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Shell games: The cost of Medicaid expansion

August 29. 2017 11:22PM

Three card monte. Follow the queen. The shell game.

Like all other hustles, the key to Medicaid expansion is distraction. Never let the sucker see what is actually happening, and you can take his money.

New Hampshire’s expanded Medicaid program was sold as a way to provide subsidized health insurance to low-income adults without any cost to New Hampshire taxpayers. Uncle Sam would pick up the tab, and when he starting asking for the state to contribute to the program, hospitals would step in. Those voluntary contributions are being challenged by federal regulators.

Now, the state insurance department has concluded that providing platinum plans for the expanded Medicaid population is driving up premiums for everyone else buying insurance through the Obamacare exchange in New Hampshire. Beneficiates have even less incentive to control their health care costs, and expenses are skyrocketing.

That hidden cross-subsidy is responsible for increasing costs in the exchange by 14 percent.

Of course, the entire Medicaid program is built on these sorts of hidden subsidies. The program reimburses hospitals at a lower rate than patients with private insurance coverage, who make up the difference in their premiums.

Shifting these costs has been expensive, but managable. But as more patients move onto Medicaid, the cost shifts become unsustainable. The shells break and the hustle falls apart.

It turns out that we’re already paying for Medicaid expansion, in just about every way possible.

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