Medicaid’s Growth: Failure or Success Story?

In April, New York State enacted its largest-ever state budget at $220 billion. Health-related expenses were by far the costliest item, including more than $90 billion for anticipated Medicaid expenditures. The program’s enrollment soared during the pandemic to over 7.4 million New Yorkers, more than a third of the state’s population.

Unsurprisingly, critics have complained about the size and scope of Medicaid, which provides comprehensive health coverage to low-income New Yorkers. While acknowledging the impact of COVID-19 on the recent surge in enrollees, they lament that the state program’s long-term expansion reflects a public policy failure—namely, that it is too generous in determining eligibility and providing benefits and that state funds would be better allocated elsewhere. Readers should note that the federal government funds over half of the state’s Medicaid program. 

While it’s reasonable to ask whether greater benefits could come from spending Medicaid dollars elsewhere, health care is a priority for most individuals and the per-person cost of Medicaid is low compared to other health insurance programs. It’s also prudent to assess whether current Medicaid dollars could be better used within the program and to root out fraud and waste where possible.


All of that said, we can’t afford to lose sight of the big picture: Ensuring members of our society have access to needed health care, a basic human right, requires the provision of a robust safety net program like Medicaid—especially given the fragmented nature of health insurance coverage in the U.S. Viewed from this perspective, the growth of Medicaid is a sign that our safety net system for insurance coverage is actually working. If anything, the growth of Medicaid may signal the failure of other parts of the insurance system to provide stable, affordable, comprehensive coverage.

Critics have also argued that insurance coverage is not needed for “access” to care, as federal law requires emergency departments to stabilize and treat all patients regardless of their ability to pay. It should be self-evident that access to emergency treatment alone is not sufficient for adequate health care. And the unfortunate reality is that our health care prices are such that only the very wealthy can pay for needed care without insurance. Health insurance is a necessary, but not sufficient, precursor to accessing health care services.

The benefits of Medicaid coverage extend beyond providing access to care. Growing evidence suggests the positive impact of Medicaid expansion on health outcomes, including lower mortality, improved financial security, and reduction of food insecurity and housing instability. All of these are important components of overall health and well-being. And despite claims that Medicaid is a disincentive for employment, Medicaid expansion has generally been associated with gains in overall employment statewide.

But do too many people rely on Medicaid? It’s unclear what the alternatives might be. For many without employer-sponsored insurance, unsubsidized commercial insurance is financially out of reach. Subsidies offered through the Affordable Care Act can help those with low or moderate incomes pay insurance premiums for plans bought in the health insurance marketplace, as well as help with deductibles, copayments, and coinsurance. New York State also has the additional option of the Essential Plan, which was also created under the ACA. However, shifting Medicaid enrollees to these options doesn’t address the “better use of government funds” argument, as both the subsidies and the Essential Plan are government-supported. I suspect the only alternative supported by those arguing that New York’s Medicaid eligibility is too generous is to simply let individuals and families go uninsured and fend for themselves.


The growth of Medicaid yields another important benefit. Because our health care insurance system is so fragmented, individual commercial payers have limited ability to shape care delivery. However, because Medicaid has become such a large payer, the program has emerged as a key driver of delivery system reform that delivers better quality and value.

Enacted in 1965 along with Medicare, Medicaid has indeed continued to expand, especially in states like New York. Unless we commit to a complete overhaul of the U.S. system of financing care (e.g., “Medicare for All”), the continued incremental expansion of Medicaid represents an important policy tool for ensuring that every New Yorker can access care.

This commentary appears in the spring/summer 2022 issue of Blueprint

June 27, 2022