Medicaid Covers 1 out of 5 Americans. How Did It Get So Big? | WSJ

Medicaid: How It Grew and What's at Stake

Key Concepts:

• Medicaid: A government program providing healthcare coverage to low-income individuals and families.
• Medicare: A government program providing healthcare coverage to individuals aged 65 and older.
• Affordable Care Act (ACA): A law enacted in 2010 to expand health insurance coverage in the United States.
• Employer-sponsored insurance: Health insurance provided to employees by their employers.
• Uninsured: Individuals without health insurance coverage.
• Work requirements: Mandates that Medicaid recipients must work or participate in work-related activities to maintain their coverage.
• Tax credits: Government subsidies to help individuals afford health insurance premiums.

1. Medicaid's Size and Funding

• Medicaid is a large program, covering nearly a quarter of Americans and costing over $800 billion.
• The federal government contributes a significant share of Medicaid funding, and this share is projected to increase.
• Proposed legislation aims to cut Medicaid spending, primarily by reducing the number of people covered.

2. Historical Development of Health Insurance in the US

• During World War II, wage freezes led businesses to offer health insurance as a benefit to attract employees.
• The IRS ruled that employees didn't have to pay taxes on insurance premiums, and unions gained the right to bargain for insurance.
• By 1950, over half of Americans had private health insurance, establishing the US as one of the few developed countries without universal coverage.
• The system's reliance on employer-sponsored insurance created gaps in coverage for those not employed or unable to access it through their jobs.

3. Creation and Evolution of Medicaid

• Medicare was created for individuals aged 65 and older, while Medicaid was initially designed for those already receiving state welfare.
• Medicaid was not initially intended to become a large or permanent program.
• Medicaid is funded through federal assistance to states, which administer their own programs.
• States have flexibility in designing their Medicaid programs, leading to variations in coverage and eligibility across states.
• Over time, Congress expanded Medicaid eligibility to include the disabled, infants, pregnant women, children, and single working adults with lower incomes (under the ACA).
• These expansions aimed to fill gaps in coverage for individuals without other insurance options.

4. Current Healthcare Coverage Landscape

• Most working-age adults obtain insurance through their employers.
• Some individuals are covered by public programs like those for the military.
• Medicaid covers many low-income individuals, children, and people with disabilities.
• Medicare covers nearly all individuals aged 65 and older, often with supplemental coverage.
• Many individuals purchase insurance directly, often through the healthcare.gov marketplace created by the ACA.
• Tax credits are available to make marketplace coverage more affordable.
• The current system is described as a "patchwork" of different coverage sources.

5. Potential Impact of Policy Changes

• Recent years have seen record lows in the number of uninsured individuals.
• Changes to Medicaid and the ACA are expected to increase the number of uninsured.
• It's estimated that 8.7 million people could become uninsured due to work requirements and administrative barriers.
• Work requirements do not necessarily lead to increased employment but create obstacles to maintaining coverage.
• The expiration of tax credits for marketplace coverage could cause 4.2 million people to lose coverage due to affordability issues.
• Many low-income individuals lack access to employer-sponsored insurance, especially part-time workers.

6. Medicaid as a Safety Net

• Medicaid has grown to address the gaps in coverage created by the employer-based insurance system.
• Proposed changes threaten to widen this gap, leaving more individuals without access to healthcare.

7. Notable Quotes

• "There's a buildup of tension over who's left out, and suddenly we end up with a new system that doesn't cover everyone, but adds the elderly and adds people in poverty."
• "It was an afterthought. It was not seen as a program that was designed to survive and grow."
• "The funding logic of Medicaid has made it both contentious, unstable, but also explains its expansion."
• "As people often say, if you've seen one Medicaid program, you've seen one Medicaid program."
• "These were incremental changes to try to leverage the program to help fill in the gaps for individuals that had no other access to insurance coverage."
• "At any given moment, you have people saying, I know, let's just change eligibility because people need coverage."
• "I think it's fair to say it's all patchwork."
• "Imposing work requirements doesn't actually lead to additional employment, but does create these barriers to being, for people being able to maintain their coverage. So more individuals wind up without health insurance coverage."
• "[Robin] There just aren't a lot of other options."

8. Synthesis/Conclusion

Medicaid's growth is a direct result of the US healthcare system's reliance on employer-sponsored insurance, which leaves significant gaps in coverage. While initially conceived as a small program, Medicaid has expanded over time to fill these gaps, providing a safety net for vulnerable populations. Proposed policy changes, including work requirements and the expiration of tax credits, threaten to undermine this safety net and increase the number of uninsured Americans. The future of Medicaid and its role in ensuring access to healthcare remains a subject of ongoing debate and policy adjustments.