Medicaid: The Program that Keeps on Taking

August 9, 2010

Medicaid: The Program that Keeps on Taking

Medicaid is one of the largest expenses in Missouri’s budget. In fiscal year 2008, Medicaid spending in Missouri totaled more than $7.09 billion. The federal government pays for the lion’s share of that, but Missouri taxpayers were still on the hook for $2.66 billion, or just over 12.5 percent of the state’s total $21.2 billion budget. As Peter Suderman points out in a new article for Reason, Medicaid has gone from an initial inflation-adjusted price tag of $9 billion in 1965 to more than half a trillion dollars just 45 years later. Moreover, those costs are only likely to rise during the coming years:

Just yesterday, the Senate voted to put $16 billion toward extending a temporary boost in Medicaid funding contained in the stimulus; the House is expected to follow sometime next week. Meanwhile, the Obama administration’s signature achievement—the new health care law—relies on an expansion of Medicaid for fully half of its projected increase in insurance coverage. According to the Congressional Budget Office, thanks to the Patient Protection and Affordable Care Act (PPACA), 16 million new individuals are projected to enroll in Medicaid by the end of the decade, and many experts believe that those estimates are low.

To add injury to insult, the health care that people get through Medicaid appears to be pretty bad:

Numerous studies show that, on an array of specific maladies, Medicaid’s health outcomes are dismal—and in some cases worse or no better than the outcomes for individuals who lack health insurance entirely. A University of Pennsylvania study, for example, reported that colon cancer patients in Medicaid have a 2.8 percent mortality rate, compared with 2.2 percent for the uninsured. A study of Florida’s Medicaid patients found they were more likely to have late-stages of prostate cancer, breast cancer, and melanoma at diagnosis than the uninsured.

It’s also worth noting that poor Americans received medical care before the advent of Medicaid. In his history of 1960s liberalism, The Unraveling of America, Rice University historian Allen J. Matusow wrote that poor patients were typically treated by charitable doctors for free. Matusow concluded that “[a]side from middle-class old persons protected from the financial ravages of long illness, the clearest beneficiaries of Medicare-Medicaid were doctors, who, according to one estimate, enjoyed an average income gain of $3,900 in 1968 as a result of these programs.” I don’t know how the medical treatment that poor patients received before the passage of Medicaid compared to that received by the middle class, but it’s historically inaccurate to argue that the poor would not have health care absent a government program.

Still, given that Medicaid is unlikely to be repealed anytime soon, what is the best solution to its spiraling costs and poor service? Suderman argues that it should become a temporary safety net instead of a permanent entitlement. Unfortunately, most politicians seem determined to keep expanding the program. If continued indefinitely, that will lead to both low-quality health care for all and fiscal catastrophe.

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6 Comments »

From the entries I have read about health care costs and such on this blog, and other places, the question(s) I keep coming back to are, should we, as a society, be ok with someone dying from something treatable, like a lot of gunshot wounds, but without the means to pay? Are we willing to deny paying treatment that a doctor proscribes if the ‘bang for the buck’ (according to some) isn’t there in improving someone’s life? I agree that medicaid is not going away anytime soon, so the challenge is in managing it.

It should also be noted that the life expectancies of people have steadily increased(leveled off recently), can’t find hard data, since medicare and medicaid have be enacted. I don’t know how much of that can be tied to those two, but I wouldn’t doubt if it were substantial.

For a solution for me, really limit what we are willing to pay for on a system similar to NICE/QALY in the UK. Yes, it is putting a price on human life, but we do that all the time in more hidden ways. Also, change the mindset from ‘we have this amount of need’, to ‘we have this amount of money, so what should be done’?

Comment by Papillon — August 9, 2010 @ 2:07 p.m.
Papillon,

You ask good, deep questions. The answer is no, we as a society should not be okay with people of slender financial means dying simply because they cannot afford basic treatment for conditions beyond their control. But what many people fail to recognize is that government need not be the solution to this problem. For centuries (even pre-dating the Revolution) Americans formed and supported charitable societies dedicated to serving the underprivileged. This is part of the reason why today we have so many medical facilities linked to religious organizations, and it is why (as the article quoted in the above post points out) doctors would frequently offer their services for little or no charge to those who could not afford the normal cost of such services. Civil society, acting of its own accord in response to the moral imperatives of its constituent members, found ways of taking care of the disadvantaged. It can do so again, if given the opportunity.

Comment by Dave Roland — August 9, 2010 @ 2:38 p.m.
Mr. Roland,

People can be very generous in supporting charitable endeavors, but I don’t think it would come close to replicating the (flawed) system we have now. Medical care got a lot better and a lot more expensive in the past 50 years. People are living longer, surviving events like heart attacks and births at a much better rate.

Doctors can still reduce/eliminate their fees and that is generous, but the machines/drugs (that weren’t in existence 1-40 years ago) that are used to diagnose would also have be cost shifted. Insurance companies are driving a hard bargain with providers to get the lowest price for their policy holders, meaning that cost shifting is limited. (Hospitals themselves are finding the most ‘profitable’ procedures under competition from (sometimes) physician owned facilities, Metro Imaging in the STL area, leaving the hospitals with the least reimburseable procedures, like, say, burn units.)

Are there any examples of private charities taking on a majority portion of poor people’s health care and the outcomes even close to what the United States has right now? If there are, they would certainly be worth of study.

I don’t see removing the lowering of the tax burden on ‘rank and file’ people as enough of an enticement to pick up where the gov program is now. Charitable giving doesn’t always go to where the most need is. People, including myself, will donate for the Art Museum to get a Picasso [I actually wouldn't, but people do], yet ignore pleas that would alleviate human suffering like for services for drug addicts.

Thanks for reading.

Comment by Papillon — August 10, 2010 @ 10:55 a.m.
People are living longer and surviving many diseases more often than they did in the past, but that seems to be statistically unrelated to Medicaid. The evidence I cited above actually shows worse health outcomes for people on Medicaid as compared to no insurance at all. It is possible that those studies are flawed, but that claim requires evidence.

Furthermore, I cited evidence that private charity provided essentially the same medical care for poor patients before Medicaid was enacted as they received afterward. There were also a plethora of fraternal societies that insured their members–ranging from the lower to middle classes–against injury and illness in the nineteenth and first half of the twentieth century. See this book for a full discussion:

http://www.amazon.com/Mutual-Aid-Welfare-State-Fraternal/dp/0807848417/ref=sr_1_1?ie=UTF8&s=books&qid=1281456518&sr=8-1

So, in response to your question of whether there is an example of private charity providing health care on par with what the U.S. government does now: yes, the U.S. fifty years ago, when the United States had an average life expectancy higher than any country outside of Scandinavia according to GapMinder.org.

Comment by John Payne — August 10, 2010 @ 11:23 a.m.
[...] at Show-Me Daily. Posted by Rough Ol' Boy Filed in Uncategorized Leave a Comment [...]

Pingback by Medicaid: The Program that Keeps on Taking « Rough Ol' Boy — August 10, 2010 @ 7:12 p.m.
A couple of points–Charity driven care may have been about as good as private care in the 1960s, but when the quality, and costs, went up, the charities couldn’t/didn’t keep up. Are you asserting that 1960 private charity care produced the same results as 2010, ‘afterward’, Medicaid? Life expectancies in America have consistently gone up through the decades. That doesn’t pass the smell test, for me. I feel that I am missing something in your message. [Imagine you are stricken with a malady, and someone says to you, you have a choice, we can time machine back to 1960 charity care hospital, or we can treat with 2010 Medicaid? Which is it? I cannot imagine a malady that would beckon me to back to 1960. NB--Gapminder keeps crashing on me.]

The studies cited seem to argue for an insurance voucher system, where everyone gets private insurance, which seems strikingly like something I have heard about. Private insurance patients get better outcomes than uninsured or those on Medicaid. Certainly food for thought, though not surprising, you pay more, you get more. I don’t think the country can afford it, or that the people want to have that obligation, but there is evidence that people’s health would improve with universal private insurance coverage.

The study(s) didn’t seem to control for reasons that put people in the medicaid system, socio-economic factors. The same things that put their wages in the medicaid eligible range, also prevent them from having better health care outcomes, possibly. The person who can’t get around obstacles to get to work on time/regularly (leading to low wage jobs) may have similar obstacles in getting other parts of their in life order, too. IF that were the case, the quality of care wouldn’t be at issue as to more of the patient’s poor choices/lifestyle/following instructions before/after care. The study doesn’t really address that. As has been noted, 17.5 MM of uninsured person have an average income of about $50,000, they seemingly would have their life better in order, and could make the most of their care. That is the flaw I see. The author admits as much, but he claims that Medicaid leads these people into poor choices/lifestyles/etc. “As to social and cultural factors, the question to ask is: is Medicaid causing these problems, or the victim of them? My view is the former.”

Comment by Papillon — August 11, 2010 @ 3:51 p.m.

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From the entries I have read about health care costs and such on this blog, and other places, the question(s) I keep coming back to are, should we, as a society, be ok with someone dying from something treatable, like a lot of gunshot wounds, but without the means to pay? Are we willing to deny paying treatment that a doctor proscribes if the ‘bang for the buck’ (according to some) isn’t there in improving someone’s life? I agree that medicaid is not going away anytime soon, so the challenge is in managing it.

It should also be noted that the life expectancies of people have steadily increased(leveled off recently), can’t find hard data, since medicare and medicaid have be enacted. I don’t know how much of that can be tied to those two, but I wouldn’t doubt if it were substantial.

For a solution for me, really limit what we are willing to pay for on a system similar to NICE/QALY in the UK. Yes, it is putting a price on human life, but we do that all the time in more hidden ways. Also, change the mindset from ‘we have this amount of need’, to ‘we have this amount of money, so what should be done’?

Comment by Papillon — August 9, 2010 @ 2:07 p.m.

Papillon,

You ask good, deep questions. The answer is no, we as a society should not be okay with people of slender financial means dying simply because they cannot afford basic treatment for conditions beyond their control. But what many people fail to recognize is that government need not be the solution to this problem. For centuries (even pre-dating the Revolution) Americans formed and supported charitable societies dedicated to serving the underprivileged. This is part of the reason why today we have so many medical facilities linked to religious organizations, and it is why (as the article quoted in the above post points out) doctors would frequently offer their services for little or no charge to those who could not afford the normal cost of such services. Civil society, acting of its own accord in response to the moral imperatives of its constituent members, found ways of taking care of the disadvantaged. It can do so again, if given the opportunity.

Comment by Dave Roland — August 9, 2010 @ 2:38 p.m.

Mr. Roland,

People can be very generous in supporting charitable endeavors, but I don’t think it would come close to replicating the (flawed) system we have now. Medical care got a lot better and a lot more expensive in the past 50 years. People are living longer, surviving events like heart attacks and births at a much better rate.

Doctors can still reduce/eliminate their fees and that is generous, but the machines/drugs (that weren’t in existence 1-40 years ago) that are used to diagnose would also have be cost shifted. Insurance companies are driving a hard bargain with providers to get the lowest price for their policy holders, meaning that cost shifting is limited. (Hospitals themselves are finding the most ‘profitable’ procedures under competition from (sometimes) physician owned facilities, Metro Imaging in the STL area, leaving the hospitals with the least reimburseable procedures, like, say, burn units.)

Are there any examples of private charities taking on a majority portion of poor people’s health care and the outcomes even close to what the United States has right now? If there are, they would certainly be worth of study.

I don’t see removing the lowering of the tax burden on ‘rank and file’ people as enough of an enticement to pick up where the gov program is now. Charitable giving doesn’t always go to where the most need is. People, including myself, will donate for the Art Museum to get a Picasso [I actually wouldn't, but people do], yet ignore pleas that would alleviate human suffering like for services for drug addicts.

Thanks for reading.

Comment by Papillon — August 10, 2010 @ 10:55 a.m.

People are living longer and surviving many diseases more often than they did in the past, but that seems to be statistically unrelated to Medicaid. The evidence I cited above actually shows worse health outcomes for people on Medicaid as compared to no insurance at all. It is possible that those studies are flawed, but that claim requires evidence.

Furthermore, I cited evidence that private charity provided essentially the same medical care for poor patients before Medicaid was enacted as they received afterward. There were also a plethora of fraternal societies that insured their members–ranging from the lower to middle classes–against injury and illness in the nineteenth and first half of the twentieth century. See this book for a full discussion:

http://www.amazon.com/Mutual-Aid-Welfare-State-Fraternal/dp/0807848417/ref=sr_1_1?ie=UTF8&s=books&qid=1281456518&sr=8-1

So, in response to your question of whether there is an example of private charity providing health care on par with what the U.S. government does now: yes, the U.S. fifty years ago, when the United States had an average life expectancy higher than any country outside of Scandinavia according to GapMinder.org.

Comment by John Payne — August 10, 2010 @ 11:23 a.m.

[...] at Show-Me Daily. Posted by Rough Ol' Boy Filed in Uncategorized Leave a Comment [...]

Pingback by Medicaid: The Program that Keeps on Taking « Rough Ol' Boy — August 10, 2010 @ 7:12 p.m.

A couple of points–Charity driven care may have been about as good as private care in the 1960s, but when the quality, and costs, went up, the charities couldn’t/didn’t keep up. Are you asserting that 1960 private charity care produced the same results as 2010, ‘afterward’, Medicaid? Life expectancies in America have consistently gone up through the decades. That doesn’t pass the smell test, for me. I feel that I am missing something in your message. [Imagine you are stricken with a malady, and someone says to you, you have a choice, we can time machine back to 1960 charity care hospital, or we can treat with 2010 Medicaid? Which is it? I cannot imagine a malady that would beckon me to back to 1960. NB--Gapminder keeps crashing on me.]

The studies cited seem to argue for an insurance voucher system, where everyone gets private insurance, which seems strikingly like something I have heard about. Private insurance patients get better outcomes than uninsured or those on Medicaid. Certainly food for thought, though not surprising, you pay more, you get more. I don’t think the country can afford it, or that the people want to have that obligation, but there is evidence that people’s health would improve with universal private insurance coverage.

The study(s) didn’t seem to control for reasons that put people in the medicaid system, socio-economic factors. The same things that put their wages in the medicaid eligible range, also prevent them from having better health care outcomes, possibly. The person who can’t get around obstacles to get to work on time/regularly (leading to low wage jobs) may have similar obstacles in getting other parts of their in life order, too. IF that were the case, the quality of care wouldn’t be at issue as to more of the patient’s poor choices/lifestyle/following instructions before/after care. The study doesn’t really address that. As has been noted, 17.5 MM of uninsured person have an average income of about $50,000, they seemingly would have their life better in order, and could make the most of their care. That is the flaw I see. The author admits as much, but he claims that Medicaid leads these people into poor choices/lifestyles/etc. “As to social and cultural factors, the question to ask is: is Medicaid causing these problems, or the victim of them? My view is the former.”

Comment by Papillon — August 11, 2010 @ 3:51 p.m.

August 9, 2010