Obamacare Puts You on Welfare

Heritage Foundation

Lost in all of last weeks headlines on how the Senate Finance Committee (SFC) finally delivered a health care product that the Congressional Budget Office (CBO) was willing to say would reduce the deficit, was how exactly they achieved it. At a price tag of $829 billion, the SFC ’framework’ will reduce the number of uninsured Americans by 29 million, moving the overall percentage of nonelderly Americans with health insurance from 83% in 2010 to 94% in 2019. But of those 29 million with new insurance coverage, almost half (14 million), will get their coverage through the welfare programs Medicaid and the State Children’s Health Insurance Program (SCHIP). That is equivalent to adding every resident of Ohio and Nevada to the welfare rolls.


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In other words, for half of those Americans who are being promised health reform, they are going to be stunned to find themselves in a welfare office applying for Medicaid. Under the current baselines for Medicaid and the State Children’s Health Insurance Program (SCHIP), there will be 76 million individuals served by these programs for at least some part of the year in 2019. If the SFC proposal becomes law, the number on Medicaid/SCHIP will top 90 million. So why do Obamacare supporters want to put 90 million Americans on the welfare rolls? It is cheaper than providing them with real quality health care.

Medicaid was originally created to provide access to health care for families on welfare. Medicaid pays providers 20-25 percent less than does the private sector, forcing doctors and hospitals to subsidize Medicaid through lower rates. This deters doctors and hospitals from participating in the program, creating a lack of access that itself is a form of rationing. As Time magazine reported this July: “But there are real questions as to whether the program could handle the strain of that many new clients. Already, it is difficult in some areas to find health-care providers who are willing to accept Medicaid patients.”

Even those who are not pushed into welfare will feel the strain on the health care system. The majority of individuals moved into Medicaid will be young and healthy. Keeping them on welfare rolls will shift even more costs to individuals and families buying private health insurance, as doctors and hospitals recoup their losses from Medicare/SCHIP by charging more to the privately insured. In effect, the congressional policy seems to be to expand dependency by discriminating against individuals based on their income.

And then there is the effect on states. The CBO estimates that the Finance Committee plan will cost states $33 billion over 10 years. But even that may be a low estimate. Governor Phil Bredesen (D-TN) has warned that the costs for his state alone could be as high as $3 billion. Thanks to strings attached to Obama’s failed stimulus, states already are facing an erosion of their authority to manage their Medicaid programs. The true cost to taxpayers in the states will only become apparent as spending for education, child welfare, public health, and investment in transportation systems and infrastructure are crowded out over time.

As Heritage Senior Fellow Dennis Smith reminds us:

In June, President Obama told Senate Democrats, “As we move forward on health care reform, it is not sufficient for us simply to add more people to Medicare or Medicaid.” Unfortunately, that is precisely what Congress is going to do with the Baucus proposal.



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