Medicaid as we know it is over and maybe that’s not a bad thing
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The selection of Rep. Tom Price (R-Ga.) to be the Secretary of Health and Human Services (HHS) in the Donald J. Trump administration seems to signal the President-elect is moving well beyond repealing ObamaCare. 

Trump could be embracing the Republican dream — voiced often over Price’s career as an orthopedic surgeon, state legislator and congressman — of replacing the Great Society’s 50-year-old safety net of health care programs for the elderly, poor and disabled.

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It’s questionable whether the new President really wants to exert the political energy it will take to convince elderly Americans that they are better off with private insurance rather than Medicare. That’s a tough sell. But he and Price will have less resistance on at least one other GOP dream. 

Medicaid, as we know it, is toast.

All things considered, maybe that’s not a bad thing. Liberal Democrats have alternatingly been trying to either protect it or expand it for decades, but it remains a deeply flawed program.

It’s no secret Republicans hate Medicaid. State budget makers consider it a drag on other spending priorities and often underfund it, which accounts for many of its problems. Much of the electorate sees Medicaid as an entitlement going to the undeserving poor, even though millions of Americans, who are working and should be covered by it, are excluded.

Moreover, every Republican “repeal and replace” plan for ObamaCare – including one authored by Price — calls for the federal government to set a fixed, lower amount of spending on Medicaid and send the money to the states, which could decide whether to supplement it or not. 

The problem is that health care for the poor will never be able to compete with state funding for roads, schools, prisons, economic development and other needs that attract more attention from voters and their elected representatives.

Think about the last time you heard a governor or prominent legislator of your state advocate for more funding for public mental health services — an area of health care spending where states already have a lot of control over how federal money for services is spent and where many have compiled a miserable record.

Here’s a little test: If you think your state does a good job administering unemployment, welfare, child protection and food stamps, you’ll probably love what it does with its own Medicaid program.

Let’s go back fifty years in time to understand why this is.

Lyndon Johnson’s primary goal in the Great Society legislation was to create a government-funded health care program for the elderly. He financed it by payroll taxes levied on employees over a lifetime of work. Like with Social Security, the theory behind Medicare is that since American workers paid into it, when they turn age 65, they get to tap into it. With Medicare how much you made, or paid, is not a question. Age makes you worthy.

But to get Medicare through Congress, Johnson and his liberal Democrat colleagues had to cut a deal with conservatives, who saw the plan as a slippery slope toward national health insurance. They argued that since many of the poor aren’t working or paying taxes they were unworthy of a Medicare-type entitlement.

So, while Washington would provide the bulk of Medicaid funding from its general revenues and demand a basic-level of required services, the states would get to decide who qualifies for it. Medicaid, like welfare, would be “means tested.”

This compromise crippled Medicaid’s effectiveness at providing the same kind of protection for the poor as Medicare provides for the elderly. And it resulted is a 50-state checkerboard of enrollment eligibility and payment for services which range from barely adequate to ridiculously bad.

Consider, for instance, that an unmarried adult making a measly $3,700 a year in Georgia, or a couple without children making more than $5,500, is considered too wealthy for Medicaid in the state. And the doctors and hospitals that take care of those who do qualify  – pregnant women and their minor children, mainly – get paid on average 60 to 80 percent of what it actually costs to provide services for their Medicaid patients.

In too many states the program purposely covers too few people and pays too little for those who are lucky enough to get coverage. It’s an easy target for being labeled ineffective.

So, here’s an idea: Let’s kill it and start over.

If Tom Price and his fellow congressional Republicans aren’t just fooling us and really do think the states can create a better program for the poor, let’s see what they’ve got.

Maybe there is a new plan that covers everyone under the federal poverty level and at the same time compensates doctors and hospitals at least as much as they get for taking care of Medicare patients, all for less than is spent now. If so, they will have found the Holy Healthcare Grail.

Don’t bet on it.

Still, there are some innovative approaches for coordinating care – and saving money – that public hospitals and federally funded community health clinics taking care of Medicaid patients in several large cities thanks to the ObamaCare. More of these should be encouraged. (If they aren’t, that’s an indication that the motive for block grants is more about saving money than providing cost-effective care.)

Some states might even want to experiment with a separately financed program for the disabled and low-income elderly cared for in nursing homes. These folks now must compete with the working poor for precious Medicaid coverage.  The working poor always lose that competition.

Every good idea should be examined.

Except this: Any plan at the federal or state level where people and their families living below the poverty level are purposely left behind because they aren’t deemed worthy should never make it to the table.

We made that mistake in 1965. We shouldn’t make it again.

Mike King is an Atlanta health policy journalist and author of A Spirit of Charity: Restoring the Bond between America and Its Public Hospitals.


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