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Across the country, cash-strapped states are leveling blanket cuts on Medicaid providers that are turning the health program into an increasingly hollow benefit. Governors that made politically expedient promises to expand coverage during flush times are being forced to renege given their imperiled budgets. In some states, they’ve cut the reimbursement to providers so low that beneficiaries can’t find doctors willing to accept Medicaid.
Washington contributes to this mess by leaving states no option other than across-the-board cuts. Patients would be better off if states were able to tailor the benefits that Medicaid covers–targeting resources to sicker people and giving healthy adults cheaper, basic coverage. But federal rules say that everyone has to get the same package of benefits, regardless of health status, needs or personal desires.
These rules reflect the ambition of liberal lawmakers who cling to the dogma that Medicaid should be a “comprehensive” benefit. In their view, any tailoring is an affront to egalitarianism. Because states are forced to offer everyone everything, the actual payment rates are driven so low that beneficiaries often end up with nothing in practice.
“Dozens of recent medical studies show that Medicaid patients suffer for it. In some cases, they’d do just as well without health insurance.”–Scott Gottlieb, M.D.
Dozens of recent medical studies show that Medicaid patients suffer for it. In some cases, they’d do just as well without health insurance. Here’s a sampling of that research:
In all of these studies, the researchers controlled for the socioeconomic and cultural factors that can negatively influence the health of poorer patients on Medicaid.
So why do Medicaid patients fare so badly? Payment to providers has been reduced to literally pennies on each dollar of customary charges because of sequential rounds of indiscriminate rate cuts, like those now being pursued in states like New York and Illinois. As a result, doctors often cap how many Medicaid patients they’ll see in their practices. Meanwhile, patients can’t get timely access to routine and specialized medical care.
The liberal solution to these woes has been to expand Medicaid. Advocacy groups like Families USA imagine that once Medicaid becomes a middle-class entitlement, political pressure from middle-class workers will force politicians to address these problems by funneling more taxpayer dollars into this flawed program.
President Barack Obama’s health plan follows this logic. Half of those gaining health insurance under ObamaCare will get it through Medicaid; by 2016, one in four Americans will be covered by the program. A joint analysis from the Republican members of the Senate Finance and House Energy and Commerce Committees estimates that this will force an additional $118 billion in Medicaid costs onto the states.
We need an alternative model. One option is to run Medicaid like a health program–rather than an exercise in political morals–and let states tailor benefits to the individual needs of patients, even if that means abandoning the unworkable myth of “comprehensive” coverage.
Democratic and Republican governors are pleading with the president for flexibility to do just this. At least so far, this has been a nonstarter with an Obama health team so romanced by Medicaid’s cozy fictions that it neglects the health coverage that Medicaid really offers, and the indecencies it visits on the poor.
Scott Gottlieb, M.D., is a resident fellow at AEI.
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