Medicaid's experience one decade after the passage of the Affordable Care Act represents extreme divergence across the American states in health care access and utilization, policy designs that either expand or restrict eligibility, and delivery model reforms. The past decade has also witnessed a growing ideological divide about the very purpose and intent of the Medicaid program and its place within the US health care system. While liberal-leaning states have actively embraced the program and used it to expand health coverage to working adults and families as an effort to improve health and prevent poverty and the insecurity and instability that comes with high medical costs (evictions, bankruptcy), conservative states have actively rejected this expanded idea of Medicaid and argued instead that the program should revert back to its “original” purpose and be used only for the “truly” needy. This article highlights several paradoxes within Medicaid that have led to this growing bifurcation, and it concludes by shedding light on important targets for future reform.
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.—Charles Dickens, A Tale of Two Cities
Dickens's quote may suffer from overuse, but it is nonetheless a very accurate description of Medicaid's experience one decade after the passage of the Affordable Care Act (ACA). The past 10 years has witnessed the most dramatic expansion in the Medicaid program since it was enacted in 1965: 25.5 million Americans were enrolled in the program over this time period, and today the program as a whole covers 21% of Americans (65.2 million in 2017), up from 13% (39.5 million) in 2008 (Kaiser Family Foundation 2019b).
At the same time, the past decade has witnessed a growing partisan divide about the very purpose and intent of the Medicaid program and its place within the US health care system. While Democratic-controlled states have actively embraced the program and used it to expand health coverage to working adults and families as an effort to improve health and to prevent poverty and the insecurity and instability that comes with high medical costs (evictions, bankruptcy), Republican-controlled states have actively rejected this expanded idea of Medicaid and argued instead that the program should revert back to its “original” purpose and be used only for the “truly” needy.
Of course, there are nuances amid the extremes. Some Republican-controlled states have enacted the Medicaid expansion, and Democratic-controlled states are just as likely as Republican-controlled states to embrace contracting with private managed care plans. In this article, I highlight several paradoxes within Medicaid that have led to a growing ideological bifurcation, to shed light on important targets for future reform.
Medicaid and Health Equity
The Best of Times
The ACA allowed states to expand Medicaid eligibility to nonelderly adults with incomes up to 138% of the federal poverty level (about $16,650 for individuals or $33,950 for a family of four in 2017). As of November 2019, 37 states have expanded Medicaid (including the District of Columbia and 3 states—Idaho, Utah, and Nebraska—that have adopted through referendum but have not yet implemented expansion), while 14 states have not (Kaiser Family Foundation 2019e). For states that expanded Medicaid, the overwhelming evidence suggests that expansion is linked to gains in coverage and improvements in access, financial security, and selected health outcomes.1 Although there were (and remain) concerns about whether Medicaid would have sufficient capacity to serve the increased number of enrollees, and the findings on provider capacity are mixed, the majority of studies confirm that access to care and utilization of services has increased substantially in expansion states (Antonisse et al. 2019; Mazurenko et al. 2018). Even very vulnerable “hard-to-reach” populations have gained access to coverage in Medicaid expansion states, including people with substance use disorders, people with HIV, and low-income adults diagnosed with depression or cancer (Antonisse et al. 2019).
The Medicaid expansion has also been able to fulfill a fundamental goal of insurance coverage: to protect individuals from financial liability when care is needed. Several studies demonstrate that financial security has improved among Medicaid enrollees in expansion states, and as a result, positive spillover effects are also realized: reductions in the poverty rate, personal bankruptcy, and evictions (Allen et al. 2019; Antonisse et al. 2019; Zewde and Wimer 2019). Fewer studies have been able to assess health outcomes, but self-reported health status has also improved (Allen et al. 2019; Antonisse et al. 2019; Zewde and Wimer 2019).
The Worst of Times
Given these findings of improved access to care and financial well-being for poor and low-income individuals, it is all the more appalling that millions of Americans remain uninsured in states that have refused to expand the Medicaid program. This gap in coverage left over 3 million Americans uninsured when the Medicaid expansion would have been fully enacted in 2014, and still nearly 2.5 million in 2017 (Garfield and Damico 2015).2 This lack of coverage means different things to different people, but if you are sick and uninsured it almost certainly means that you do not have adequate access to the care you need. Especially in the midst of the opioid epidemic, for example, this means that people in nonexpansion states are less likely to get life-saving treatments (Grogan et al. 2020).
Medicaid Policy Innovations
The Age of Wisdom
Although researchers have long identified social factors such as income, education, and housing as crucially affecting health outcomes (Gottlieb, Wing, and Adler 2017), only in the last decade, with the onset of the Medicaid expansion, have states begun to invest in social needs. States realize that Medicaid is uniquely positioned to support social needs, given its central role in providing coverage to low-income Americans (Alderwick, Hood-Ronick, and Gottlieb 2019). Under current Medicaid policy, states have the option to provide basic social supports to Medicaid enrollees, such as food or housing resources. Many states—Republican and Democrat alike—are using their contracts with managed care organizations (MCOs) to encourage or require referrals to address patients' social needs. In particular, in 2018, 16 states required MCOs to screen enrollees for social needs, and an additional 10 states encouraged the screening. Moreover, a survey of Medicaid MCOs revealed that over three-fourths of plans were undertaking activities to address housing needs, 73% were addressing nutrition, 51% education, and 31% employment needs (Hinton et al. 2019).
States can also apply for 1115 waivers to use Medicaid funds to invest in more intensive social interventions that often utilize health and social service partnerships. Several states have received such waivers to address patients' social needs (Kaiser Family Foundation 2019a). Early evidence of these initiatives in Oregon and Colorado suggests improvements in quality, controlling costs and reducing health disparities (McConnell et al. 2017; Muoto et al. 2016).
The Age of Foolishness
At the same time that more states are investing in addressing social needs, several Republican-led states are implementing policy reforms that focus on individual behaviors of particular Medicaid recipients, with the intent to increase personal responsibility, rooted in questions about whether certain low-income Americans deserve public coverage (Grogan, Singer, and Jones 2017; Vulimiri et al. 2019). As of November 2019, 7 states had approved work requirements, which require work as a condition of eligibility for Medicaid; 10 states required premium payments, including receipt of payment before coverage begins or a lock-out period (e.g., 6 months in Indiana) if premiums are not paid; and 7 states have received waivers to increase copays above previously allowed levels, and/or healthy behavior incentives tied to premiums or cost sharing (Kaiser Family Foundation 2019a).
Early data suggest these policy designs result in many individuals losing their Medicaid coverage. After Arkansas implemented its work requirement, 18,000 people were disenrolled from the program (Rudowitz, Musumeci, and Hall 2019). Other studies found cost-related barriers due to Indiana's lock-out period if required payments were not deposited in health savings accounts. Although coverage has expanded in the state, its coverage gains are significantly less than in traditional expansion states because of these restrictions (Freedman, Richardson, and Simon 2018; Sommers et al. 2018). There are also serious concerns about how states will consider work requirements for people who are not officially classified as “disabled” but have behavioral health issues, such as opioid use disorder, or other chronic health conditions that make work requirements particularly challenging to fulfill (Wen, Saloner, and Cummings 2019).
Medicaid Political Polarization
The Epoch of Belief
When Medicaid was first enacted in 1965, political discourse and the actual eligibility rules, which tied Medicaid eligibility to cash assistance programs, described Medicaid as appropriate for certain categories of poor people—the elderly, blind and disabled, and poor (largely single-headed) families with dependent children. For those favoring national health insurance at the time, Medicaid was seen as a residual, stigmatizing program that could be dispensed when Medicare was extended to all Americans. However, among conservatives opposing national health insurance, Medicaid was viewed as appropriately restrictive because, if a person is poor but able-bodied, that person should be working and purchase private health insurance (or receive employer-sponsored health benefits) (Grogan and Patashnik 2003a, 2003b).
Of course, the assumption that working adults in low-wage jobs either received health benefits or earned enough to purchase health insurance was never true, but the rhetoric (and perhaps the actual belief) persisted in those early years. That all began to change in the 1980s with a set of incremental expansions that eventually extended coverage to all children under the federal poverty level (FPL) by 1990. The State Children's Health Insurance Program (SCHIP) was passed in 1997, which allowed states to expand Medicaid coverage to uninsured children of working parents up to 250% of the FPL. These efforts were largely bipartisan under a growing consensus that health insurance was necessary not only for those not working but also to prevent those working in lower-wage jobs from falling into poverty due to high medical expenses. SCHIP was viewed as particularly important for decoupling Medicaid from cash assistance and ushering in a growing ideological acceptance that low-income persons should have access to health insurance regardless of work or welfare status. I describe this as “growing” because, although SCHIP extended coverage for children above the poverty level in families with working adults, and there was widespread acceptance of the importance of covering children (though at different income levels), using Medicaid to extend coverage to low-income parents was very uneven across the states, and almost no states covered childless adults. Nonetheless, many states took advantage of the coverage options allowed under SCHIP in the early 2000s period, and it suggested a willingness among states to consider a broader vision for Medicaid. Indeed, the passage of the ACA in 2010 could be viewed as part of this trajectory, since the ACA Medicaid expansion finally moved the program away from categorical distinctions and declared that all persons earning less than 138% FPL eligible for Medicaid (Grogan 2013; Thompson 2012).
The Epoch of Incredulity
While the ACA Medicaid expansion allowed Democratic-controlled states to embrace this broader ideological vision of Medicaid as a program to prevent poverty and promote health equity for low- and even middle-income Americans, it also ushered in a strong rejection of this vision. The National Federation of Independent Business v. Sebelius lawsuit supported by 25 states argued against the constitutionality of the ACA mandate to expand Medicaid (Kaiser Family Foundation 2019d), and the Supreme Court ruled in favor of the plaintiff. This was arguably the most significant event after passage of the ACA, not only because it left millions of Americans uninsured but also because it opened the possibility for conservative states to bargain with the federal government over how to extend coverage. Even when Republican-controlled (or dominated) states adopted the Medicaid expansion, they often did so under a rejection of the Medicaid program (Grogan, Singer, and Jones 2017). This has had very important political implications.
First, although the program is expanded—in terms of both coverage and public expenditures—conservatives have attempted to revert the program, in actual policy design and, politically, in the broader public mind's eye, back to a residual welfare program. The work requirement not only kicks those deemed able-bodied but not working off Medicaid but also pits one group of Medicaid recipients against another under classic tropes of welfare deservingness: The program is for the truly needy, not those who take advantage and don't want to work (Grogan, Singer, and Jones 2017). This is important because the success of retrenchment politics depends on whether a large constituency would fight against such actions, thus threatening the reelection prospects of officials in support of retrenchment (Pierson 1994). It was arguably not lost on conservatives, especially in poor southern states where Medicaid expansion would result in nearly a third of the state's population relying on the Medicaid program (Grogan 2013), that passage of the Medicaid expansion could create an entitlement politics for Medicaid with favorable political feedback effects: once the program expands, it is difficult to rescind expanded coverage (Grogan and Park 2017a, 2018). Thus, conservative states rejected an expanded public vision of Medicaid, even when they used public funds to expand, in favor of a highly fragmented, unequal program, which is presented as public insurance for the undeserving and private insurance for the deserving (Grogan and Park 2017a, 2018).
Second, as Mettler (2018) describes, there is already a serious disconnect between Americans' actual dependence on government and their perception of it. Because a great deal of the American welfare state is structured through the tax system, such as employer-sponsored health insurance, most Americans who depend on tax-subsidized benefits do not see the role of government in the provision of these benefits and do not perceive themselves as benefiting from government policies. In a similar process, after the passage of SCHIP almost all of the states changed the name of their Medicaid program (at least for the uninsured children's program) in an attempt to destigmatize the program, and the vast majority of states contract out with Medicaid MCOs, which tends to obscure the role of the state and presents Medicaid benefits as private insurance to enrollees. Yet, conservative policy designs and political framing take this process one step further by strategically treating different groups differently to bifurcate coalition politics. Conservative state actors are engaged in a political classification process, which actively portrays their reform efforts as “not Medicaid” but, rather, a private initiative that demands “consumer-driven personal responsibility.” Under this frame, the role of the state is intentionally hidden, and public funds received from the federal government are strategically obscured (Grogan, Singer, and Jones 2017; Mayrl and Quinn 2017).
Third, Medicaid's ideological cleavage mirrors the extreme political polarization reflected across our formal political institutions (e.g., in the US Congress, in the courts, and across state legislatures) and American public opinion (Hare and Poole 2014; Shor and McCarty 2011). While numerous historical accounts explicate how the development of the US health care system has been racially biased (Gamble 1995; Smith 2016; Wailoo 2001), there is evidence that as public opinion about health care reform has become more partisan since the passage of the ACA, it has also become more racially biased (Tesler 2012, 2013). Tesler (2012) documents that the racial gap in support for public insurance has significantly widened over time, with whites much less supportive than blacks or Latinos. Similarly, although several studies confirm that the composition of race in the state has long impacted the generosity of Medicaid benefits (if a state has a higher proportion of whites, means-tested eligibility levels tend to be higher), recent studies suggest that public opinion about the Medicaid expansion is also racialized (Grogan and Park 2017b; Lanford and Quadagno 2015), in two ways: large differences in support levels by race, and state adoption decisions positively related to white opinion and not responding to nonwhite support levels (Grogan and Park 2017b). This racialization is related to partisan visions of Medicaid. Rather than embrace a growing, unified vision of Medicaid that minimizes differences across class and race, the conservative vision highlights racial difference and invites conflict.
Medicaid Delivery Model Reforms
The Season of Light
Similar to state investments in social needs, Medicaid waivers allowed under the ACA have also ushered in major delivery model reforms attempting to coordinate care, improve quality, and lower costs. Every state in the nation is experimenting with some type of Medicaid delivery model reform, such as accountable care organizations, primary care medical homes, and health homes (Kaiser Family Foundation 2019c). While the attention to reforming the delivery system for Medicaid is unprecedented, there is little evidence to date on the outcomes of these reform efforts.
The Season of Darkness
A long-standing concern about the Medicaid program is that many providers refuse to participate in the program. Although the proportion of primary care physicians' patient panels made up of adult Medicaid patients increased in expansion states, from 10% to nearly 14% (Neprash et al. 2018), most Medicaid patients still utilize the health care safety net for their care. In 2015, 20% of primary care physicians saw 60% of Medicaid patients (Neprash et al. 2018). While Medicaid patients might prefer to see safety net providers, especially federally qualified health centers that offer wrap-around services, such as language translation and transportation, audit studies also confirm that relatively few private providers are available for new Medicaid patients (Polsky et al. 2018). In addition, so-called narrow networks—plans that employ 30% or fewer physicians in their market—are much more common among Medicaid MCOs than among employer-based MCOs or MCOs on the ACA Marketplaces (Ndumele et al. 2018; Polsky et al. 2018). Although the percentage of Medicaid MCOs with narrow networks has declined, from a high of 42% in 2011 to 27% in 2015, still one in four Medicaid MCOs offered to enrollees has a limited number of providers available and high turnover rates, raising concerns about continuity of care in addition to lack of choice (Ndumele et al. 2018). In sum, the hope of providing so-called mainstream medical care to Medicaid recipients has never been realized, and the ACA has not substantially changed that reality of a dual system of care.
There is also concern that, with little state oversight, for-profit commercial MCOs operating in the Medicaid program are earning significant profit margins (Herman 2016). The for-profit sector in Medicaid is substantial. Already by 2009, 41% of Medicaid MCO members were enrolled in publicly traded plans (McCue 2012). While the profit levels are concerning, there is almost no evidence to date about how Medicaid recipients fair in for-profit MCOs (especially post-ACA) relative to nonprofit plans.
The increase in public ACA funding has meant significant profits not only for many private organizations in the health care industry but also for private equity investors as well. Industries where Medicaid is the major funder of care (e.g., long-term care and home health care services, and behavioral health) have been a particularly lucrative target. For example, Medicaid is the largest payer for addiction treatment (Andrews et al. 2018), and private equity investments in behavioral health increased 24% in deal volume in just one year, amounting to $2.9 billion investments in treatment facilities in 2016 (Whalen and Cooper 2017). Private equity investment in the nursing home industry resulted in many facilities in large for-profit chains closing and laying off employees, while private equity executives and investors received substantial earnings (Appelbaum and Batt 2014; Baker 2019; Bos and Harrington 2017). Despite some murmurings of the need to regulate the private equity markets, especially as they have impacted needed medical facilities and services, the industry remains almost completely unregulated (Appelbaum and Batt 2014; Baker 2019; Bos and Harrington 2017).
Spring of Hope to Winter of Despair
For those who had been fighting for universal coverage in the United States for a long time, the passage of the ACA in the spring of 2010 represented a time of hope. As many have written, we had not seen such a significant reform since the passage of Medicare and Medicaid in 1965 (Grogan, 2011a). These hopes were quickly dashed, however, with the immediate, virulent conservative backlash against the ACA and the Supreme Court ruling overturning the Medicaid mandate. After 6 full years of demonization of the ACA, we had clearly reached the winter of despair in 2017, when the ACA was saved only by the now famous thumbs-down vote of one notable senator, John McCain.
Back to Hope?
And yet, the ACA was saved in part because, for the first time since 2010, more Americans reported feeling favorable about the ACA than unfavorable, and although a partisan divide remained, by the summer of 2017 there was much less support for the repeal-and-replace bills even among Republicans (Kirzinger et al. 2017). Indeed, because Medicaid retrenchment was the centerpiece of the Republican ACA repeal efforts, one of the key arguments against it, even among members in their own party, was the impact repeal would have on their base. Because Medicaid has expanded over time, even in conservative states, and the Republican Party's core constituents include working-class voters, who ironically rely on the program for a vital source of financial protection and access to care, a sizable portion of the Republican base was against repeal and the significant cuts proposed to Medicaid. In summer of 2017, three-fourths of the general public (74%) held a favorable view of Medicaid, but 61% of Republicans also held a favorable view (Kaiser Family Foundation 2017).
Some have interpreted the mobilization against repeal as evidence that Medicaid has become entrenched and is on the path toward more political stability. This might be true, but others point out that we were just one vote short of repealing the ACA despite mobilization against it (Hacker and Pierson 2018; Patashnik and Oberlander 2018). It is clear that, as the Republican Party has moved further to the right ideologically, its members have been more willing to attack Medicaid—despite its popularity—as a welfare program (Rosenbaum 2018).3 And, the increase in inequality in terms of how states treat their Medicaid enrollees, the racialization of Medicaid, private profits in Medicaid, and strategic efforts to obscure or make visible the states' role in Medicaid may also make it more difficult to create broad coalitions across race and class to fight against future attempts to retrench.
Can anything be done in light of these recent post-ACA trends? Underlying conservative efforts to radically reform the Medicaid program are false dichotomous portrayals of reform: “Promote private insurance and reduce the role of government.” The “non-Medicaid” waiver reforms produce only a rhetorical elimination of government. When Republican-led states obtain waivers to enact a supposedly “non-Medicaid” expansion, they draw down the same federal subsidies that Democrat-led states use to expand Medicaid. Democratic states are just as likely as Republican states to contract with Medicaid MCOs, and when their Medicaid enrollees sign up for private plans, public funds subsidize the coverage.
Under “private” frames, the role of the state is intentionally hidden and public funds received from the federal government are strategically obscured. While Medicaid is defined as “public” and conservatives use old welfare tropes to describe enrollees on Medicaid, the health care system that middle- and upper-income Americans are said to rely on is repeatedly described as “predominantly private”—despite an estimated $437 billion in tax-exempt subsidies for employer-based health insurance in 2019 (Grogan 2015). In reality, the US health care system reflects a complete interdependence between private and public sectors (Grogan 2011b). Even Pauly (2019), writing for the conservative American Enterprise Institute, calculated that nearly 80% of health care dollars are government directed in some way, which fuels the growth in private-sector delivery and administration. Thus, labeling a program as “public” or “private” is a political construction and should be understood as part of a political (often partisan) struggle. As such, it is politically important to reveal some basic truths: first, the extent to which all Americans—across the income distribution—rely on public subsidies to obtain health care coverage, and second, the extent to which the financial industry (and therefore the extremely wealthy) are profiting off of the American health care system, while many Americans continue to struggle to access care and pay their medical bills.
These figures represent only the so-called Medicaid gap—those not covered because states have not adopted the ACA Medicaid expansion. There are many more uninsured: nearly 28 million in 2017 (see Kaiser Family Foundation 2019b).
For an explanation of Republican strategy around Medicaid related to the opioid epidemic, see Grogan et al. 2020.