The Myth of Cost-Free Medicaid Expansion


You may have heard that the Senate Democrats took up the issue of Medicaid expansion this week.  I thought now is a good time to address the myth that expanding Medicaid doesn’t cost Iowa taxpayers any money because the federal government pays 100% of the expansion.  This is a myth.

Expanding Medicaid the way Democrats have proposed has two fundamental problems:

  1. It costs more every year for the same services.
  2. It doesn’t make Iowans healthier.

Currently Iowa has 400,000 people enrolled in Medicaid.  The FY 14 estimate is that this will cost $ 1.2 billion in state dollars which is $88.5 million more than last year.  This cost grows every year because the number of Iowans who qualify grows, if expansion is approved or not.  Since 2000, Medicaid enrollment has gone up 88% and Medicaid expenditures are up 226%.  With or without Obamacare, the cost of Medicaid is going up.

Additionally, there are between 52,000 and 81,000 people who qualify for Medicaid but are not enrolled.  The cost of providing Medicaid to these Iowans over the next seven years is estimated at between $327 million and $564 million of additional state funds.  Under Obamacare, these people have to be enrolled in Medicaid because they are not eligible to receive health insurance.  The state is required to pay for these people at the current rate.  These people ARE NOT among the new enrollees which the federal government promises to cover at 100% for three years.  Once again, the cost on Iowans goes up again.

Finally, you have 150,000 people who will become newly eligible for Medicaid under Obamacare.  The federal government promises to pay 100% of the cost for these people for three years.  After three years, the federal share decreases.

We believe it is irresponsible and foolhardy to believe the federal government will live up to its funding promises. Just last week the U.S. Senate decided to repeal one of the key revenue generators for Medicaid expansion when it repealed the medical device tax.  With that revenue stream gone, the feds are forced to find it elsewhere.  A logical and easy place to go is lower the percentage they will reimburse states for the newly-eligible Medicaid recipients.

It is a myth that expanding Medicaid doesn’t cost the hardworking taxpayers of Iowa any money.  Medicaid costs are going up, even if it’s not expanded.  But Medicaid is going to cost EVEN MORE if we DO expand.

We need an Iowa solution.  Right now we have a Medicaid program that people on both sides of the aisle believe is broken.  That broken system treats Iowans over and over for the same chronic diseases and the same medical issues while Iowa taxpayers keep paying for it, over and over.  At the same time, none of these Medicaid recipients are getting healthier.  With an outcomes-driven program, like the Governor’s Healthy Iowa Plan, we have hope of containing costs or making Iowans on another Medicaid program healthier.

Once Iowa decides to jump into Medicaid expansion with both feet, there is no backing out.  The Supreme Court reaffirmed our right to decide if we want in, but it also did not stipulate a right to leave once we’re in.  Regardless, this would leave needy Iowans out in the cold – we need an Iowa program now.

The hardworking taxpayers of Iowa are not interested in ceding control of the fastest growing portion of the state budget to Washington, DC.

I will continue to work for an Iowa solution that:

  • Improves the quality of care – Provides a benefits package similar to private care that includes in and outpatient services, prevention services, prescription drugs, home health, durable medical equipment, therapies and some transportation.
  • Lowers costs – Implements personal responsibility mechanisms that have worked in other states and the private sector to encourage members to be cost-conscious consumers of health care as well as healthy behaviors.
  • Makes Iowans healthier – Rewards health care providers for helping make Iowans healthier.

As always, please let me know if you have any questions or concerns – you can contact me at my office at (515) 281-3521 or by email at