By skyforbes 
While recent data on Medicaid health outcomes remains limited, there is ample research in the early 2000s concluding that patients have higher mortality rates than the privately-insured and sometimes even the uninsured.
However, there are underlying factors at play. Most of these studies are only able to conclude that Medicaid is associated with poor health outcomes, not the cause. The lower-income population already faces high rates of mental illness, homelessness, and chronic disease compared to the general population because of a lack of resources. Because folks can sign up for Medicaid retroactively, needy patients often enroll in Medicaid after they become sick and see the doctor. Controlling for all such socioeconomic variables is difficult. The Oregon Medicaid expansion lottery experiment, one of the only randomized controlled studies performed, revealed mixed results. Medicaid increased access to care, improved detection of diabetes, and somewhat reduced financial strain, but the program did not significantly improve physical health outcomes such as blood pressure or cholesterol.
Nevertheless, the quality of care provided in Medicaid is questionable. Because of low reimbursement rates, many physicians and hospitals refuse to see Medicaid patients. Even when accepted, the setting can be at overburdened public clinics or safety-net hospitals. Diagnosis and treatments are often delayed or limited. They face longer wait times for specialist or dental care, often weeks-long. The limited provider networks dictate where members must live, reducing their freedom. Because of a lack of uniform standards across states, some states have better outcomes than others. The program is bound by federal and state regulations that limit innovation, hinder adoption of new care delivery models, and require reporting and compliance processes that redirect resources away from care. Fee-for-service (FFS) payment systems reward volume over value. Even with the greater shift to managed care organization (MCO)-based systems where plans are paid on a per-member-per-month basis, incentives are still blunted by lack of competition. There is no emphasis on preventive care or improving long-term outcomes. State Medicaid directors are largely powerless to address population health needs because of clinical and operational data constraints and tight budgets.
Medicaid patients often rely on and overutilize emergency rooms for routine non-urgent care, which not only increases the system’s strain, wait times, and costs but also reveals a lack of adequate access to preventive care for those patients. With fewer primary care options, many automatically choose the ER because there’s nowhere else to go. I’ve experienced this firsthand as a part-time emergency medical technician (EMT). So many calls we get are for low-acuity conditions like an upper respiratory infection. Going to the ER isn’t cheap — the average visit for a non-life-threatening condition cost between $1k-$3k in the U.S. in 2024. Medicaid restricts cost-sharing by federal law, so no meaningful financial disincentives or measures for electing alternative options like urgent care can be employed by MCOs because most Medicaid members have no skin in the game.
Many argue that Medicaid disincentivizes work and self-sufficiency. There is a so-called “welfare cliff” where small increases in income can lead to disproportionate loss of benefits. In most states, if someone earns more than 138% of the federal poverty line (FPL), they can immediately lose coverage. This makes it risky for low-income earners to accept promotions or raises or work extra hours as they could lose eligibility. It’s not just for Medicaid — SNAP, housing assistance, and child care subsidies are often bundled together. There’s little incentive for upward mobility as a $1k income increase may result in a $3k loss of benefits. Complex eligibility requirements that vary across states can leave patients confused and jeopardize their coverage, disrupting care continuity. The latest GOP-led bill will establish 80 hours a month of work requirements for Medicaid recipients and require redeterminations of eligibility for Medicaid expansion folks twice a year. This coupled with the projected cuts of $723B over the next ten years could cause up to 11M folks to lose coverage. Many lawmakers suggest that folks who lose coverage can obtain health coverage on the ACA marketplace, but even with subsidies, those plans can be cost-prohibitive.
Medicaid systems are outdated and error-prone. Deloitte-run systems in Texas have consistently sent incorrect notices to beneficiaries, sent paperwork to wrong addresses, and undergone outages. These eligibility errors have oftentimes taken months to resolve, leading to eligible folks losing access to their benefits. And once folks lose coverage, it’s a struggle to get it back. After the end of COVID-19 pandemic-era protections, over 2M folks in Texas wrongfully had their Medicaid coverage stripped, and officials say the error was preventable. Gaining and maintaining Medicaid coverage in and of itself can trigger anxiety.
The large size and fragmented bureaucracy of the program leave payments vulnerable to fraud and abuse. Program fee schedules set by the government dictate what providers get paid for charging a specific procedure or revenue code, and many different modifiers can be added to denote service type. Trust me, I’ve seen some fee schedules with the worst structure in the world that are so unintuitive and indecipherable, so I’m sure that providers and other folks are able to maliciously take advantage. Phantom billing, overprescribing, and misuse of home health and durable medical equipment funds are common. A network of Arizona-based behavioral health providers and sober living homes defrauded Medicaid of $2.5B by billing for services that were not provided. A Texas rheumatologist was sentenced for a $325M fraud scheme by misdiagnosing patients and giving chemotherapy to healthy folks. $31B was lost on fraud in FY 2024.
In the next part, I dive into Medicare and why we also need to bid farewell.
NOTE: this piece is an excerpt from a broader proposal. The full white paper was originally published here.