Is Medicaid Crowd-Out the Only Effect of Obamacare?

Medicaid “crowd-out” is the hypothesis that enrolling more people in Medicaid will cause some people to drop private coverage in favor of Medicaid. The rate of crowding out may reach 60 percent.

Now, courtesy of the Robert Wood Johnson Foundation (RWJF), we have evidence that the entire effect of Obamacare so far is to crowd out private coverage. RWJF’s new report (“First Observations Around the Affordable Care Act”) further confuses the consequences of Obamacare on coverage and access to care. This is not the RWJF’s fault: The emerging evidence on Obamacare is a jumble of contradictions. In this instance, the report insists that physicians saw no increase in patient demand after Obamacare, as demonstrated in Figure 2. More sophisticated metrics showed that the complexity of patients’ needs also did not increase after Obamacare.

However, there was a significant increase in Medicaid patients as a share of patients seen. In states that expanded Medicaid, this proportion increased by one-quarter, from 12.3 percent to 15.6 percent, and barely budged in states that did not expand Medicaid. Both of these findings contradict other evidence that Obamacare patients consume many more specialty drugs than non-Obamacare patients; and that many states that did not expand Medicaid also experienced a (smaller) increase in Medicaid dependency than states that expanded the program.

Nevertheless, if the RWJF report trumps this earlier evidence, we are left with an equally disturbing conclusion: Obamacare did not increase access to medical services at all, it merely replaced privately paying patients with taxpayer-funded patients. And need we remind you that at the beginning of June, almost three million Medicaid applications had not been processed?

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

John R. Graham is a former Senior Fellow at the Independent Institute.
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