Maine just jumped on the Medicaid expansion bandwagon

While everyone else was focused on the drubbing the GOP was taking in the New Jersey and Virginia gubernatorial races, something equally disturbing was taking place up in Maine. Despite Governor Paul LePage’s best efforts in recent years, the voters there overwhelmingly voted to expand Medicaid coverage under Obamacare. Considering the state’s graying population and rising health insurance premiums, it probably wasn’t all that shocking. (Associated Press)

Residents in this rural state grappling with a heroin epidemic and an aging population voted Tuesday to deliver a rebuke to Republican Gov. Paul LePage and join 31 other states that have expanded Medicaid under former President Barack Obama’s health care law.

The referendum represents the first time since the law took effect that the question of expansion had been put in front of U.S. voters.

Some 11 million people in the country have gotten coverage through the expansion of Medicaid, a health insurance program for low income people.

The legislature in Maine had voted to adopt Medicaid expansion five times already, but LePage vetoed it every time. That’s how the question wound up going to a referendum to decide the matter. But what will the long term costs be?

The fact that the voters wanted this is easy to explain. On top of dealing with an opioid addiction epidemic, Maine has the oldest average population in the country. This move will add another 70,000 people to the Medicaid rolls, an increase of roughly 20%. So… “free” healthcare is popular. Who doesn’t like free stuff, right?

What opponents of the move failed to drive home to the voters is the fact that nothing the government gives out is actually free and the more we overload the Medicaid rolls, the more it drags down the entire health care system. Jim Demint summarized these problems at Heritage a few years ago, not that anyone seemed to be paying attention.

For decades, government plans such as Medicare and Medicaid have typically paid doctors and hospitals less than private plans, and even less than the actual costs of the services in some cases. Health care providers covered their losses by raising prices to patients with private insurance.

This “cost shifting” contributed to increases in the costs of employer and individual health insurance plans. As private health insurance became prohibitively expensive for many Americans, more became uninsured or covered by government plans. And as more participants in government plans strained state and federal budgets, the gap between payouts from Medicaid vs. private insurers became even larger.

The cost shifting that Demint referenced is very real and it’s also one of the chief drivers of increasing premiums for people having private or employer-provided plans. As private coverage becomes less and less affordable, more people are driven onto government programs. (Some might argue that this was a feature of Obamacare, not a bug.)

At the same time, proponents of “Medicaid for All” fail to note that the payments to doctors and hospitals are so out of whack with current market prices that fewer doctors are accepting new Medicaid patients. This drives up the burden and wait times for the remaining facilities who will take them.

Unfortunately, that’s a hard message to sell to the public when opponents are simply screaming, “free health care for all my friends!” Maine has now chosen to join this grand experiment and the only lesson which may sink in for them won’t come for a few years as the health care system stabilizes under this new formula.