Tags: Medicaid's | Costs | Soaring

Medicaid's Costs Soaring

Tuesday, 02 August 2005 12:00 AM

The extension of taxpayer-funded Medicaid to the working poor has led to the largest expansion of a government entitlement since the Great Society was launched in the 1960s.

The soaring costs of Medicaid – which will more than double this year to close to $330 billion since 1999 – is largely due to legislation that extended Medicaid coverage to many Americans who have low-paying jobs.

The government's free health care offering swelled Medicaid's numbers as many low-income workers are choosing Medicaid rather than insurance from their employer because it is free or nearly free and often provides more benefits, according to an eye-opening report in USA TODAY.

The result has been a staggering growth in the welfare state – as the federal government has become the health insurer of 100 million Americans – about one of every three citizens.

The growth of the health entitlement program – which critics say has become national health care by stealth – has been embraced by both Republicans and Democrats.

President Bush has even proposed $1 billion in spending for the next two years "to encourage eligible families to sign up for Medicaid," USA Today noted.

Some experts blame the growth of Medicaid on 1996's landmark welfare reform legislation, which moved millions of welfare recipients off the welfare rolls and into low paying jobs.

To make sure these newly employed didn't lose free health benefits, the federal government enacted legislation to extend Medicaid to lower-incomed workers.

"Health coverage has been a costly side effect of welfare reform," the newspaper disclosed.

Now a great number of workers – many who were never on welfare - can also sign on for free health care.

Under federal rules, a family of four can earn as much as $40,000 a year in most states and still get government health insurance for children.

The Medicaid program has grown from covering 34 million individuals in 1999 to 47 million last year, and Medicaid costs have soared from $159 billion in 1997 to $295 billion in 2004 – an increase of 85 percent.

This year Medicaid spending is projected to hit $329 billion.

Added to the staggering costs are new rules that provide Medicaid to illegal aliens – tacking on another $2.5 billion to annual costs.

Critics say Medicaid's expansion is adding to the crushing Federal deficit and luring workers from insurance plans offered by employers.

Supporters, on the other hand, maintain that Medicaid will prevent higher costs in the future by reducing emergency room visits by the uninsured.

But the expansion of benefits to low-income workers has made federal and state taxpayers "the health insurance provider for millions of workers at Wal-Mart, McDonald's and other low-wage employers," USA TODAY reports.

The federal government pays 59 percent of Medicaid costs; the states pay the rest. The rising costs are crushing many states, who say rising health costs are contributing to deficits.

Medicaid enrollment now even outpaces enrollment in Medicare, and many states are spending more on Medicaid than on anything else, including education.

Said Michael Cannon, director of health care studies at the Cato Institute: "Shame on us for creating perverse incentives that cause people to give up private coverage for Medicaid."

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The extension of taxpayer-funded Medicaid to the working poor has led to the largest expansion of a government entitlement since the Great Society was launched in the 1960s. The soaring costs of Medicaid - which will more than double this year to close to $330 billion...
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2005-00-02
Tuesday, 02 August 2005 12:00 AM
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