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Dan Liljenquist: Medicaid expansion would lead to takeover of insurance market

Published: Thursday, Oct. 3 2013 12:00 a.m. MDT

In this July 12, 2012 photo, a man using two canes is helped in the waiting area at Nuestra Clinica Del Valle in San Juan, Texas. About 85 percent of those served at the clinic are uninsured. Texas already has one of the nationÕs most restrictive Medicaid programs, offering coverage only to the disabled, children and parents who earn less than $2,256 a year for a family of three. Without a Medicaid expansion, the stateÕs working poor will continue relying on emergency rooms _ the most costly treatment option _ instead of primary care doctors. The Texas Hospital Association estimates that care for uninsured patients cost hospitals in the state $4.5 billion in 2010. (AP Photo/Eric Gay)

Eric Gay, AP

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On Sept. 28, I received an email from the Utah Democratic Party, addressed to Gov. Gary Herbert from Chairman Jim Dabakis, urging the governor to “lead us, please” into a full expansion of the Medicaid program, arguing that “with ideology and politics left out of the equation, there is little argument against taking Utah’s fair share of Medicaid.” The letter then proceeds to overstate the economic benefits, understate the risks, and ignore the long-term implications of Medicaid expansion. Dabakis manages all of this in a practiced, condescending, mocking tone that projects the schoolyard bully rather than a serious, thoughtful statesman.

In my column last week, I detailed the powerful incentives that companies have under Obamacare to stop providing employer sponsored health care and push their employees to the health care exchanges. Those incentives are hard-coded into the federal statutes, and, barring a complete repeal of Obamacare, are here to stay. Pointing to the tremendous turmoil in the insurance market this year, turmoil caused by Obamacare itself, liberals are now arguing that a “government insurance option” is necessary to stabilize the market. Their goal is obvious, create enough uncertainty in the health care market and the public will clamor for the government to take over.

Contrary to Dabakis’ assertion that there is little argument against expanding Medicaid, such an expansion would certainly accelerate the government takeover of health care. While that may not be an open issue in Debakis’ mind, I am certain it is still an open issue in the minds of most Utahns. If we wish to preserve a private health care insurance market in Utah, we should not opt for full Medicaid expansion. Here’s why.

Obamacare offers states the option to expand Medicaid eligibility to every man, woman and child who live underneath 138 percent of the federal poverty level. As an inducement to do so, the federal government has committed to cover 100 percent of the cost of expansion for the first three years, and 90 percent of the costs thereafter. For the 130,000 plus Utahns without health care insurance, this appears to be a financially attractive option for the state (ignoring for the moment that there is no such thing as a free lunch and that Utah taxpayers will ultimately have to pay the piper). Few people are thinking about what will happen to the approximately 400,000 Utahns who live underneath the 138 percent federal poverty eligibility threshold but currently have health care insurance provided by their employers. Should employers follow the fairly obvious financial incentives to kick all of these employees to the health care exchanges, these 400,000 individuals would still be able to purchase federally subsidized, private health care insurance through the exchanges, at the very least preserving some choice in their health care insurance options.

Should Utah choose to fully expand Medicaid, every individual earning under 138 percent of the federal poverty level who goes to the exchange to shop for health care will be defaulted into the Medicaid program. Full Medicaid expansion would not just pick up the 130,000 or so Utahns not currently covered by insurance, but could easily drive hundreds of thousands more from the private insurance market onto Medicaid, ballooning costs for Utah taxpayers, hurting doctors and hospitals because Medicaid reimbursement rates are, by far, the lowest among insurance carriers, and forcing up insurance premiums on an ever shrinking pool of people who purchase private insurance. Sooner rather than later, 99 percent of us will be priced out of the health care insurance market, and the government will take over.

I applaud Gov. Herbert for carefully deliberating over the Medicaid expansion decision. It is a decision that must not be made lightly.

Dan Liljenquist is a former state senator and U.S. Senate candidate.

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