Georgia is one of 19 states currently not expanding Medicaid under the auspices of Obamacare. This, contends proponents of expansion, is leading to needless deaths and poor health outcomes for many poorer Georgia residents due to the ongoing closure of rural Georgia hospitals. As with any political issue reduced to sound bites, this is a gross over simplification. Although it is true that monies received under a Medicaid expansion would indirectly alleviate some of the financial burden faced by these hospitals, it would not solve the problem nor would it address the proximate cause of these hospital’s failures.

This nationwide network of rural hospitals was established in the 1940s by the federal government. For the most part they were quite successful with few closures, that is, until the first year of Obamacare regulations came on line – 2010. Obamacare then began to smother these community hospitals with shortsighted regulations that do nothing to limit costs. These regulations included penalties for patient re-admittance if done too soon after initial release, mandates to establish electronic medical records, as well as cuts in Medicare reimbursements to hospitals.  While one hand of Obamacare beats these hospitals with a stick (regulation), the other hand offers a Band-Aid (Medicaid expansion); truly a case of governmental cognitive dissonance.

Medicaid expansion is but one part of the Obamacare-Trojan horse that will slowly stamp out the last vestige of market health care. The “Medicaid Hole” was deliberately inserted into Obamacare. This “hole” leaves some people with no coverage unless the states go along with the Federal definition of Medicaid eligibility (the states can set their own standards now). This is the second Gruber-esque ploy within Obamacare directed at enticing “voluntary” state compliance. It follows the standard Mafia extortion-pattern of an “offer you can’t refuse” by threatening harm to a third party. The first instance of this was the state exchanges: “set up state exchanges or else your citizens won’t qualify for federal subsidies.” Now it is “expand Medicaid or your citizens will suffer for lack of health care.” The individual is but a pawn in their game. If that were not so then why didn’t they simply create federal exchanges and grant everyone subsidies?

The second part of this Trojan horse is that Obamacare sets a substantial tax on “Cadillac” health care plans. The threshold for a Cadillac plan is the ONLY financial figure in Obamacare that is NOT indexed to inflation (let that sink in for a minute). Once a state expands Medicaid they must follow the federal eligibility requirements. The end game is a masterful pincer action; Medicaid eligibility will be eased upward by the feds while the Cadillac cap will in effect be eased downward (as a result of healthcare inflation). “Affordable” plans will disappear and thus people will have no choice but to jump over to Medicaid. End result: single payer healthcare (Medicaid) without a shot being fired.

Now before anyone argues that we need single payer to fix this “free market” mess remember that we have never had a free market based health care system in this country – there has always, at some level, been government intrusion into the market.* These intrusions distorted natural incentives and created unintended consequences. The “solution” to these unintended consequences then is always more government intrusions. Wash, rinse, and repeat.

To find a real solution to government interventions we must “undo” – not “do”. If proponents of Medicaid expansion in Georgia are serious about helping the poor and uninsured then they should propose the total repeal of all “Certificate of Need” laws (O.C.G.A. 31-6) in this state that require both state approval and the approval of any potential competitors for not only any new health care facility, but even the expansion of an existing one. CON laws have nothing to do with maintaining a certain standard of care. They are entirely a crony-capitalist measure, like taxi medallions, meant to limit competition among providers of a particular service. These laws do nothing but scare off potential investors and add years onto the process of opening a new hospital. The best thing to help the uninsured would be low prices brought about through competition. Subsidies to the uninsured in a CON environment are nothing but an indirect subsidy to high cost providers.

*Sky high income tax rates during World War II fostered the creation of tax free health insurance through ones employer. That, coupled with the creation of Medicare in the 1960s soon led to rapidly increasing health costs in the 1970s which Congress tried to stem with the HMO Act of 1973  and this country’s first dalliance with “managed-care” – that is the insertion of a third party between the doctor and patient who would pay for all care but also inject their opinion on the necessity of care. As costs continued to spiral upwards (due to the artificial disconnect between the customer (the patient) and the vendor (the doctor), Congress introduced layer upon layer of additional regulations trying to keep costs down. That was about as successful as throwing more blankets on a leaking waterbed to stop the leak. Like whack-a-mole, as soon as they plugged one hole a new one appeared, normally as a direct, unintended consequence of the “fix” for the last hole. And that story is how we now got to Obamacare – the latest fix in a long line of fixes.