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Jul
19

Universal coverage is bad – Part Eight

Universal coverage is not needed because its just a replacement for a failed Medicaid/Medicare system that should be covering those folks without employer-based insurance. Once we fix the ‘M’ programs we’ll be fine.
That’s another argument against UC, and the one we’ll tackle today.
(Again, we will narrowly construe this argument; corollaries and complementary/supplemental positions have been addressed in detail previously.)


Disclaimer – I am no expert on Medicaid my sense is while it helps provide coverage for many poor people, the program’s reimbursement levels are far too low, which results in cost-shifting and a shallow pool of providers willing to take Medicaid patients.
Who is covered by Medicaid?
Medicaid covers people at or near the poverty line – 38 million people all told in 2005 were covered by the program throughout the year. The vast majority of the uninsured non-elderly are employed with incomes that place them well above that line.
70% of Medicaid spending is for elderly and disabled folks; only 30% goes to parents and kids who are not in those categories.
It is true that Medicaid does not even cover those it should — fully 37% of individuals below the poverty line are uninsured.
What happens if we change the income threshold?
If we want to have Medicaid cover those folks without health insurance, we’ll have to significantly raise the income limit. If the threshold is increased it is likely that many employers who presently offer health insurance will drop the coverage, pushing their workers into the governmentally-funded system.
This is not a value statement, just an acknowledgment of reality. Interestingly, some very large employers also have lots of workers on Medicaid.
What does it cover?
States are not required to cover drugs, rehab, or PT. Many do provide this coverage, albeit at very low reimbursement levels.
What does it cost?
Medicaid consumed 22% of average state spending in 2004;(see Chapter 6, Medicaid; this is the source for most of the stats referenced in this post) the number is likely closer to 25% today. Total spending for 2006 is projected at $320 billion. If states or the Feds do increase the income threshold, that number would balloon, driving up taxes and borrowing and driving out other spending priorities, like roads and schools.
Could Medicaid be expanded enough to cover most of the uninsured?
Politically, I don’t see how. State budgets would explode, employers would drop coverage, and providers would revolt against low reimbursement levels. I realize these are the same arguments many will make against any kind of universal coverage mandate, but using Medicaid as the vehicle poses a unique, and intractable, set of problems.
What about Medicare for all?
Two problems. Politically, single payer has as much chance of passing as Tom Tancredo does of inhabiting the White House. And Medicare’s own inherent limits and issues, particularly a demonstrated inability to control cost, make it truly the “most worst option’.
I don’t see how either option is the solution.


8 thoughts on “Universal coverage is bad – Part Eight”

  1. Why must there be a combination of obvious left wing political commentary in a managed care blog?
    i.e. – “passing as Tom Tancredo does of inhabiting the White House”
    Why not be a bit more balanced and add:
    “or passing as Hillary Clinton does of keeping Bill away from White House interns if she inhabits the White House.”

  2. Question: Why must I continually read Rush Limbaughesque bullying when someone disagrees with the bloggers thoughts? Answer: Because it is America and we all have the right to express our opinion.

  3. I think Medicaid might be able to save a lot of money if it required all of the elderly and disabled beneficiaries to execute living wills or advanced medical directives and put the information on a national registry so it could be accessed by doctors and hospitals when needed. Moreover, my understanding is that there is a lot of fraud that goes on in nursing homes, often in the form of “therapy” for patients who are unlikely to benefit from it. It is performed to drive revenue for the nursing home. If primary care physicians were paid an adequate reimbursement to supervise the care of each patient, most of this unnecessary and inappropriate care could be eliminated. But, since Medicaid is penny wise and pound foolish, the supervision doesn’t happen or is woefully inadequate. Yet another example of government mismanagement. By contrast, Medicaid’s average annual cost for each child on its rolls is about $1,500 because most kids don’t need much care. If Medicaid were more efficient, especially with respect to care provided to the elderly and disabled, it could probably cover the remaining uninsured kids from families with incomes below 300% of the FPL and, probably, most of their parents as well.

  4. Thank you Ron!!! Aubrey, Everyone is allowed to have their own political opinion in this country, but you have made it very clear to all the readers of “Managed Care Matters” what political party you support. Try not to upset yourself so much over the fact that there are some people that do not share your views. Remember Aubrey, it is a managed care blog, NOT a political debate.

  5. “The vast majority of the uninsured non-elderly are employed with incomes that place them well above that line.”
    The Kaiser Family Foundation recently reported that about 65% of the non-elderly uninsured are BELOW 2X’s the federal poverty line.

  6. “If the threshold is increased it is likely that many employers who presently offer health insurance will drop the coverage, pushing their workers into the governmentally-funded system.”
    In the first place, this is preventable. Medicare Part D (the Rx program) manages this risk effectively. Regs similar to Medicare D could be written into Medicaid, but haven’t been
    But perhaps more important, what is the problem anyway if employers do this? If the objective is to cover more more people in a government-financed single-payer plan, what is the problem if more people move into Medicaid? And what is the problem with employers deciding whether they wish to buy better coverage for their employees (thereby competing for labor) or choose the government-plan option? And finally, sure the cost of Medicaid would go up if it covers more people. The companies will pay a fair share of that additional cost thru their taxes, while seeing their group insurance costs drop. Why isn’t that good for single-payer and for business? Individuals will be paying higher taxes, too, but they will also have lower (or zero) private insurance premiums. Why isn’t that good for individuals?
    So what exactly is the big problem here?

  7. Massachusetts put together a low-cost insurance relying on its network of low-cost Community health Centers. There is no revolt among providers over low remuneration since these centers are funded specifically to take care of the poor, uninsured and underserved… the kinds of people the rest of the industry does not care to compete for.
    Every state has different thresholds for Medicaid eligibility; in Maryland it is something like 53% of the Federal Poverty Guideline… a level that is below subsistence level.

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Joe Paduda is the principal of Health Strategy Associates

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