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Looming Medicaid Payment Crisis Highlights Fatal Flaw in Obama Health Care Financing

by | Jan 5, 2015


By Jennifer Popik, JD, Robert Powell Center for Medical Ethics

medicaidlogoThe Medicaid program, which provides insurance coverage for lower income Americans, has expanded under the Obama Health Care law and now covers over one-fifth of Americans. Yet it is now set to face big cuts in the new year.

In a December 27, 2014, New York Times article titled “As Medicaid Rolls Swell, Cuts in Payments to Doctors Threaten Access to Care,” Robert Pear writes

But federal officials have not set forth a strategy to expand access to care with enrollment, and in many states Medicaid payment rates for primary care services, like routine office visits and the management of chronic illnesses, will plunge back to 2012 levels, widely seen as inadequate.

The Obama Health Care law (Obamacare) contains a self-contradictory approach to both increase the number of Americans with health insurance, but also to limit the amount of money allowed to be spent on health care. [More on the way the law suppresses health care spending can be found at].

To increase coverage, one approach the Administration used was initially to funnel large amounts of money into state Medicaid programs so that states could expand who they covered–but then cut back on the funds.

In the words of Dr. George J. Petruncio, interviewed for the New York Times piece, the infusion of Medicaid dollars was a

“bait and switch…The government attempted to entice physicians into Medicaid with higher rates, then lowers reimbursement once the doctors are involved.”

According to the Pear article, “The impact will vary by state, but a study by the Urban Institute, a nonpartisan research organization, estimates that doctors who have been receiving the enhanced payments will see their fees for primary care cut by 43 percent, on average.”

Categories: ObamaCare