Heritage’s Kevin Dayaratna finds in a recent survey of academic literature that “Medicaid’s so-called safety net cripples the very people it is designed to help.”

The structural flaws in the program produce a cascade of failures, starting with underpaid and overburdened doctors, which produces longer waits for care, in turn leading to late-stage diagnosis of illnesses, finally resulting in more costly (though often less effective) treatments and higher mortality rates.

Recent statistics show that Medicaid enrollment has reached an all-time high of 70.4 million beneficiaries. In other words, one in five Americans now receives Medicaid benefits. Despite this, Obamacare’s intended expansion of Medicaid would add another 17 million beneficiaries to the already overburdened program.

With this in mind, the failures of Medicaid must be acknowledged:

  • Medicaid reduces access to care. On average, Medicaid pays physicians 56 percent of the amount private insurers pay. This low reimbursement rate makes it difficult for doctors to accept Medicaid patients. A 2012 study in Health Affairs found that “nearly one-third of physicians nationwide will not accept new Medicaid patients.” Doctors in urban areas are among the least inclined to accept new Medicaid patients.
  • Longer wait times and later diagnosis. As Dayaratna points out, a 1993 study published in the New England Journal of Medicine “found that breast cancer patients in New Jersey were often diagnosed with more advanced stages of the diseases and had higher risks of death if they received their insurance coverage through Medicaid instead of private insurance.” In addition, a 2001 study published in Cancer found that Medicaid cancer patients in Michigan had significantly higher rates of occurrence as well as higher risks of late-stage diagnosis and death for breast, cervix, colon, and lung cancers compared to non-Medicaid patients.
  • Higher in-hospital mortality rates and higher costs. A 2010 study in the Journal of Hospital Medicine found higher in-hospital mortality rates for Medicaid patients than for privately insured patients “even after adjusting for factors such as age, gender, income, other illnesses, and severity.” The same study also found that “Medicaid patients hospitalized for strokes and pneumonia also ran up higher costs than the privately insured, as well as the uninsured.”

Dayaratna explains that “one of Obamacare’s greatest pretenses is that it improves access to health care. The new law attempts to achieve this goal by dumping millions more into the broken Medicaid system.”

A far better alternative is for policymakers to take the opposite approach of “mainstreaming” Medicaid beneficiaries into superior private insurance. Dayaratna points to the example of Florida’s successful five-county pilot program that gives Medicaid patients a choice of private managed care plans. Florida’s program has achieved “greater access to care, higher degrees of patient satisfaction, and a marked improvement in health outcomes” while also saving the state just under $120 million annually.

The Heritage Foundation’s Saving the American Dream proposal expands on that approach. It recommends transitioning non-disabled Medicaid beneficiaries into private health insurance and then better meeting the needs of the remaining (disabled and frail elderly) Medicaid population by integrating private, patient-centered care models into Medicaid.

Donald Schneider is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm.