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How Medicaid Expansion Covers Health Care For Inmates Over The Disabled

Americans could be paying billions more in the years ahead to cover healthcare costs for prison inmates as a direct result of Medicaid expansion.

Of all the arguments for Medicaid expansion, you won’t hear the one about how expansion will cover more healthcare costs for inmates in state and county prisons. That’s not exactly an appealing message.

Proponents of the Obamacare Medicaid expansion like to talk about how expanding eligibility to able-bodied, childless adults will create jobs and relieve pressure on hospital emergency rooms and save everyone hundreds of millions of dollars. They’re far less eager, understandably, to explain how Medicaid expansion incentivizes states to shift criminal offenders into a program originally meant to provide healthcare to infants, pregnant women, and the disabled.

And that’s precisely what expansion is doing, according to a report released this week from the Government Accountability Office: “The combination of expanded Medicaid eligibility and enhanced funding for those newly eligible as allowed under PPACA gives states additional incentives to enroll inmates in Medicaid and obtain federal matching funds, and increases the federal responsibility for financing allowable services for inmates.”

Generally, the cost of treating inmates falls on state and local authorities. Federal law prohibits states from using Medicaid funds to pay for inmates’ healthcare expenses, except when an inmate who would otherwise qualify for Medicaid is admitted to a hospital for at least 24 hours. Obamacare doesn’t change this policy, but by expanding Medicaid to everyone who earns less than 138 percent of the federal poverty level, or about $15,000 a year for an individual, almost every state prison inmate in the country—about 1.5 million people—would qualify for Medicaid if they needed treatment outside prison.

This is also true of the entire correctional population of those on probation or parole, an estimated 4.5 million nationwide. All told, if every state expanded Medicaid, millions of inmates, probationers, and parolees nationwide could be placed on the Medicaid rolls as a result of Obamacare.

This news shouldn’t come as a surprise. Last year, House Energy and Commerce Committee Chairman Fred Upton asked the GAO to review the effect of the ACA on former offenders and the current inmate population. Upton’s concern was that limited Medicaid funds would be used to pay medical bills for inmates and parolees at a time when hundreds of thousands of Medicaid enrollees—disabled children and the frail elderly—are on Medicaid waiting lists for home care and other services.

Some, like Jonathan Ingram at the Foundation for Government Accountability, have already pointed this out, warning that past attempts at Medicaid expansion have resulted in huge cost overruns that forced states to eliminate coverage for things like organ transplants and place thousands on waitlists for some services. To be fair, under current federal rules the waiting lists are for Medicaid waiver programs that go beyond the scope of Medicaid’s core services, so it’s not as though basic Medicaid coverage would be denied to the aged and disabled in favor of treatment for prison inmates.

Nevertheless, it raises the question of what kind of services we want Medicaid dollars to fund and whether inmates and probationers should have priority over the elderly and disabled (a question treated with a bit of humor in FGA’s video, below).

To get a sense of whether states really are trying to shift inmate healthcare costs onto Medicaid via the expansion, the GAO reports looked at six states—four that expanded Medicaid (California, Colorado, New York, and Washington) and did two that didn’t (North Carolina and Pennsylvania). The report found that all six states were trying to shift inmates’ healthcare costs into Medicaid through various efforts, like hiring staff to enroll inmates in Medicaid.

While the percent of the inmate population eligible for Medicaid services appears to be relatively small, Medicaid expansion could change all that. For example, Colorado officials told the GAO that prior to 2014, the number of inmates eligible for Medicaid was very small and therefore federal funds used to pay for their care was limited. This year, however, the state received $2.5 million in federal matching Medicaid funds to pay for inmates’ care. That figure might seem small, but it’s the relative increase that matters. In a state like California, which received $38.5 million in federal Medicaid funds for inmates in 2013, expansion will mean a much larger increase in federal Medicaid spending.

On a national level, Americans could be paying billions more in the years ahead to cover healthcare costs for prison inmates as a direct result of Medicaid expansion, which 27 states have now adopted. Whether that’s a good use of taxpayer dollars and something most Americans would support is an open question. Maybe it is, maybe it isn’t.

The problem is, we’re not having that debate—and that’s just fine by Obamacare’s supporters, for whom the most important goal is to expand federal funding for healthcare and consolidate control over it in Washington, D.C.—even if that means stretching Medicaid so thin that those who are most vulnerable have to languish on waiting lists.

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