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Reducing Medicaid Costs By Throwing People Off Medicaid

By Matthew Yglesias  

"Reducing Medicaid Costs By Throwing People Off Medicaid"

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The important thing that you need to know about Medicaid costs is that if you’re comparing the cost of providing health insurance via Medicaid to the price of providing health insurance some other way, Medicaid is incredibly cheap. If you wanted everyone in the United States to have health insurance and wanted to massively reduce national health care expenditures, what you would do is rescind existing tax breaks for health insurance, cancel Medicare, and put everyone on Medicaid. Doctors and hospitals would squeal in agony since Medicaid is a stingy program, but the purchasing pool would be really big and the vast majority of providers would have noplace else to go.

That said, Medicaid is quite expensive compared to just not getting health care. If you imagine two people lying on the sidewalk writhing in pain from a heart attack, they guy who you leave on the street to die will be way cheaper than the guy you rush to the hospital, treat, and then you need to deal with chronic heart disease forever. The old “Die Quickly” health care alternative is hard to beat.

This is the correct context in which to understand the debate over the State Flexibility Act from Reps Phil Ginrgey (R-GA) and Cathy McMorris Rodgers (D-WA) which, as Suzy Khimm explains will “save money” by making it easier for states to throw people off Medicaid. This definitely works. But you have to understand the ambiguity in the concept of “saving” that’s being exploited here. WMATA could save money by not running the buses on Tuesdays. But if they did that, we wouldn’t have any buses. If you’re really interested in efficiency there’s no reason you’d focus on Med

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