. I mean, the squeaky wheel in this case is reimbursement rates for doctors and hospitals, so what states do is they cut back on what they pay doctors and hospitals to care for Medicaid patients, because that’s the only way they can rein in cost.

They can’t ask poor people to pay premiums. They can’t ask poor people to have deductibles. They can’t ask poor people to have co-pays. So what’s left? Basically the only thing that’s left is paying doctors and hospitals less to provide the same care. Over time, what’s happened with that? With that decision by states, every year, they crank back reimbursement rates of doctors and hospitals. Doctors, in particular, have dropped out of the program. An increasing number of physicians don’t accept Medicaid patients, and as a result, it becomes very, very difficult for Medicaid beneficiaries to get, not only primary care but specialty care.

There was a study a couple of years ago that was published, I believe, in the New England Journal of Medicine and another in Pediatrics, that showed that if you were a child with a broken arm about 60% of physicians who were specialists, orthopedic pediatric specialists, wouldn’t accept your insurance whereas if you had private insurance, almost everyone did.

If you had an acute asthma attack and you were a kid, a lot of doctors wouldn’t take your insurance if you had Medicaid. So is it any surprise that if physicians don’t take your insurance and won’t see you when you have an acute medical problem, let alone just general annual physicals and primary care check-ups, is it any surprise that the health outcomes would be worse? So the health outcomes are worse, because people don’t have access to care. The reason they don’t have access to care is physicians don’t take Medicaid. The reason physicians don’t take Medicaid is because states have been rolling back how much they pay physicians to care for you, and on and on.

That again results from the fundamental design of the Medicaid program that goes back to 1965 and has never been changed. We talk a lot in our circles about how ObamaCare is unfixable and all this kind of stuff. The program that’s most unfixable in our health care universe is Medicaid. Medicaid is so broken that it basically can’t be fixed. This is the great danger of expanding Medicaid, is that if you expand Medicaid, you’re not going to be able to reform it later.

You’re going to make it even harder to reform Medicaid because so many more people are going to be on that program and affected by any single thing you do to it, to say, increase the premiums or increase the co-pays, or what have you, that it becomes even harder to reform. It becomes even more of a pressure on state budgets and all sorts of other state-based priorities like education, policing, get squeezed, because more and more money, more and more tax revenue has to be spent on Medicaid rather than other programs.

It’s an incredibly dangerous decision to expand Medicaid, and it’s been quite disappointing that so many Republican-controlled states have done so already. We have to hold the line here because the states that haven’t expanded Medicaid thus far, they can be expanded at any time. Then once that expansion goes through, it’s going to very hard to roll back. It’s very important that people don’t lose sight of that and remain vigilant because in the states that didn’t expand Medicaid last year, there continues to be a push from the left to expand Medicaid this year, and they’re going to have a couple of victories from what it looks like.

Christie Herrera

Remember that if you’d like to ask Chris or Avik a question, you can press *6 to get into the question queue, but before we go to some of our live questions, I want to follow up on a few points.

Avik, you brought up emergency rooms and I think there are some folks on the call that aren’t familiar with the Oregon experience. Just a quick line about Oregon, for those of you who don’t know, Oregon expanded Medicaid through a lottery system, which really allowed researchers to study the effect that Medicaid has on people’s health.

Avik, can you talk about what happened in Oregon and what it can tell us about Medicaid, health outcomes and emergency room use?

Avik Roy

Well, I think anybody who is interested in learning how Oregon has singularly destroyed its health care system should read Mark Hemingway’s article in The Weekly Standard last week where he describes from beginning to end how John Kitzhaber, who is now the governor of Oregon, and was an emergency room physician and state representative or state senator in Oregon 20 years ago, has been primarily responsible for everything that Oregon has messed up regarding its health care system.

One of the things they of course messed up was their Medicaid program. What they did was, they expanded Medicaid back in the early ‘90s back when all the liberals were excited about HillaryCare, a number of enterprising democratic policymakers expanded Medicaid as a way of achieving universal coverage. Of course, when Oregon expanded Medicaid, what happened? It massively destroyed their budget because all of a sudden there was all these people signing up for it, there was all this spending that they didn’t anticipate, and they had to pare back the program.

When they pared back the program, they ended up, making a very long story short, that’s what ended up causing this lottery, is that they had expanded eligibility for the program but didn’t have the funds to actually enroll everyone who wanted to sign up. They created a lottery where several tens of thousands of people if they won the lottery they would get Medicaid, and those that lost the lottery wouldn’t get Medicaid.

Some enterprising economists looked at this from MIT and Harvard, and said, hey, this is a natural experiment that we can use to follow these patients over time and see if Medicaid is making a difference in their health outcome, precisely because most of the literature has shown that Medicaid doesn’t improve health outcomes, and these guys wanted to show, and gals, I should say, that these guys and gals wanted to show, actually, no, Medicaid does help people, and this is our best chance to prove it.

They tracked these patients over time, the ones that didn’t win the lottery and were uninsured, and those that “won the lottery” and got Medicaid to see how they did. What they found after two years, and again, I’m sort of summarizing the story here, what they found after a two-year study was that Medicaid did not improve health outcomes. It didn’t make patients live longer. It didn’t improve their control of their diabetes, their high blood pressure, their cholesterol, nothing.

This was surprising to some of their researchers who were very optimistic about Medicaid’s value. It wasn’t surprising to those of us who are really familiar with the medical literature on this topic, and so it created this big firestorm, but I think it stands as the definitive argument in favor of our point of view, which is that Medicaid is not helping people, and if we want to offer people good health care, Medicaid is not the place to start, not the place to end, not the place we should be talking about this at all.

A second point that we should bring up with the Oregon study that comes from something that was published just very recently, which is this whole idea, well, one of the principal reasons we need to expand Medicaid and expand coverage generally, is because it will keep people out of the emergency room. Right now people can get free coverage through the emergency room, and if they have Medicaid, they’ll stay out of the emergency room, and that will save everyone money.

Well, that has all the evidence, again, has shown that isn’t true. In Massachusetts they found that for every dollar they saved in emergency room spending, they increased overall health spending by 3 to 4 dollars. They said they were losing money net on this whole process, and in fact, the Oregon study found that when they expanded Medicaid, they dramatically increased the number of people who were using the emergency room for non-urgent care. Far from reducing emergency room usage by this population, it actually, the Oregon Medicaid expansion expanded the number of people who were inappropriately using the emergency room and costing the system more money.

This was another talking point from ObamaCare and also from RomneyCare, it must be said, that was demolished by this Oregon study. It’s, again, this is a situation where the data and the facts are very, very much on our side and have been neglected by the left because they want to ignore the data or massage the data or manipulate the data to show an effect or a relationship that it doesn’t.

One other point I want to make about Medicaid that sort of outside of this whole issue of health outcomes, something that’s important to be aware of, is that more than a third of the people who “benefit” or who would be the recipients of the Medicaid expansion are prison inmates.

It turns out that a third…The Justice Department estimates that about 35% of the Medicaid expansion enrollees will be people who literally are convicted criminals. That is the biggest chunks or subpopulation of people who will get that coverage through Medicaid. Now, from a policy standpoint, we can have a discussion about what’s the best way to reintegrate convicted criminals back into civil society and maybe health coverage is something we need to think about along those lines, but it’s important to understand that a big chunk of this population is not the nice single mom who has been denied coverage because of a preexisting condition and can’t get coverage, and therefore Medicaid is a last resort.

The big chunk of this population are people who are, again, convicted criminals who are getting coverage through ObamaCare and in many cases doing so because taxpayers are footing the bill. I mean, taxpayers, of course, are footing the bill entirely for the Medicaid expansion in one form or another.

Christie Herrera

Yeah, I think you’re right. I mean, we hear a lot about who this population, who this Medicaid expansion population is and it’s not kids. It’s not the disabled. They’re already covered by Medicaid today. To follow up on your point about people going to the ER even with Medicaid expansion, I think you’ll see even the most left-wing Medicaid expansion supporter will agree that even if we do expand Medicaid there’s going to be a lot of education that needs to happen for these people in order to get them to go to the doctor if they can find a doctor that will take them rather than going to the ER…there was something good in Kaiser health news a few weeks ago about that.

Chris, before we go to live Q and A I want to bring up one point, and it’s kind of a little in the weeds but I think you could set us straight.

Chris Conover


Christie Herrera

We hear a lot about new studies that say Medicaid really leads to poor health and expansion supporters counter, and they say, well, we’re going to dismiss that research outright because the studies that you’re citing don’t control for things like whether or not someone is poor, whether or not someone can speak and understand English. All of these other factors might contribute to the fact that Medicaid leads to poor health outcomes, and it’s not Medicaid itself. Could you talk about some of those criticisms?

Chris Conover

Right. There’s no question that observational studies generally are weaker standard than the gold standard of scientific evidence or just randomized controlled trials. That’s what the FDA uses to approve drugs, for example. But expansion supporters have to be a little consistent. It’s inappropriate to criticize observational studies as flawed whenever they show that Medicaid is worse than private coverage or even in some cases, as Avik has shown, than being uninsured, but then turn around and rely on observational studies to support a claim that Medicaid expansion would save lives, and that’s what the Health Affairs study did.

Moreover, it’s certainly true that observational studies cannot control for everything, so there always will be some unmeasured effects, but Avik’s done a great job of dissecting the massive Virginia Surgical Outcomes study of nearly a million patients. It’s an observational study, to be sure, but it also was able to control for the lion’s share of patient differences that reasonably could be expected to affect surgical outcomes. It’s difficult to believe that any remaining unmeasured differences would have been large enough to account for the striking difference in mortality rates for Medicaid patients compared to those with private coverage or no coverage.

Moreover, consistently finding that private coverage beats Medicaid in study after study, accords a little more confidence that the health differentials that these studies are measuring are actually real, and not a statistical artifact. Remember that for the longest time the tobacco industry rebutted claims that smoking harms health using the very same criticism that everything was based on observational evidence. But of course, no IRB in the country would authorize a study in which people were randomized into smoking or into being uninsured, so while observational studies may not be the best evidence, they often are the only evidence available, and we shouldn’t discount them as saying they offer no evidence whatsoever.

The consistency of the finding that Medicaid is inferior to private coverage across study after study after study gives me some confidence that’s true, not a statistical artifact.

Christie Herrera

We’re now going to open the call for questions.

If you have a question, again, please press *6 to be placed into the question queue. Again, that’s *6.

We have a question that was sent in by a Virginia legislator, and the question is this: The Arkansas experiment is on the ropes as I understand it. Can you send us the details on this situation? Arkansas is being used as an example in Virginia to push expansion. What do you think about the Arkansas model?

Avik Roy

I’ve written a bunch of stuff on the Arkansas model and if you just Google my name and Forbes and Arkansas Medicaid, you’ll find it all. Right now, in fact, I was just talking to someone who’s plugged in down there last night, right now, the Arkansas legislature, which is controlled by Republicans, it has voted down a couple of times the appropriation for this Medicaid expansion which was passed last year. The leadership, the pro-expansion leadership of the legislature has insisted they’re going to bring this before a vote every day until the recalcitrant legislators buckle, or at least enough of them do, that the expansion will once again pass. That process is ongoing. We’ll see what happens there and I think it’s extremely important that as a side note that we martial a lot of resources and try to defeat the expansion of Medicaid in Arkansas if it’s possible. So, what happened in Arkansas and what makes it interesting?

When I first heard about what was going on in Arkansas from some of the Republicans who were supporting it, a year or two ago, I was intrigued because what they presented, what they claimed they were trying to do was basically say, look, instead of expanding Medicaid, we’re going to give this Medicaid population exchange-based insurance. We’re going to give them just like someone who would enroll in the exchange today who was poor, we’re going to give them the dollars and say, you know, using that voucher of premium support payment, we shop on the exchange and we find a plan that suits you.

To me, this was a massive improvement on the Medicaid approach, because what did I say were the big problems with the Medicaid approach? That you don’t have these co-pays. You don’t have these deductibles. So if you’re actually saying to someone, okay, we’re going to give you the dollars. Go buy insurance on the exchange. In theory, what you’re saying is, you’re going to give them normal private insurance, albeit ObamaCare-regulated private insurance, but it’s a massive improvement relatively speaking from the way that the traditional Medicaid program works.

Well, it turns out that that pitch, that presentation of what Arkansas was doing was not true. What, in fact, HHS in Washington had said to Arkansas was yeah, we’ll let you create this kind of exchange window dressing around your Medicaid expansion, but you’re going to have to adhere to the same co-pay and deductible and premium restrictions that the Medicaid program has always had. In other words, yeah, you know, you can use private insurers to deliver the Medicaid benefit, but the Medicaid benefit has to be the same Medicaid benefit it has always been. It can’t be reformed and modernized to reflect the way normal private insurance works.

Once that became clear and HHS published a letter where they described exactly how this would work and how it was a lot less than it appeared to be at first, I wrote about that too. I said, well, it looks like this was kind of a Lucy with the football thing where this is not a privatization of Medicaid. It’s basically Medicaid with some quasi-private crony capitalist window dressing and that’s not at all what Arkansas should seek to do and that continues to be my position to this day, and I think it’s really unfortunate that a number of states have now said, oh, well, look, Arkansas has done something in a bipartisan way with this private option. Let’s do that.

I think that’s…Pennsylvania is looking at this. Iowa is looking at this. It’s a number of states where, again, they’re competitive, purple states, we might say, where the Republican politicians are feeling the heat from the hospital lobbies and other groups that are pushing hard for the Medicaid expansion and they’re looking to the Arkansas model as a way out.

I think that’s been the unfortunate consequence of what’s happened in Arkansas is that because you have a Democratic governor in Arkansas and a Republican legislature, a lot of people who are looking for centrist bona fides can look at that and say it’s a bipartisan approach that somehow meets in the middle. No one should be fooled. This Medicaid expansion in Arkansas is in fact Medicaid expansion and does not apply meaningful reform to the Medicaid program.

Christie Herrera

Again, if you’d like to ask a question, press *6. We have a live question coming in from North Carolina. Go ahead with your question.


This is Marilyn Avila and I’m a member of the House here in North Carolina. The fact that we have a broken system just felt like everybody else was our main reason for not expanding Medicaid. The question that I have is actually more curiosity, and there’s a factor that intrigued me, and I wonder it’s not been discussed, and that was the payment. It was going to start out at 100% for three years from the federal government and then drop down to 90%. I guess my question is, how have the states that expanded their Medicaid planned ahead for that additional 10% in what was probably, in their state, a broken system, and do we trust Washington to keep it at 90% indefinitely?

Avik Roy

Well, the short answer to your question is no. They haven’t planned that much, because basically what they’ve done, particularly the Republican states. The typical Republican state that has expanded Medicaid has handled it this way: They’ve budgeted for the next couple of years only, not for the long term. Over the next couple of years of course the federal government is covering the whole thing or nearly all of the Medicaid expansion. It’s in the out years where the Medicaid expansion becomes more borne by the state governments, and those years tend not to be in the tables and charts that you get from the governor’s office or from the budget organization in your state government.

That’s problem #1, that people are only looking at the short term fiscal-benefit and not the long-term fiscal cost. The second thing that people have done is that they’ve put in these triggers where they say, well, if the federal government were to ever reduce further the match rate from 90% to some lower percentage, then we would have a trigger that says the Medicaid program expansion is automatically suspended, and we would no longer participate. But that’s completely unrealistic.

You’re trying to tell me that six, seven, eight, nine years into a Medicaid expansion if Congress pulls the rug out from under you and stops funding the program at the same rate, the politicians in that state are going to throw hundreds of thousands of people off Medicaid? There’s no history to suggest that politicians will do that once the entitlement has been fully entrenched. I see those provisions as worthless and I think it’s really disappointing that Republican politicians have pointed to those provisions as some kind of assurance of fiscal stability of this program, because I don’t think it will serve that purpose at all.

Chris Conover

Let me put one caveat on that. We actually do have historical experience which is the TennCare program which expanded massively, the state figured out it couldn’t afford it, and then in one fell swoop they knocked 350,000 people off the Medicaid rolls. I’m not sure…I wouldn’t want to be a state that’s caught in that trap. I agree with Avik. There’s no reason to suppose that the feds are going to be able to honor their promise to fund this at 90% in perpetuity. I mean, already there’s discussions in Congress about changing that formula because of the budget pressures.

Avik Roy

That’s a great point. Go ahead.

Christie Herrera

I think you’re right, and I want to jump in real quick. Representative Avila, I think you’ll see in a lot of other states that are debating Medicaid expansion, a lot of them in their legislation construct something like a taxpayer recovery fund where all of the upfront Medicaid money goes into this special lockbox for expansion and that’s going to be used to pay for cost overruns with when FMAP drops below 100%. What you’ll see in most if not all of those states when they project out 10 years, when they project out to 2030, 2025, the money in those taxpayer recovery funds will be gone. There’s never going to be enough to pay for cost overruns in perpetuity in the future.

I’ve heard other state legislators also point out that they don’t think that Congress won’t fund Medicaid at all, but it’s definitely possible that they’re going to ration it down slowly a couple of percentage points at a time, and one percentage point in your Medicaid match in North Carolina might be a billion dollars. It’s going to be something we’re going to be talking about for many, many more months to come.

Chris, we had a question just come in over email from an Illinois state legislator, and he asked: Didn’t the mortality rate actually slightly increase following expansion in Maine yet the same ObamaCare advocates are all saying that Medicaid expansion will do the opposite?

Chris Conover

Well, it did increase slightly. That wasn’t a statistically significant result so from the standpoint of a scientist that’s a null result, no impact one way or the other, but, I would just say this about it. If we knew for sure that Medicaid had this definitive positive impact on health, wouldn’t you expect to see it in all three states, right, and not just one state?

Christie Herrera

We have another email question. Oh, do we have a live question? Go ahead with your question.

It looks like we dropped them.

We had an email question from a state legislator in Mississippi and they said, statistics in Mississippi show that while there has been an increase in Medicaid services, there has been a decrease in the health of our Medicaid population. Is this a nationwide trend or one specific to states with poor health? Can either of you address that?

Chris Conover

I cannot, but that’s very interesting. It would be interesting to see if that’s going on in other states.

Avik Roy

I apologize, which state was this?

Christie Herrera


Avik Roy

Yeah, I haven’t looked at the Mississippi numbers directly. I’d have to take a look at that. You know, I think one thing that’s, and it also depends on how the state’s Medicaid program was run before, what the eligibility criteria were before, and how that corresponds to how the exchanges interact with the Medicaid program. So all that would matter, and I’m thinking about that. That is something worth looking into. I will have to take a look at that.

Christie Herrera

Our final question comes from someone in Oklahoma, and they have a very blunt question: What is the truth? Why are my local hospitals so insistent?

Avik Roy

Well, I wrote a piece for National Review this last summer called An Arm and A Leg, and it’s all about how the hospital lobby is going bananas trying to lobby for this Medicaid expansion. It’s very simple. It’s the money. For every dollar that taxpayers that are forced to spend on government health care programs, 40 cents goes to hospitals. Hospitals stand to make an enormous amount of money from the Medicaid expansion because all that extra health care spending goes, a big chunk of it, the largest chunk of it, goes to them.

They’ve been running around trying to claim that they’re going broke because they’re underpaid, etc, etc. They’re not going broke. If you look around and you look at hospitals all over this country, they are building new wings, gleaming new towers filled with new equipment, because of all the money that the government and thereby taxpayers, are spending on them. This is going to be the biggest bonanza…ObamaCare is the biggest bonanza for the hospital industry that’s ever been seen. I recently did a debate in Florida on ObamaCare. It was me and Steve Brill who is a liberal who actually supports single-payer, against two hospital executives, one who runs the Harvard-affiliated hospital group called Partners Healthcare, and another who runs a Pennsylvania-affiliated group called Geisinger. Those were the guys who were most pro-ObamaCare because, again, for them, it’s all about the money. They get enormous amounts of money, and you have to be very aware of how the hospitals have manipulated this whole debate.

I think we have a tendency to think of these hospitals as these guys are helping people, they’re the good guys, they’re filled with people who are saving lives. Hospitals are big corporations that dominate…They’re the biggest crony capitalists in America. There’s more taxpayer money that’s directed towards hospitals than any other industry including the military, the defense industry, in the country. It’s about, I want to say, it’s like $800 billion of direct subsidies to the hospital industry from the government. It’s very important to be aware of that. They do a good job of concealing that image, but they are the biggest crony capitalists in the history of civilization basically.

Christie Herrera

Chris, do you have anything to add to that very definitive final statement from Avik?

Chris Conover

No, I will just point out that hospitals have been pushing for Medicaid expansion since I arrived at Duke in the mid-1980s, so this is nothing new, just more of the same. Avik’s right. Follow the money.

Christie Herrera

We’re about out of time. Chris and Avik, just one final kind of closing comment, if you were to put yourself in a state legislator’s shoes and you’re in a committee hearing and you’re listening to someone tell you, Chris and Avik, you are letting people die every day that you don’t expand Medicaid, how would you respond?

Avik Roy

I’d wave in their face a printout of the New England Journal of Medicine article showing that the opposite of that is true.

Christie Herrera


Chris Conover

Yeah, I would say that the evidence that this is true is thin. In the best study that looked at this, two out of three states showed no effect on mortality, so we’re basing this all on one state, New York, where we’re not even sure that that effect is a genuine effect.

Christie Herrera

Well, thanks to both of you, to Duke University Research Fellow Chris Conover, Editor Avik Roy, and to all of who participated on the call today. If you’re interested, you could join us next Friday, February 28th, at noon eastern. We’ll be having another FGA conference call titled How Medicaid Expansion Hurts Seniors. That will be with FGA Senior Fellow Josh Archambault. If you want to register for that call, again, next Friday, February 28th, at noon eastern, on how Medicaid expansion hurts seniors, please email us at We’ll have a transcript of today’s call posted on our website There you can access additional research and resources on ObamaCare exchanges and Medicaid expansion.

Thanks to everyone and we’ll talk to you again soon. Have a good day.

Full Transcript: Does Medicaid Expansion Really Save Lives

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