Philadelphia Reflections

The musings of a physician who has served the community for over six decades

Related Topics

Introduction: Surviving Health Costs to Retire: Health (and Retirement) Savings Accounts
New topic 2016-03-08 22:42:53 description

Fixing Medicaid by the Obamacare Back Door

On the March 16,2016 WSJ Opinion Page, Scott W. Atlas of the Hoover Institution directed attention to the defects in Medicaid, presumably as part of his forthcoming book Restoring Quality Health Care. Quite rightly identifying Medicaid as the weakest part of contemporary American medical care, he presumably feels the Obama Administration missed an opportunity to reform Medicaid as a central feature of the Affordable Care Act. I agree with both positions.

History. Because of money and the Tenth Amendment to the Constitution, Medicare emerged in 1965 as a fairly close copy of Blue Cross/Blue Shield, while Medicaid emerged as a plan funded by Federal money, but administered by the various states. Onlooker opinion also gives considerable weight to compromises between the King-Anderson proposal of the House and the Kerr-Mills proposal of the Senate, leading to Blue Cross administration for old indigents (Medicare) and State Welfare programs for young indigents (Medicaid). As observers would have it, one was generously funded so the other had to be underfunded with what was left, but there was much more parliamentary circus than that alone.

In any event, Medicaid started out as an expansion of Aid for Maternal and Infant Care, with the hope other young indigents might be gradually included. Unfortunately for such dreams, 1965 was the last year America ran an international trade surplus, so Medicaid expansion was slow. Even with time state legislatures could never match the federal Congress's generosity, for reasons which trace back to the Civil War. There was never a pretense of fair test between equally funded but differently designed plans. Indigent care was supported by communities varying in generosity, and it had to cope with the Great Migration from the Reconstruction South, which imposed the disturbing realization that any generous indigent health plan will act as a magnet to attract more indigents, eventually more than Northern communities could absorb. Possibly this was an important ingredient of the fact which emerged: enrollment in Medicaid was largely left to the hospital social workers, motivated by seeking reimbursement for the hospital when sick poor people made an appearance at their door. The final consequence of this was that nobody really knew the extent of coverage by the program until they got sick. Vast numbers of indigents might be eligible if they applied, but they appeared to be uninsured as long as they stayed well. There were certainly some uninsured indigents, but nobody could tell how many. The numbers were therefore exaggerated in both directions, by politicians who wanted to claim the numbers were disgracefully high, or the numbers were too low to warrant much concern. Later on, it would thus be hard to evaluate claims of what proportion of the uninsured had become insured by the Affordable Care Act. In particular, if you don't even know how many are potentially to be covered, you can't judge the extent their healthcare contains a backlog of untreated disease. Judging from Medicare experience, it almost surely contains a big backlog, rather poorly described as pre-existing illness.

If funding a disparity of untreated disease by direct federal payments could ever work, it certainly could not work in the midst of a major economic recession. That's one of the main lessons of the Affordable Care Act. Scolding people will not work, and the uplifting language of wellness programs won't cure much, either. The electronic medical record, wisely unmentioned by Scott Atlas, makes things worse by increasing the proportion of cost which could be described as overhead. Before 1965, doctors were accustomed to using their spare time to help the poor, pro bono. Packing in five-minute visits leaves no extra room. All that extra overhead keeps you from slowing down, but at least it must let you quit. When one doctor quits, another gets increased overhead. By the way, paying doctors a salary promotes an instant 40-hour week. Solution: build more medical schools.

Three things eroded the informal patchwork system for the indigents, although in established areas patchwork did, more or less, work. First of all, the electronic record takes up several extra hours of doctor time each week; there's less time for charity. Secondly, the welfare doctors proved as competitive as anyone else. Foreign-trained doctors especially needed marginal income. But worst of all, welfare programs by consensus embraced the fortress exclusivity of HMO, the Health Maintenance Organization. I never turned away an indigent patient in my life, but they did gradually dwindle out of my office because I declined to join the welfare HMO. A two-class system is segregated of course; it does not necessarily deliver bad medical care. But the patients think it does, it sounds to them like separate but equal, and they won't have it. Previously, it had never occurred to me that discrimination works in both directions. The mainstream practicing profession was pushed out of Medicaid, just as surely as they were happy to leave it.

Linking low-cost high-deductible plans to catastrophic (no frills) coverage, helps low-income people considerably more than it helps no-income ones. You need subsidies from somewhere else, for no-income. Loading a compulsory indigent plan with luxuries, and then funding it with cross-subsidies, sinks a plan with more costs than it can hide; because the lack of funding is never confessed. I have a suspicion I cannot exactly prove, which is that a lot of talk about preexisting conditions was really talk about the untreated backlog.


Please Let Us Know What You Think


(HTML tags provide better formatting)