Delaware Medicaid spending rises sharply but experts question quality of care

By Bradley Vasoli

Spending on Medicaid, the federal-state healthcare program serving lower-income Americans, has climbed significantly in many states, including Delaware. But many experts believe care quality has decreased despite that — or because of it.

In Fiscal Year 2023, the First State spent more than $3.34 billion in combined state and federal money on Medicaid, with the program covering nearly a quarter of Delawareans. In 2012, two years before the state implemented a significant Medicaid expansion per the 2010 federal Affordable Care Act (ACA), better known as Obamacare, the figure was $1.48 billion.

Warnings about medical outcomes

Early in the new era of expanded public health insurance, some healthcare economists warned that medical outcomes could suffer. In 2016, Troy University Professor Daniel Sutter published a study on drivers of the program’s expenditure growth over 50 years and professed he was struck by how poorly it served low-income Americans.

Sutter found no fewer than a third of doctors refused to accept new Medicaid patients during the time the ACA was taking effect. Many recipients faced prolonged waits to see physicians. Sutter furthermore cited data from the University of Virginia revealing those on Medicaid experienced more hospital deaths, longer hospitalizations, and steeper expenses than others with — and even those without — health insurance. Other researchers, Sutter wrote, replicated those findings.

After years of ramping up Medicaid enrollment, more than one-third of Delawareans rely on government healthcare of some form, with most others in that group being insured through the elderly-supporting Medicare. The nonprofit Caesar Rodney Institute health policy director Christopher Casscells told Delaware Live this has neither helped neither taxpayers nor the majority of Medicaid-covered individuals. In the latter case, that’s because many health professionals cannot profitably accept Medicaid insurance and therefore do not.

Does Medicaid offer patients access to care?

“People in Delaware who have Medicaid really don’t have access to care,” said Dr. Casscells, an orthopedic surgeon. “They get access to very poor quality care, but they don’t get the same access to care that everybody else does for a very simple reason: Nobody will take Medicaid if they don’t have do; it doesn’t pay you enough money to take it.”

This reality is particularly acute in subspecialties. Virtually no dermatologists, for instance, would accept Medicaid.

“Dermatologists don’t work in hospitals,” he said. “So if you’ve got a skin problem — which is the largest organ in the human body — you’re out of luck if you’re on Medicaid.”

The fiscal problems with the program have worsened, he explained, because Obamacare changed Medicaid’s original paradigm whereby the federal government would provide half of its funding and states would proved the other half. The ACA initially shifted the federal government’s contribution to well over nine-tenths, though that lopsided scheme was scheduled for a phaseout over the late 2010s. That phaseout has been delayed in Delaware and other states whose political leadership prefers broadened government medical insurance; in the First State, the split remains at about 95 percent to 5 percent, though federal largesse is ebbing.

State addiction to Medicaid

“In the meantime, of course, the state becomes addicted to Medicaid,” Casscells said, jeopardizing the state’s fiscal health. “It’s a shell game; money comes in from the federal government for Medicaid and it completely makes Delaware’s budget look okay. It’s not okay.”

By contrast, conservative states that resisted the Medicaid expansion sacrificed a temporary fiscal boon but now see greater budgetary stability because they did not rely on temporary federal allocations.

He noted that Medicaid, public employee healthcare, and government-retiree medical spending combined have accounted for more than half of Delaware’s annual budget over the last several years.

What Delaware will do to ensure Medicaid does not overwhelm its budget is especially unclear now that Governor John Carney (D) is retiring to become Wilmington mayor and New Castle County Executive Matt Meyer (D) prepares to take Carney’s place in January. New state House leadership in both parties also leaves uncertainty about just how willing the Democrat-run General Assembly will be to adjust how the state administers the program.

A challenge for the General Assembly

House Minority Leader Tim Dukes (R-Laurel) opined that some change must occur.

“We want to take care of people, but [one-third of state spending on healthcare is] a lot of money on the backs of the taxpayers,” he said. “I think we’ve got to figure out ways to remedy that. It’s a big hit every year on a budget that just continues to grow.”

Nevertheless, he could not speak to the outlook.

“I there there’re a lot of [relevant policies] being contemplated,” he said. “I don’t know that there’s anything concrete right now…. Until we have a deeper relationship with [Meyer] and we know where he is, I don’t think that we have a lot of answers.”

Neither Delaware’s Department of Health and Social Services nor its Department of Finance nor the governor’s office provided comments.