Chairwoman Gonzales, Ranking Member Foley, and members of the Health & Human Services Subcommittee, my name is Michael F. Cannon. I am the director of health policy studies at the Cato Institute. Founded in 1977, the Cato Institute is a non-partisan, non-profit, 501(c)(3) educational foundation in Washington, D.C. The mission of the Cato Institute is to promote the principles of individual liberty, limited government, free markets, and peace.
I welcome the opportunity to discuss the costs and benefits of what may be the most important decision facing Ohio officials.
The Patient Protection and Affordable Care Act of 2010 carries costs that far outweigh its benefits.
- The PPACA makes access to care less secure for millions of Americans, depresses economic activity, eliminates jobs, increases health care costs, increases the burden of government, and traps people in poverty.1
- It imposes $1.2 trillion in new taxes through 2022.2 According to one estimate, these taxes will reduce economic output by as much as $750 billion in just the first six years.3
- The PPACA commits taxpayers to pay for an estimated $1.6 trillion in new federal spending through 2023.4 Roughly half of this new spending consists of subsidies to private health insurance companies that will flow through new government agencies called health insurance “exchanges.” The balance comes from a 50 percent increase in the number of nonelderly Medicaid enrollees.5 This is money the federal government simply does not have.
- The Congressional Budget Office estimates the PPACA will eliminate roughly 800,000 jobs.6 Last week, the Federal Reserve reported, “Employers in several Districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.”7 The law has already caused employers to cut hours for everything from waiters to college professors. Former Obama economic advisor Austan Goolsbee predicts that even if overall hiring in the economy increases, the PPACA could cause overall hours worked to fall,8 while former adviser Jared Bernstein admitted, “I’m a little nervous about that [Federal Reserve report]…I think there’s something to it…I’ve got a news flash for you. The Affordable Care Act is not a jobs program.”9
Congress and President Obama have already repealed one of the law’s three new entitlement programs—the Community Living Assistance Services and Supports Act, or CLASS Act10—as well as other provisions of the law.11
Repealing the remaining provisions of the PPACA is essential to making health care better, more affordable, and more secure, as well as making the federal government live within its means.
The Role of States in the PPACA
The PPACA relies on states to implement health insurance Exchanges and the Medicaid expansion.12 Each provision would impose significant costs on the state of Ohio. Ohio is under no obligation to implement either. Between the two, the Medicaid expansion would cost the state far more.13
In fact, the PPACA gives Ohio officials considerable power to shape how the Act operates—but only if state officials refuse to implement these provisions. The moment Ohio implement either an Exchange or the Medicaid expansion, its cedes even greater control over its health care sector and the state’s destiny to the federal government. If Ohio officials wish to reassert control over their health care sector, they must decline to implement these provisions
The Unknowable Cost of Medicaid Expansion
Under the PPACA, Ohio has the option of expanding its Medicaid program to cover all citizens and legal immigrants below 138 percent of the federal poverty level. The federal government will cover 100 percent of one category of spending (claims) for one category of enrollees (newly eligible adults), for the first three years.
Ohio would be responsible for covering the administrative costs—plus the cost of covering newly eligible children and any already-eligible new enrollees—at the state’s current matching rate (roughly 36 percent).
Beginning in 2017, Ohio would also begin to pick up a larger share of the cost of claims for newly eligible adults. That share would rise to 10 percent by 2019. According to one news report, “States will receive more than $9 in federal money for every $1 they spend to cover low-income residents under” the expansion.14 This offer stands, as one observer wrote, in “theoretical perpetuity.”15
The Kaiser Family Foundation and the Urban Institute project Ohio’s share would total a considerable $6.6 billion over 10 years.16 My Cato Institute colleague Jagadeesh Gokhale is a leader in his field of economics and a member of the Social Security Administration’s advisory board. That means that when Social Security wants to know how to make these sorts of projections, they ask him. Gokhale more realistically projects that in states similar to Ohio, the expansion will cost up to 45 percent more than the Kaiser/Urban estimates,17 which suggests the expansion, under current law, would cost the state of Ohio as much as $10 billion.
The actual cost is likely to be much higher, for two reasons.
First, actual enrollment and spending in government health programs typically far surpasses initial projections. A 2009 report by the Joint Economic Committee of the U.S. Congress found, “In 1967, the House Ways and Means Committee predicted that the new Medicare program, launched the previous year, would cost about $12 billion in 1990.” The report found, “Actual Medicare spending in 1990 was $110 billion—off by nearly a factor of 10.”18 According to Jonathan Ingram of Florida’s Foundation for Government Accountability, when Arizona expanded its Medicaid program in 2002, actual enrollment reached nearly three times the projected level, while spending quadrupled initial projections.19 Over the long term, such programs always expand and are never eliminated or pared back in any significant way.
Second, the federal government is likely to renege on the initial nine-to-one match. The federal debt is now $12 trillion, or 76 percent of gross domestic product. This year, the federal government will run a projected $845 billion deficit.20 Under current law, annual deficits will cause the federal debt will grow to $20 trillion by 2023. According to the Congressional Budget Office (CBO):
Along such a path, federal debt held by the public will equal a greater percentage of GDP than in any year between 1951 and 2012 and will be far above the average of 39 percent over the 1973—2012 period. Moreover, it will be on an upward trend by the end of the decade. Debt that is high by historical standards and heading higher will have significant consequences for the budget and the economy…The nation’s net interest costs will be very high…[and] will require the government to raise taxes, reduce benefits and services, or undertake some combination of those two actions. National saving will be held down…which in turn will decrease income in the United States…The likelihood of a fiscal crisis will be higher…Those consequences would be exacerbated if federal debt exceeded the amounts projected in CBO’s baseline, as it would if certain deficit-reducing policies that are scheduled to take effect were instead reversed without being replaced by other policies with similar budgetary effects.21
Since Congress tends to reverse spending cuts or tax increases before they take effect, the CBO also makes the more realistic projection that if current policies continue, federal debt will grow to $29 trillion by 2023, or 114 percent of GDP.22
It is wildly unrealistic to assume the federal government will maintain the Medicaid expansion’s nine-to-one matching rate. As a consequence, the Medicaid expansion will likely cost Ohio even more than the direst projections.
Ohio currently spends about $5 billion per year to cover 2.5 million residents through Medicaid. Under the Medicaid expansion, each of those numbers would rise dramatically and continue to climb.
South Carolina governor Nikki Haley summarized the situation so: “The federal government likes to wave around a nine dollar match like it is some silver bullet, some extraordinary benefit that we cannot pass up. But what good do the nine dollars do us when we can’t come up with the one? And what good are any dollars when they come through a program that doesn’t allow us the flexibility to make the decisions that are in the best interest of the people?”23
Expansion Spends Scarce Tax Dollars
on People Who Already Have Coverage
Expanding Medicaid is neither a wise or well-targeted use of Ohio taxpayer dollars. A recent study by supporters of the PPACA projected “high rates of crowd-out for Medicaid expansions aimed at working adults (82%), suggesting that the Medicaid expansion provisions of PPACA will shift workers and their families from private to public insurance without reducing the number of uninsured very much.”24 Medicaid expansions in Arizona, Delaware, Maine, and Oregon did not reduce those states’ uninsured rates at all, but they were accompanied by declines in private coverage.25
More Medicaid, More Fraud
The amount of fraud in Medicaid is stunning even by government standards.26 Official estimates suggest Medicaid loses tens of billions of dollars to fraud annually—but experts deride those estimates as “comfortingly low and quite misleading.”27 In one example, a Brooklyn dentist billed taxpayers for nearly 1,000 procedures in a single day.28 Rampant fraud has led the Government Accountability Office to designate Medicaid as a “high-risk” program for the past decade.29 Expanding Medicaid means forcing Ohio taxpayers to pay for even more Medicaid fraud.
What Would Happen to Access to Care?
When Medicaid crowds out private health insurance, it often leaves patients with less-secure access to care. Nationwide, roughly one third of physicians refuse to accept new Medicaid patients.30 According to the U.S. Department of Health and Human Services, “Only about 20 percent of the nation’s 179,000 practicing dentists accept Medicaid.”31 In Maryland, the number is one in six.32 According to a study published last year in the Annals of Emergency Medicine, Medicaid patients are twice as likely to experience barriers to primary care as privately insured patients.33
Medicaid Expansion Could Increase Emergency-Room Use
One consequence is that Medicaid patients may turn to emergency rooms. The same Annals of Emergency Medicine study found Medicaid patients are also twice as likely to use the emergency room as a source of primary care.34
A 2011 study in the Journal of the American Medical Association found, “Adults with Medicaid accounted for most of the increase in ED visits” between 1997 and 2007, which was “almost double of what would be expected from population growth.” Emergency rooms “are increasingly serving as the safety net for medically underserved patients, particularly adults with Medicaid.” The authors found adult Medicaid patients are three times more likely than the uninsured, and seven times more than patients with private insurance, to use an emergency room for conditions that could have been addressed with primary care.35
The Annals of Emergency Medicine study concludes, “Expansion of Medicaid eligibility alone may not be sufficient to improve health care access.”36
It may not be a surprise, then, that when Maine expanded its Medicaid program to cover childless adults, as the PPACA would do, the expansion did not reduce uncompensated charity care. Rather, charity care by hospitals grew at an accelerated rate, increasing five fold.37
One Medicaid enrollee who turned to an emergency room when he couldn’t find primary care was a Maryland boy named Deamonte Driver.
In 2007, 12-year-old Deamonte was suffering from a toothache, caused by an abscess. His mother struggled in vain to find a dentist who would accept the family’s Medicaid coverage. According to one account, “the Public Justice Center in Baltimore…made dozens of calls to find someone to care for one of Alyce Driver’s sons. In the meantime, another one of her sons, Deamonte, fell ill.”38 But only one in six Maryland dentists accepts Medicaid. The Washington Post reported, “By the time Deamonte’s own aching tooth got any attention, the bacteria from the abscess had spread to his brain … After two operations and more than six weeks of hospital care, the Prince George’s County boy died.”
“A routine, $80 tooth extraction might have saved him,” the Post concluded. “If Medicaid dentists weren’t so hard to find.”39
Would Expanding Medicaid Improve Health?
It should not come as a surprise that there is no reliable evidence that Medicaid saves lives, scant reliable evidence that Medicaid improves health outcomes at all, and absolutely no evidence that it is a cost-effective way of doing so.40
This is a dimension of the Medicaid expansion that few people understand, and few people grasp after they hear it the first time. So I want to repeat that: There is no reliable evidence that Medicaid saves lives. There is scant reliable evidence that Medicaid improves health outcomes at all. And there is absolutely no evidence that Medicaid purchases the most health per dollar spent.
Does Expanding Medicaid Create Jobs?
The most vocal advocates of the expansion are the health care providers who would receive those subsidies. “A government which robs Peter to pay Paul can always depend on the support of Paul.”41
Ohio hospitals claim expanding Medicaid would create or save jobs. In reality, the expansion would reduce jobs. Government spending does not appear out of thin air. That money is diverted from other job-creating uses, and the taxes that raise those funds reduce economic activity.42 Medicaid is a drag on the economy, not a stimulus.
A thought experiment can show how treating Medicaid like a jobs program is dangerously counterproductive. Consider the following innovations:
- Artificial respirators pump oxygen into patients’ lungs.
- Oximeters, the small devices that attach to a patient’s forefinger, automatically measure the oxygen in her blood and display the results on a monitor.
- Blood pressure machines automatically track the patient’s blood pressure, and display that information on the same monitor.
- Dosage machines automatically dispense the right amount of medication to the patient at the right time.
- Certain hospital beds automatically and gently adjust to prevent bed-ridden patients from developing painful pressure sores.
- Electronic medical records make patient information more secure and accessible, and can reduce administrative costs and duplicative testing.
If Ohio’s hospitals believe the purpose of Medicaid is to create jobs, they should support legislation that denies Medicaid reimbursement for these devices or, even better, bans them outright. Think of all the jobs we would create for nurses, lab technicians, orderlies, and clerks who would then have to perform those tasks by hand.
Banning these items would be foolish, of course, because it would make health care more expensive. Likewise, pumping billions of additional dollars into an inefficient behemoth like Medicaid will block innovations that reduce costs. As two Harvard economists recently explained in the New England Journal of Medicine, “Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.”43 The day Medicaid becomes a jobs program, we should abolish it—not expand it.
If hospitals dislike the PPACA’s cuts to Medicare and disproportionate share hospital (DSH) payments, they should never have agreed to those cuts in the first place. As it is, they are addressing their frustrations to the wrong legislature. The solution to those problems is to fix those problems, which only Congress can do. Ohio officials can stand shoulder to shoulder with Ohio seniors and providers in that effort. It is no solution to expand a government program that will inevitably disappoint providers again.
Would It Be Discriminatory Not to Expand Medicaid?
Arizona Gov. Jan Brewer (R) claims it would be discriminatory not to expand Medicaid. While it is true that in some cases the PPACA provides more generous subsidies to legal immigrants (who would receive subsidized private insurance through an Exchange) than to similar citizens (who would receive Medicaid or possibly no subsidies), Brewer’s analysis and remedy are flawed for three reasons. First, the source of this discrimination against citizens is the PPACA’s Exchange subsidies, not a state’s failure to expand Medicaid. Second, 34 states including Arizona and Ohio have eliminated that discrimination by refusing to establish an Exchange. Third, expanding Medicaid would not eliminate the discrimination against citizens.44
Many states decline to cover certain legal immigrants through their Medicaid programs. The PPACA’s authors therefore let those immigrants purchase subsidized health insurance through an Exchange. The upshot is that if a legal immigrant and his citizen-neighbor are both below the poverty level, the immigrant may receive government-subsidized private health insurance, while the citizen gets Medicaid or—if their state refuses to expand Medicaid—nothing.
Yet the PPACA authorizes those discriminatory Exchange subsidies—like all Exchange subsidies—only in states that establish their own Exchanges. Thus, Arizona, Ohio, and 32 other states have already blocked those discriminatory subsidies by refusing to establish an Exchange.
Unfortunately, the Obama administration is trying to offer those discriminatory subsidies in those 34 states anyway—without congressional authorization, and indeed contrary to federal law and congressional intent. Rather than expand Medicaid, officials concerned about this form of discrimination should challenge the Obama administration’s illegal subsidies—and the illegal taxes those subsidies trigger—in court, as Oklahoma attorney general Scott Pruitt has done.45 Blocking those illegal subsidies is the only way to stop the PPACA’s discrimination against citizens. Expanding Medicaid would not end the discrimination, because many citizens would still receive Medicaid coverage while immigrants receive private insurance.
Is Expansion Necessary to Protect Employers?
Some employers are encouraging states to expand Medicaid to protect them from the PPACA’s employer mandate. That mandate penalizes certain employers up to $2,000 per worker if the employer fails to offer sufficient coverage to all workers.
Again, Ohio and the other 33 states that have refused to establish Exchanges have already exempted their employers from those penalties.46 But again, though the law is quite clear, the Obama administration—without congressional authorization, and contrary to federal law and congressional intent—is attempting to impose those penalties on Ohio employers anyway.
Once again, if Ohio employers and officials want to protect employers, they must follow Oklahoma’s lead and challenge those illegal taxes in federal court.
Does Putting the Expansion Population in Private Insurance Make Sense?
Gov. Mike Beebe (D) has requested and received initial approval for a plan to enroll Arkansas’ Medicaid-expansion population through the PPACA’s health insurance Exchanges. This proposal is of dubious legality47 and would make the PPACA more costly, more discriminatory, and even more of a giveaway to private health insurance companies.
MIT health economist Jonathan Gruber, one of the PPACA’s architects, counsels against enrolling Medicaid-eligible adults through Exchanges for three reasons. First, it increases the cost of the law: “Medicaid coverage is less expensive than coverage in the exchange for this population.”48 The Congressional Budget Office estimates the government would spend an additional $3,000 per person to cover them through an Exchange,49 and has estimated this option would increase the cost of the PPACA (and increase federal deficits) by $50 billion.50
Indeed, the PPACA’s authors repeatedly voted down such proposals because the cost would be too great. Sen. Jeff Bingaman said, “[F]or our committee to say…that anyone covered by Medicaid could opt to go into the [Exchange] and obtain subsidies I think would just add to the cost and I would have to oppose the amendment.”51 Senate Finance Committee chairman Max Baucus stridently denounced the idea: “I must say that this is a very bad amendment…If you are concerned about affordability, you will reject this amendment outright immediately…this one just blows affordability out the window. We cannot accept this amendment…I cannot understand how anybody would vote for this amendment.”52 It would be unwise, and possibly unlawful, for HHS to spend $50 billion that Congress expressly rejected.
The main beneficiaries of those additional government subsidies would be private health insurance companies. Since its introduction in 2009, left-wing critics have called the PPACA a giveaway to private health insurance companies, because it forces nearly all Americans to purchase those companies’ products. Beebe’s proposal would make the PPACA an even greater sop to private health insurance companies: it would increase government spending by paying private insurers more to cover Medicaid enrollees outside of Medicaid than they would receive for covering them through the Medicaid program. Paul Krugman calls Beebe’s proposal “welfare for the medical-industrial complex.”53
Second, Gruber notes that opening the Exchanges to Medicaid enrollees would encourage even more employers to drop coverage: “if the entitlement for low-income individuals is to an exchange, disruption of existing employer insurance arrangements will be higher than if it is to a Medicaid.”54 This suggests the share of newly eligible Medicaid enrollees who would have had private insurance anyway would be even higher than 82 percent under Beebe’s proposal.
Third, Gruber writes, “It is not clear how well consumer choice and structured competition can work for the lowest income populations who cannot afford to pay differentials across health plans. In light of these considerations, I would suggest a clear breakline for public insurance eligibility below which individuals are eligible for free public insurance, and above which they can come into the exchange.”55
In addition, the Beebe proposal would add another form of discrimination into the PPACA. As discussed above, the law already discriminates in favor of immigrants over citizens. Beebe’s proposal would create a new form of discrimination: the government would provide better health care to bachelors (i.e., newly eligible adults, who could obtain subsidized private health insurance through Exchanges) than to parents who are already (and only) eligible for Medicaid.56
States Can Decline All “Mandatory” Medicaid Provisions
As originally conceived, the PPACA’s Medicaid expansion mandated that states expand their Medicaid programs in numerous ways, on pain of losing all federal Medicaid funds, which amount to roughly 12 percent of revenues for the average state.57 The Supreme Court’s ruling in NFIB v. Sebelius found that mandate to be unconstitutionally coercive and freed states to refuse all mandatory Medicaid provisions of the law—not just the newly eligible adult population.58
Yet the Obama administration has arbitrarily narrowed the Supreme Court’s ruling. The administration has told states they may only opt out of providing coverage for newly eligible adults. In other words, the administration is continuing to threaten states with the loss of all federal funds—a penalty the Supreme Court held to be coercive—unless they implement the PPACA’s other mandatory Medicaid provisions. Maine ran afoul of HHS’s misreading of NFIB and has challenged that misreading in federal court.59 States can reduce the cost of their Medicaid programs by following Maine’s example.
Ohioans’ access to health care is less secure than it should be because of government interventions like the PPACA. Blocking and repealing this Act are therefore positive steps that will make health care more secure. For example, the CBO reports that repealing the Act would reduce premiums for many consumers by freeing them to purchase more affordable health plans.60 But state and federal officials should not stop there.
After rejecting both an Exchange and the Medicaid expansion, Ohio should adopt reforms that make health care better and bring it within the reach of vulnerable Ohioans.
A “Good Samaritan” Law
Ohio should enact a “Good Samaritan” law like those enacted in Tennessee, Illinois, and Connecticut.61 Volunteer groups like Remote Area Medical engage doctors and other clinicians from around the country to treat indigent patients in rural and inner-city areas. These clinicians are often turned away from providing free medical care to the poor, however, because they are not licensed to practice medicine by the state they are visiting.
Remote Area Medical has had to turn away patients or scrap clinics in California, Florida, and Georgia due to these licensing restrictions. “Before Georgia told us to stop,” says founder Stan Brock, “we used to go down to southern Georgia and work with the Lions Club there treating patients.” After a tornado devastated Joplin, Missouri, Remote Area Medical arrived with a mobile eyeglass lab, yet state officials prohibited the visiting optometrists from giving away free glasses.62
Tennessee, Illinois, and Connecticut have enacted laws that allow out-of-state-licensed clinicians to deliver free charitable care in their states without obtaining a new license. To protect patients, visiting clinicians should be subject to the malpractice laws of the state in which they are practicing.
Care Enough to Study Whether Medicaid Works
Most non-health care experts are surprised to learn how little reliable evidence there is that Medicaid has a positive impact on health, and how there is absolutely no evidence it is a cost-effective way to improve health.63
Rather than expand Medicaid, Ohio should apply for a waiver to conduct an experiment like the Oregon Health Insurance Experiment (OHIE).64 The OHIE randomly assigned patients to receive Medicaid or not, with the goal of producing reliable data to measure the impact of Medicaid on existing populations. Unfortunately, Oregon officials arbitrarily halted the experiment. Ohio should apply for a waiver from the federal government to conduct a similar study with existing populations, to determine exactly what Ohio taxpayers are getting for the billions of dollars they contribute to the program. There likely will be objections to randomly assigning Medicaid slots to existing populations, yet the truly unethical position is to preserve or expand Medicaid without knowing whether it even helps the people it is meant to help.
Let Patients and Doctors Reform Malpractice Liability
The cost of medical malpractice liability insurance increases the price of health care services, pricing many low-income patients out of the market. A given reform might reduce the price of medical services, but at the expense of preventing some injured patients from recovering the full cost of their injuries.65 When these complicated tradeoffs exist, the best approach is to let patients choose the tradeoff that works best for them.
Ohio should therefore allow patients and providers to adopt their own “med mal” reforms via contract.66 Patients who want caps on non-economic damages, mandatory binding arbitration, medical courts, or a “loser pays” rule could have those measures, and any concomitant reduction in their medical bills. Patients who prefer to have an unlimited right to sue could write that into contracts with their medical providers, and pay whatever markup comes with that added protection.
The obstacle to such contracts is that courts do not enforce them. That unfortunate judicial trend denies access to care for low-income patients by denying them the opportunity to decide for themselves whether accessing medical care now is more important than having an unlimited right to sue in the unlikely event they suffer an injury due to a provider’s negligence. In states that have already enacted caps on noneconomic damages or other med-mal reforms, freedom of contract would allow patients to obtain greater protections than those laws allow. Ohio’s legislature should direct courts to enforce such contracts.
Ohio should decline to underwrite the PPACA’s Medicaid expansion. Rejecting the expansion would reduce federal deficits and would reduce total government spending even more. According to CBO estimates, the handful of states that have refused to expand Medicaid have reduced federal deficits by $84 billion.67
Finally, Ohio argued before the Supreme Court that the PPACA coerced the state into implementing an unaffordable Medicaid expansion. The expansion is still unaffordable. It would more befit Ohio’s stature to join Maine in challenging the Obama administration’s arbitrary attempt to limit the Supreme Court’s Medicaid ruling in NFIB v. Sebelius.
The PPACA’s Medicaid expansion is unaffordable given the current projections—and its actual cost is likely to exceed those projections. Perhaps more important, expanding Medicaid conflicts with the goal of delivering affordable, high-quality health care.
Thank you for allowing me to address the committee today. I look forward to your comments.
1 See Michael F. Cannon, “50 Vetoes: How States Can Block the Obama Health Law,” Cato Institute White Paper, forthcoming, March 21, 2013.
2 This $1.2 trillion figure represents the total projected burden of the revenue-increasing provisions of the law. Douglas W. Elmendorf, “Letter to Rep. John Boehner on Repeal of Obamacare Act, as passed by the House of Representatives on July 11, 2012,” July 24, 2012, p. 6, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf. As the CBO has not published updated projections for all such provisions, this estimate may not be directly comparable to subsequent projections.
3 Christopher J. Conover, “Congress Should Account for the Excess Burden of Taxation,” Cato Institute Policy Analysis No. 669, October 13, 2010, p. 8, https://www.cato.org/pubs/pas/PA669.pdf.
4 This $1.6 trillion figure represents total projected spending under the insurance-coverage provisions of the Act, and does not include the budgetary impact of the non-refundable portion of the Act’s premium-assistance tax credits, which further increase federal deficits. Congressional Budget Office, Effects of the Affordable Care Act on Health Insurance Coverage—February 2013 Baseline, February 5, 2013, p. 2, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900_ACAInsuranceCoverageEffects.pdf, and author’s calculations; Douglas W. Elmendorf, “Letter to Rep. John Boehner,” Table 2, pp. 5—6 (showing 78 percent of the budgetary impact of Exchange-related tax credits and subsidies is new spending, while only 22 percent is tax reduction); and author’s calculations. The estimate also reflects the fact that certain states have refused to implement the Act’s Medicaid expansion. That adjustment reduces projected Medicaid outlays, but increases the budgetary impact of Exchange-related tax credits and subsidies. The CBO’s most recent projections based on all states implementing the Medicaid expansion (from March 2012, and adjusted for slower observed growth in Medicaid spending) yield a similar estimate: $1.5 trillion. Congressional Budget Office, Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act, March 2012, p. 11, http://cbo.gov/sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdf; Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 2013, p. 60, http://cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf; Elmendorf, “Letter to Rep. John Boehner,” Table 2, pp. 5—6; and author’s calculations.
5 Congressional Budget Office, Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act, March 2012, p. 12, http://cbo.gov/sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdf.
6 Michael F. Cannon, “Yes, ObamaCare Will Eliminate Some 800,000 Jobs,” Cato@Liberty, November 2, 2011, https://www.cato.org/yes-obamacare-will-eliminate-some-800000-jobs/.
7 Board of Governors of the Federal Reserve System, “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” March 6, 2013, http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201303.htm.
8 Austan Goolsbee et al., “Non-Farm Payrolls Up 236,000 in February,” CNBC Video, March 8, 2013, http://video.cnbc.com/gallery/?play=1&video=3000153157.
9 Austan Goolsbee et al., “Non-Farm Payrolls Up 236,000 in February,” CNBC Video, March 8, 2013, http://video.cnbc.com/gallery/?play=1&video=3000153157.
10 American Taxpayer Relief Act of 2012, Pub. L. 112-240, Sec. 642, 126 Stat. 2313, 2358 (2013).
11 See, for example, Sarah Kliff, “The Fiscal Cliff Cuts $1.9 Billion from Obamacare. Here’s How,” Washington Post, January 2, 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/02/the-fiscal-cliff-cuts-1-9-billion-from-obamacare-heres-how/. Elise Viebeck, “Health Plan Advocates Slam ‘Cliff’ Deal Cuts,” The Hill, January 3, 2013, http://thehill.com/blogs/healthwatch/health-reform-implementation/275479-health-co-op-advocates-slams-cliff-deal-cuts. Sarah Kliff, “In ‘Fiscal Cliff’ Deal, a Blow to ObamaCare,” Washington Post, January 15, 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/15/co-ops-were-supposed-to-replace-the-public-option-now-they-are-dead/.
12 For more on health insurance Exchanges, see Michael F. Cannon, “50 Vetoes: How States Can Block the Obama Health Law,” Cato Institute White Paper, forthcoming, March 21, 2013.
13 Funding an Exchange could cost the state upward of $34 million in the first year, and likely would cost the state half a billion dollars over the first 10 years. Jeremy D. Palmer, Jill S. Herbold, and Paul R. Houchens, “Milliman Client Report: Assist with the First Year of Planning for Design and Implementation of a Federally Mandated American Health Benefits Exchange in the Individual Market,” 2011, pp. 1-2, http://www.ohioexchange.ohio.gov/Documents/MillimanReport.pdf.
14 Ricardo Alonso-Zaldivar, “Report Says States Can Get More Than $9 From Feds For Every $1 They Spend To Expand Medicaid,” Associated Press, November 26, 2012, http://www.startribune.com/politics/180870201.html?refer=y.
15 Adrianna McIntyre & Karan Chhabra, “Arkansas is Fiddling Around with Obamacare. People Care. But is it Legal, and Does it Matter?” Project Millennial, March 2, 2013, http://projectmillennial.org/2013/03/02/arkansas-is-fiddling-with-obamacare/.
16 Kaiser Family Foundation and Urban Institute, “The Cost and Coverage Implications of the ACA Medicaid Expansion: National and State-by-State Analysis,” November 2012, http://www.kff.org/medicaid/upload/8384.pdf.
17 See Jagadeesh Gokhale, “Estimating Obama Care‘s Effect on State Medicaid Expenditure Growth,” Cato Institute White Paper, January 11, 2011, https://www.cato.org/publications/workingpaper/estimating-obamacares-effect-state-medicaid-expenditure-growth; Jagadeesh Gokhale and Angela C. Erickson, “The Effect of Federal Health Care ‘Reform’ on Kansas General Fund Medicaid Expenditures,” Kansas Policy Institute, June 2011, http://www.kansaspolicy.org/researchcenters/healthcare/studiesanalysis/d79018.aspx; Jagadeesh Gokhale, “Projecting Oklahoma’s Medicaid Expenditure Growth Under the Patient Protection and Affordable Care Act”, May, 2011, https://www.cato.org/articles/projecting-oklahomas-medicaid-expenditure-growth-under-ppaca; Jagadeesh Gokhale, Angela C. Erickson, and Geoffrey Larence, “The Impact of ObamaCare on Nevada’s Medicaid Spending,” Nevada Policy Research Institute Analysis, May 5, 2011, http://npri.org/docLib/20110510_Impact_of_Obamacare_on_Nevadas_Medicaid_Spending.pdf; Jagadeesh Gokhale, “New Jersey’s Medicaid Spending Escalation under the PPACA,” Presentation to the Common Sense Institute, New Jersey, December 20, 2011.
18 Joint Economic Committee, Are Health Care Reform Cost Estimates Reliable? July 31, 2009, http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=5802c84c-e821-4ab3-baeb-793f3ae2e036.
19 Jonathan Ingram, “Medicaid Expansion: We Already Know How the Story Ends,” Foundation for Government Accountability, March 11, 2103, http://www.floridafga.org/wp-content/uploads/Medicaid-Expansion-We-Already-Know-How-the-Story-Ends.pdf.
20 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 2013, p. 28, http://cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf.
21 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 2013, pp. 25-28, http://cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf.
22 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 2013, pp. 25, 33, http://cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf; and author’s calculations.
23 “Full Text: SC Gov. Nikki Haley State of the State address,” The State, January 16, 2013, http://www.thestate.com/2013/01/16/2592664/full-text-sc-gov-nikki-haley-state.html.
24 Steven D. Pizer, Austin B. Frakt, and Lisa I. Iezzoni, “The Effect of Health Reform on Public and Private Insurance in the Long Run,” March 9, 2011, http://ssrn.com/abstract=1782210. See also Jeffrey R. Brown and Amy Finkelstein, “The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market,” American Economic Review 98, No. 3 (2008): 1083—1102; Geena Kim, “Medicaid Crowd-Out of Long-Term Care Insurance with Endogenous Medicaid Enrollment,” 12th Annual Joint Conference of the Retirement Research Consortium, 2010.
25 Jonathan Ingram, “Medicaid Expansion: We Already Know How the Story Ends,” Foundation for Government Accountability, March 11, 2103, http://www.floridafga.org/wp-content/uploads/Medicaid-Expansion-We-Already-Know-How-the-Story-Ends.pdf.
26 Michael F. Cannon, “Entitlement Bandits,” National Review, July 4, 2011, https://www.cato.org/publications/commentary/entitlement-bandits-how-ryan-plan-would-curb-medicare-medicaid-fraud.
27 Malcolm K. Sparrow, Criminal Prosecution as a Deterrent to Health Care Fraud, Testimony before the U.S. Senate Committee on the Judiciary, Subcommittee on Crime and Drugs, 111th Cong., May 20, 2009, http://www.hks.harvard.edu/news-events/news/testimonies/sparrow-senate-testimony.
28 Clifford J. Levy and Michael Luo, “New York Medicaid Fraud May Reach Into Billions,” The New York Times, July 18, 2005, http://query.nytimes.com/gst/fullpage.html?res=9807E7D8163CF93BA25754C0A9639C8B63.
29 See U.S. Government Accountability Office, High-Risk Series: An Update, GAO-13-283, February 14, 2013, p. 255, http://www.gao.gov/assets/660/652133.pdf.
30 Sandra L. Decker, “In 2011 Nearly One-Third of Physicians Said They Would Not Accept New Medicaid Patients, But Rising Fees May Help,” Health Affairs 31, No. 8 (2012), http://content.healthaffairs.org/content/31/8/1673.full.
31 Health and Human Services, Health Resources and Services Administration, “Oral Health Workforce,” 2013, http://www.hrsa.gov/publichealth/clinical/oralhealth/workforce.html.
32 Mary Otto, “For Want of a Dentist; Pr. George’s Boy Dies after Bacteria from Tooth Spread to Brain,” Washington Post, February 28, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/02/27/AR2007022702116_pf.html.
33 Paul T. Cheung et al., “National Study of Barriers to Timely Primary Care and Emergency Department Utilization Among Medicaid Beneficiaries,” Annals of Emergency Medicine 60, No. 1 (2012): 4-10, http://www.annemergmed.com/webfiles/images/journals/ymem/FA-PTCheung.pdf.
34 Paul T. Cheung et al., “National Study of Barriers to Timely Primary Care and Emergency Department Utilization Among Medicaid Beneficiaries,” Annals of Emergency Medicine 60, No. 1 (2012): 4-10, http://www.annemergmed.com/webfiles/images/journals/ymem/FA-PTCheung.pdf.
35 Ning Tang et al., “Trends and characteristics of US emergency department visits, 1997-2007,” Journal of the American Medical Association 304, No. 6 (2010): 664-70, http://jama.ama-assn.org/content/304/6/664.
36 Paul T. Cheung et al., “National Study of Barriers to Timely Primary Care and Emergency Department Utilization Among Medicaid Beneficiaries,” Annals of Emergency Medicine 60, No. 1 (2012): 4-10, http://www.annemergmed.com/webfiles/images/journals/ymem/FA-PTCheung.pdf.
37 Jonathan Ingram, “Medicaid Expansion: We Already Know How The Story Ends,” Foundation for Government Accountability Policy Brief No. 3, March 11, 2013, p. 6, http://www.floridafga.org/wp-content/uploads/Medicaid-Expansion-We-Already-Know-How-the-Story-Ends.pdf.
38 Tracy A. Harris, The U.S. Oral Health Workforce in the Coming Decade: Workshop Summary (Washington, DC: National Academies Press, 2009), p. 118, http://www.nap.edu/openbook.php?record_id=12669&page=118.
39 Mary Otto, “For Want of a Dentist; Pr. George’s Boy Dies after Bacteria from Tooth Spread to Brain,” Washington Post, February 28, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/02/27/AR2007022702116_pf.html.
40 Michael F. Cannon, “Oregon’s Verdict on Medicaid,” National Review Online, July 7, 2011, http://www.nationalreview.com/articles/271252/oregon-s-verdict-medicaid-michael-f-cannon.
41 “George Bernard Shaw,” Wikiquote.org, 2013, http://en.wikiquote.org/wiki/George_Bernard_Shaw.
42 See Christopher J. Conover, “Congress Should Account for the Excess Burden of Taxation,” Cato Institute Policy Analysis No. 669, October 13, 2010, p. 8, https://www.cato.org/pubs/pas/PA669.pdf. 43 Katherine Baicker and Amitabh Chandra, “The Health Care Jobs Fallacy,” New England Journal of Medicine 366, no. 26 (2012): 2433—35, http://www.nejm.org/doi/full/10.1056/NEJMp1204891.
44 Michael F. Cannon, “On ObamaCare’s Discriminatory Subsidies, Brewer Bows When Arizona Should Keep Slugging,” Cato@Liberty, January 31, 2013, https://www.cato.org/blog/obamacares-discriminatory-subsidies-brewer-bows-when-arizona-should-keep-slugging.
45 Jonathan H. Adler and Michael F. Cannon, “Taxation without Representation: The Illegal IRS Rule to Expand Tax Credits under the PPACA,” Case Legal Studies Research Paper no. 2012—27, December 14, 2012, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2106789.
46 For more on health insurance Exchanges, see Michael F. Cannon, “50 Vetoes: How States Can Block the Obama Health Law,” Cato Institute White Paper, forthcoming, March 21, 2013.
47 See Adrianna McIntyre & Karan Chhabra, “Arkansas is Fiddling Around with Obamacare. People Care. But is it Legal, and Does it Matter?” Project Millennial, March 2, 2013, http://projectmillennial.org/2013/03/02/arkansas-is-fiddling-with-obamacare/; and Adrianna McIntyre & Karan Chhabra, “Arkansas Proposal Still Fiddly in Practice,” Project Millennial, March 9, 2013, http://projectmillennial.org/2013/03/09/arkansas-proposal-still-fiddly-in-practice/.
48Healthcare Reform Roundtable (Part I): Hearing Before the S. Comm. on Health, Education, Labor, and Pensions, 111th Cong. p. 60 (June 11, 2009) (testimony of Jonathan Gruber), http://www.gpo.gov/fdsys/pkg/CHRG-111shrg50510/pdf/CHRG-111shrg50510.pdf.
49 Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision, July 2012, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf.
50Executive Committee Meeting to Consider Health Care Reform: Before the S. Comm. on Finance, 111th Cong. pp. 376-377 (September 24, 2009) (Statement of Sen. Max Baucus), http://www.finance.senate.gov/hearings/hearing/download/?id=05b7b365-6abd-4bda-bd51-4885aa8b887f..
51Executive Session Affordable Health Choices Act: Before the S. Comm. on Health, Education, Labor, and Pensions, 111th Cong. video at 100:05 (July 14, 2009) (Statement of Sen. Jeff Bingaman), http://www.help.senate.gov/hearings/hearing/?id=0325b8b5-d9ad-a254-a443-6feccedeb06b..
52Executive Committee Meeting to Consider Health Care Reform: Before the S. Comm. on Finance, 111th Cong. pp. 376-377 (September 24, 2009) (Statement of Sen. Max Baucus), http://www.finance.senate.gov/hearings/hearing/download/?id=05b7b365-6abd-4bda-bd51-4885aa8b887f..
53 Paul Krugman, “Welfare for the Medical-Industrial Complex,” New York Times, March 2, 2013, http://krugman.blogs.nytimes.com/2013/03/02/welfare-for-the-medical-industrial-complex/.
54Healthcare Reform Roundtable (Part I): Hearing Before the S. Comm. on Health, Education, Labor, and Pensions, 111th Cong. p. 60 (June 11, 2009) (testimony of Jonathan Gruber), http://www.gpo.gov/fdsys/pkg/CHRG-111shrg50510/pdf/CHRG-111shrg50510.pdf.
55Healthcare Reform Roundtable (Part I): Hearing Before the S. Comm. on Health, Education, Labor, and Pensions, 111th Cong. p. 60 (June 11, 2009) (testimony of Jonathan Gruber), http://www.gpo.gov/fdsys/pkg/CHRG-111shrg50510/pdf/CHRG-111shrg50510.pdf.
56 See Adrianna McIntyre & Karan Chhabra, “Arkansas is Fiddling Around with Obamacare. People Care. But is it Legal, and Does it Matter?” Project Millennial, March 2, 2013, http://projectmillennial.org/2013/03/02/arkansas-is-fiddling-with-obamacare/.
57 Cindy Mann, Joan C. Alker, and David Barish, “Medicaid and State Budgets: Looking At The Facts,” May 2008, http://ccf.georgetown.edu/wp-content/uploads/2012/03/Medicaid_state-budgets-2008.pdf (“It is often reported that states spend, on average, almost 22 percent of their state budgets on Medicaid, but this figure can be misleading because it considers federal as well as state funds. On average, federal funds account for 56.2 percent of all Medicaid spending.”).
58NFIB v. Sebelius, 132 S. Ct. 2566 (2012).
59 Michael F. Cannon, “50 Vetoes: How States Can Block the Obama Health Law,” Cato Institute White Paper, forthcoming, March 21, 2013.
60 Douglas W. Elmendorf, “Letter to Rep. John Boehner on Repeal of Obamacare Act, as passed by the House of Representatives on July 11, 2012,” July 24, 2012, p. 13, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf (Consumers in the individual market would be free to choose health plans that “cover a smaller share of enrollees’ costs for health care and a slightly narrower range of benefits.”).
61 See CONN. GEN. STAT. § 52-557b; 745 ILL. COMP. STAT. ANN. 49/25; and TENN. CODE ANN. § 63-6-701.
62 “Medical Volunteers Not Free to Cross State Lines,” Associated Press, July 21, 2012, http://www.knoxnews.com/news/2012/jul/21/medical-volunteers-not-free-to-cross-state-lines/.
63 Michael F. Cannon, “Oregon’s Verdict on Medicaid,” National Review Online, July 7, 2011, http://www.nationalreview.com/articles/271252/oregon-s-verdict-medicaid-michael-f-cannon#.
64 Amy Finkelstein, et al., “The Oregon Health Insurance Experiment: Evidence from the First Year,” Quarterly Journal of Economics 127, No. 3 (2012): 1243-1285.
65 Shirley Svorny, “Could Mandatory Caps on Medical Malpractice Damages Harm Consumers?” Cato Institute Policy Analysis No. 685, October 20, 2011, https://www.cato.org/publications/policy-analysis/could-mandatory-caps-medical-malpractice-damages-harm-consumers.
66 Michael F. Cannon, “Reforming Medical Malpractice Liability through Contract,” Cato Institute Working Paper, November 12, 2010, https://www.cato.org/publications/working-paper/reforming-medical-malpractice-liability-through-contract.
67 Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision, July 2012, p. 2, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf.