More on Medicaid Caseloads and Recession

John Graham makes an excellent point about the lack of correlation between recessions and Medicaid spending. Medicaid eligibility has been relentlessly expanded over the last two decades. Caseloads drive expenditure.

And there is no reason to think that unemployment creates an automatic urge to sign up for Medicaid. Unemployment does not create an automatic need for health care. Furthermore, work done by the Census Bureau shows that a great many people who are eligible for Medicaid do not bother to sign up until they actually need health care.

As further evidence, consider these two charts on Colorado Medicaid caseload growth from the Colorado Department of Health Care Policy and Financing, the agency in charge of administering Colorado’s Medicaid program. The original charts are available here.

The first chart shows Medicaid caseload increase over time, highlighting the growth caused by the eligibility expansions that the Colorado General Assembly passed in 2007. The second chart shows Colorado caseload versus Colorado unemployment. Note that Medicaid enrollment began to expand significantly in July of 1998 even though unemployment continued falling for the next two years. Caseload grew at a generally constant rate until July 2005 despite large changes in unemployment.

Caseload growth finally began declining along with unemployment in July 2006. The July 2006 decline was seen in other states. It occurred right after the federal government began requiring that states verify citizenship before enrolling people in Medicaid. Medicaid expansion enthusiasts said the documentation requirement was burdensome and “taking its toll” by making Medicaid more difficult to apply for. Cynics noted that state audits showed that at least some illegal aliens were on the Medicaid rolls before verification was required.

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