Want to enrage a lefty? Critique aspects of Medicaid

Article Highlights

  • The actual coverage that Medicaid offers is often so eroded that the program falls short of progressive ideals.

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  • The competing visions for how to shore Medicaid up varies profoundly between the two parties. #election2012

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  • Medicaid’s current problems aren’t inadequate funding alone. It suffers as a result of the program’s basic design.

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Nothing ignites liberal ire like pointing out the problems plaguing Medicaid. On the political left, support of the program has the fervor of a new religion. Progressives view any critique of Medicaid's clinical failings as an affront to egalitarian piety.

The program provides a vital safety net for the poor. But the actual coverage that Medicaid offers is often so eroded that the program falls short of progressive ideals.

This has become a key issue in the presidential election, because the competing visions for how to shore Medicaid up varies profoundly between the two parties.

Medicaid current problems aren't inadequate funding alone. It suffers as a result of the program's basic design. Medicaid is set up as a one-size-fits-all scheme. It promises most low-income enrollees largely the same benefits and coverage. This means it can never be fully funded. Doing so would bust any reasonable budget.

It's hard not to miss what's happened to the medical care that the program delivers as a consequence. So much attention is focused on maintaining benefits and expanding eligibility that Medicaid's resources are spread thin. Reimbursement rates are driven so low that it's tough for beneficiaries to get timely access to care, especially when it comes to specialty medical services. In Illinois, to take one example, there's a $1.9 billion backlog of unpaid bills. It's projected to grow so large that providers may soon cut off services because the state can't pay for them.

The result is that medical care under the program is being degraded. The medical literature is replete with hundreds of clinical studies showing bad outcomes under Medicaid, largely because patients can't get suitable and well-timed access to care.

Point this literature out to liberal observers (I have) and you'll get saddled with criticism that the studies don't control for all the social factors that adversely impact the health status of low income Americans. It's true that any single study can be imperfect. But the totality of the research is unmistakable.

Liberals largely ignore these troubles in favor of expanding the Medicaid rolls still further. But this only swells the problem. Under Obamacare, nearly half of those getting health coverage are going to be put on Medicaid. The political dogma seems to be this: Place enough Americans in Medicaid, and the political class will come under enough pressure to adequately fund the program's bloated benefit promises.

This dismissive approach to policymaking only lets the current woes propagate.

So how to fix the program? The most meaningful reforms have derived from state leadership and experimentation. This experience provides the intellectual foundation for the conservative proposals for reforming Medicaid: block grants.

The idea is to give states control over their portion of federal Medicaid dollars and let governors tailor programs that match the needs of their low-income residents.

This proposal is a centerpiece of Governor Romney's Medicaid plan. It's sure to feature prominently at the Vice Presidential debate this Thursday. Romney's plan is to apportion what the federal government currently spends on Medicaid as a grant, and then allow that pot of money to grow at the rate of overall inflation plus 1%.

In recent years, Florida, Massachusetts, and Rhode Island are among states that shored up their Medicaid programs, and improved medical care, by taking steps to reform the way the program operated. All of these efforts were made possible by special wavers that the governors of these states received from the feds to take more active control of how their state Medicaid programs structured benefits.

Many on the political left eschew waivers. They don't want to give up federal control over the program and the rules that dictate the kind of benefits that Medicaid must deliver. These rules reflect the ambition of liberal policymakers who cling to a dogma that Medicaid should be a "comprehensive" benefit, offering everyone the same broad coverage. Tailoring benefits is seen as an affront to egalitarianism.

But it's precisely because states are (in theory at least) forced to offer everyone, everything, that Medicaid's payment rates are driven so low.

Block grants will let states run Medicaid like a health program rather than an exercise of political morals. Democratic and Republican governors are asking Mr. Obama for flexibility to do just this, along the lines of pilots started in West Virginia (personal responsibility contracts) and Indiana (POWER accounts).

Some of the most promising state reforms have been the result of waivers that let governors customize benefits to these patient segments. Pregnant women, the young and healthy, and those with chronic ailments all have very different health needs. A block grant is, in many respects, a waiver by another name. The idea isn't to end Medicaid, but shore it up by letting states adapt benefits based on medical need.

But these ideas are largely non-starters with President Obama's health team. They are romanced by a fictional view of Medicaid that doesn't exist on the front lines of medical care. In the meantime, the health coverage that Medicaid provides is becoming increasingly illusory, and visiting accumulating indecencies on the poor.


American Enterprise Institute (AEI) Resident Scholar Scott Gottlieb, M.D. is a practicing physician.  He previously served in senior positions at the Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS). 

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