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Why Not Medicaid For All?
OCTOBER 22, 2013 5:26 PM October 22, 2013 5:26 pm 182 Comments
My Sunday column on the potential consequences of Obamacare’s botched rollout ended by sketching a scenario in which the program’s Medicaid expansion is deemed a success while its reform of the individual market leads to much-higher-than-expected costs and much-lower-than-expected participation rates. This combination would no doubt be politically helpful to the Republican Party in the short run, but (I argued) it would actually leave liberals with a fairly clear path forward: Keep pressing the Medicaid expansion on states that haven’t taken it (and look for John Kasich-style Republicans to partner with), return to the Joe Lieberman-killed idea of expanding Medicare to 55-and-overs, and basically try to further shrink the percentage of Americans who aren’t eligible for one or both of those single-payer programs. This wouldn’t amount to the full-on push for single payer that some people expect from the left if Obamacare fails or gets repealed, but it would move the U.S. toward the closest thing to single payer that we’re ever likely to get: A system in which both the late middle-aged and the lower middle class gradually get folded into government-run insurance alongside the poor, the disabled, and the aged; the individual market survives as a kind of de facto high risk pool (overpriced but technically accessible); and the employer mandate helps prop up employer-based health insurance for a shrunken but still substantial share of the population.

In this landscape, the two forms of government-run insurance would presumably converge, because the liberal vision for keeping Medicare solvent without resorting to benefit cuts tends to rely on cutting provider payments toward Medicaid levels. So while the long-term result of this approach wouldn’t be “Medicaid for All,” it would, at the very least, be “Something Like Medicaid For An Awful Lot More People.” And indeed, my colleague Paul Krugman had a post just last month on roughly this possibility — not arguing for a Medicaid expansion per se, but making the case that Medicaid demonstrates that “we can actually control costs pretty well, while maintaining a universal guarantee, by slightly reducing choice and convenience.” (His column yesterday covered some related ground as well.)

It won’t surprise you to learn that I think that “slightly reducing choice and convenience” might slightly understate the case, given what we know about how Medicaid generates its current savings. Instead, I suspect the likely result of a Medicare-into-Medicaid transformation would be something like what The American Interest’s Adam Garfinkle discusses here: Significant access problems for everyone involved in the public system’s varied manifestations, and a sharpening of the incentives for the most successful/talented/credentialed doctors and their better-off patients to opt for various forms of concierge medicine rather than Medicare and employer-provided insurance. The resulting system would indeed offer a universal guarantee of coverage at a potentially reasonable price, but in terms of access and quality of care it might well end up being more stratified — especially between the upper-middle and the lower-middle — than the system we have today.

The liberal counterpoint, and it’s a reasonable one, is that stratification is inevitable in any health care system so long as inequalities of income and wealth exist (and conservatives are obviously not proposing to do away with those!). For instance, in the kind of system that represents the beau ideal for right-of-center health policy types, instead of universal Medicaid we would have some kind of subsidized catastrophic insurance combined with health savings accounts that are tax-advantaged for most people and directly funded up to a certain level for the poor. This mix, Medicaid’s conservative critics plausibly argue, would reduce certain kinds of stratification: If you want an appointment with a physician, the cash in a health savings account would probably get you faster service and a better doctor than Medicaid access does right now, and if you needed some kind of major surgery private catastrophic coverage likewise would probably widen your range of options relative to what public coverage makes available to the poor today.

But there’s a lot of potential medical spending that falls in between the routine and the hyper-expensive, between what an H.S.A. covers and where a high-deductible plan kicks in. And in that middle zone, lower-income Americans would almost certainly be burdened with higher out-of-pocket costs — and be able to afford fewer doctor visits, fewer tests, fewer procedures than wealthier Americans — under the catastrophic-insurance model than under a Medicaid-For-Most alternative. Their access to some forms of care might be better, and their protections from financial ruin reasonably solid, but the financial and personal strain of dealing with some forms of illness, whether chronic or unexpected, would undoubtedly be greater under the preferred conservative model than under a single-payer system.

The argument that this strain notwithstanding, the catastrophic system is actually better for human welfare rests, I think, on two foundations. The first is the view that comprehensive health insurance is, at its heart, a deeply wasteful use of resources: Modern people, and especially modern Americans, are much more likely to overconsume health care than to underconsume it, which is why the correlation between health insurance and health outcomes is surprisingly unclear, and why you end up with data like the much-discussed Oregon study earlier this year, which revealed that a major Medicaid expansion had basically no impact on the physical health of the newly-covered. This doesn’t mean that social insurance shouldn’t protect people against adverse medical outcomes and unaffordable medical bills, but it suggests that there are better ways to allocate our resources than comprehensive coverage, and that most people would be better off if public policy didn’t push so much money into that direction. (The column-length version of this argument is here.)

Now many liberals would dispute the premise that health insurance doesn’t have a big impact on health. (Hence the inevitable to-and-fro over what the Oregon Medicaid data actually showed.) But they could also agree, or semi-agree, with that premise and still reject the right’s policy prescriptions. Yes, these liberals would say, maybe we should spend less on health care and consume fewer medical services overall. But there’s no need to jerry-rig some kind of untested-except-kinda-in-Singapore catastrophic-plus-H.S.A.’s setup that might leave big gaps in coverage, since we already know that single-payer systems have by far the best track record in accomplishing the cost-reduction feat. Just look at the difference between what Western European countries spend on health per capita and what America spends — or, to return to my colleague’s argument, just look at the difference between what Medicaid spends and what our private insurers pay out. There’s no comparison: If you want people to spend less on health care, socialized medicine rather than catastrophic coverage is obviously the way to go.

And this is where we start to really get down to ideological bedrock, because conservatives and libertarians (and a few liberals) then look at the European/Canadian model and say, Surely there’s a better way than that. Yes, we concede, the strictly socialized systems do seem to save money relative to our mixed, kludge-y, public-private mess. But we also think that Americans really do get something for all the extra money that we spend: Specifically, a system that appears to drive a leonine share of global health care innovation, creating the drugs and procedures and life-extending technologies that then ripple outward, improving health and life expectancy in the developed and developing world alike. And the great fear on the right is that if we, too, end up controlling costs from the top down the way other countries do, then we won’t just squeeze waste out of the system, we’ll squeeze out innovation and drive out talent as well … and worse, we won’t even know it, because we’ll just assume that the innovations that we get are the only ones there could have been.

So these are the two foundations for the conservative perspective on these issues. First, that our health care sector is oversubsidized and a great deal of health care spending is unnecessary, and second, that controlling this spending through the kind of price controls that other nations employ has long-term costs that are unquantifiable but potentially enormous. Which in turn leads to the basic calculus in favor of the catastrophic alternative: That when it comes to long-run human welfare, for the poor as well as the rich, X (the cost-inflation reductions achieved by cost sharing and price transparency) plus Y (the gains to innovation from maintaining or increasing the role of market forces in American health care) is greater than Z (the costs, financial and medical, of not covering as much care for low-income people as a single payer system would).

Again, this is not a calculus that can be proven without some recourse to underlying ideological assumptions. Conservative have examples and data points at our disposal — the quasi-free market success of Singapore, the role that cost sharing has played in the recent slowdown in health care cost inflation — but as liberals reasonably note, no major existing national model that exactly matches what we’re seeking. What we have, instead, are basic beliefs about how the world works, tested across a wide variety of human spheres, and a sense that while health care is exceptional in some Arrovian respects (hence the need for some substantial public provision), it is not immune to the bottom-up, trial-and-error, Adam Smith-ian forces that drive innovation and cut costs in most sectors of the economy. Which leads, in turn, to our conviction that in developed countries, the well-intentioned pursuit of universal comprehensive insurance has too often left those forces bridled rather than unleashed.

So it isn’t that we think that something like “Medicaid for all” couldn’t achieve the goals that liberals set for it. On the evidence of our friends and neighbors, it well might. But we think the United States has an opportunity, precisely because we aren’t locked in to to a pre-existing single payer system, to actually aim higher, and perhaps achieve a whole lot more.

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Welcome to Medicaid for All
Obamacare’s expansion of poor care, dependency, and insolvency is not a recipe for success.
By Mona Charen

Mona Charen  
The Washington Post’s Ezra Klein has found what he thinks is a bright spot amid the gloomy Obamacare news. When you hear what he’s enthusiastic about, you’ll perhaps understand why I wonder if there is any common ground at all between liberals and conservatives. Klein reports that Obamacare’s “biggest success” is that 4 million new enrollees signed up for Medicaid as of November and the number should be even higher when December’s statistics are tallied. “If the point of health-care reform is covering people who need health insurance, the expansion of Medicaid should be a huge win.”

Sorry, but the expansion of dependence on government is never cause for rejoicing. Conservatives acknowledge that a safety net is necessary for the poor, but we regard only the number of people leaving a government program like Medicaid as cause for celebration, not adding to the numbers who receive benefits. Klein is hardly alone. Nancy Pelosi described unemployment benefits as the greatest possible “stimulus” to the economy. By that logic, we should put everyone on unemployment, right?

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Why is it terrible news that millions more people are signing up for Medicaid? Here are just a few of the reasons:
Medicaid is one of the entitlements whose growth endangers national solvency. Together with Medicare, Medicaid was already consuming more than one in five federal dollars before the enactment of Obamacare. The growth in health-care spending was one of the rationales for Obamacare, but expanding Medicaid spending simply contributes to the problem.

Medicaid is plagued by fraud. Among the common scams perpetrated by enrollees, the National Council of State Legislatures lists “obtaining medications or products that are not needed and selling them on the black market, filing claims for services not received,” and more. Providers commit fraud by “billing for services not performed, billing duplicate times for the same service, ordering excessive or unnecessary tests,” and so forth. Just last month, dozens of Russian diplomats — yes, non-citizens — were charged with bilking Medicaid of $1.7 million over the course of nine years.

Medicaid is not just a program for the poor; it’s a poor program. Reimbursement rates for doctors, dentists, and other professionals are so low under Medicaid that enrollees have difficulty finding care. Having health insurance does not equate with having medical care. As Avik Roy recounts in “How Medicaid Hurts the Poor,” there is a “massive fallacy at the heart of Medicaid, and therefore at the heart of Obamacare. It’s the idea that health insurance equals health care.” In fact, people without health insurance get care in a variety of ways. The startling news is that Medicaid enrollees fare worse on health outcomes than those with no health coverage at all.

Expanding Medicaid was sold on the premise that uninsured people were driving up health-care costs by waiting until they were very sick before seeking care and thus overburdening emergency rooms. If the near-poor had Medicaid coverage, the argument went, they would see doctors before their conditions became critical and required expensive emergency-room treatment.

But research on Oregon’s program, published in the journal Science, found the reverse to be true. Tracking 25,000 enrollees for a period of 18 months, researchers found that Medicaid patients used emergency rooms 40 percent more than similarly situated adults who lacked health insurance. Having a Medicaid card did not divert people away from emergency rooms and into primary care. The number of ER visits for non-emergency matters increased. There was no change in the number of visits for non-preventable emergencies.

An earlier analysis of Oregon’s data found that having a Medicaid card did not improve health outcomes. Medicaid patients were no healthier than the uninsured, except on one measure of mental health (which might be the result of people initially feeling — however incorrectly — that they had access to good medical care).

Medicaid is a poor program because it promises benefits but squeezes provider reimbursement to keep costs down. The result is rationing. The poor are forced to wait on long lines for treatment and are sometimes denied care altogether. Ezra Klein may applaud those results, but the poor clearly don’t. Medicaid is also the model for Obamacare — top-down price fixing and mandates from Washington.

There are alternatives — like a combination of health savings accounts and catastrophic insurance — that would provide better care to the poor and an improved outlook for the nation’s fiscal health. Klein’s happy talk notwithstanding, there are no “successes” in Obamacare. Left alone, it will remake the entire health-care system in Medicaid’s image.

— Mona Charen is a nationally syndicated columnist. © 2014 Creators Syndicate, Inc.