Goldwater Institute Report: Medicaid Expansion Leads to Unintended Consequences

August 7, 2018

Phoenix—A new report out today from the Goldwater Institute provides a cautionary tale to states considering an expansion of Medicaid: Arizona’s experience shows that Medicaid expansion had unintended consequences that contradicted many experts’ rosy predictions.

The Arizona Medicaid Expansion Experience: Beware the Peddlers of Cost-Shifting Claims tells the story of Arizona’s decision to enact Medicaid expansion and how it worked—or didn’t work—in practice. “Arizona bought the promise of Medicaid expansion largely on the basis that it would ease so-called ‘cost-shifting’ claims—that hospitals were passing their uncompensated care costs to private payers resulting in higher insurance premiums,” said Goldwater Institute Director of Healthcare Policy Naomi Lopez, who co-authored the paper. “But if one is to believe these claims, our study shows that the cost-shifting is even worse today. Once Arizona expanded Medicaid, hospitals were able to flex their muscles and extract higher prices from all payers.”

Total charges for all payment groups (public and private) increased between 2007 and 2016, but Medicaid charges in Arizona’s emergency departments alone increased more than 300 percent.

“States that are considering expanding their Medicaid programs should study what happened in Arizona,” said Goldwater Institute Executive Vice President Christina Sandefur, another of the report’s co-authors. “Arizona’s expansion of Medicaid not only failed to deliver on its promise that expansion would help alleviate the supposed shifting of costs for providing care to the uninsured to the privately insured, it allowed hospitals to further increase prices on all payers—with no transparency or accountability to the taxpayers who are footing the bill for the program. The lesson for state lawmakers is that a program should be evaluated based on its outcomes, not its intentions.”

Read the full report, written by Sandefur, Lopez Bauman, and economist Angela C. Erickson, here.

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About the Goldwater Institute

The Goldwater Institute drives results by working daily in courts, legislatures and communities to defend and strengthen the freedom guaranteed to all Americans in the constitutions of the United States and all 50 states. With the blessing of its namesake, the Goldwater Institute opened in 1988. Its early years focused on defending liberty in Barry Goldwater’s home state of Arizona. Today, the Goldwater Institute is a national leader for constitutionally limited government respected by the left and right for its adherence to principle and real world impact. No less a liberal icon than the New York Times calls the Goldwater Institute a “watchdog for conservative ideals” that plays an “outsize role” in American political life.