Yet the report's projections are based on the average costs of Insure Oklahoma enrollees. As noted, that state plan covers a much healthier population. You can't estimate the price of insuring people with serious health problems based on the medical expenses of their healthy neighbors — at least, not if you want an accurate estimate. The report also predicts 10 percent or more of those covered through the Medicaid alternative will substitute taxpayer-subsidized coverage for previous employer-provided coverage.
The experience of other states also refutes savings projections. The Florida-based Foundation for Government Accountability notes Arizona officials expected to spend $2 billion on a similar Medicaid expansion between 2002 and 2008. They spent $8.4 billion. The expansion did not reduce the rate of uninsured citizens.
In Maine, childless adults added to Medicaid cost more than four times the amount spent covering low-income parents. Hospital charity care expenses continued to surge even as Medicaid expanded. Similar patterns were seen in Delaware, Oregon, Utah, Vermont and Washington, D.C. Medicaid expansion costs outran projections. Uninsured rates remained steady.
The Leavitt report's conclusions are based, in part, on the assumption that the medical expenses of sick people are comparable to those of healthy people. In many cases, it admits the proposed plan will spend taxpayer money to provide state coverage to the already insured. And the experience of other states suggests taxpayer costs will far exceed projections but the rate of uninsured citizens will hardly budge.
Lawmakers are being told that spending $850 million will actually save $400 million. They should keep this adage in mind: When something sounds too good to be true, it usually is.