Give states flexibility with Medicaid to improve health care quality

By Mississippi Center for Public Policy
July 28, 2017

Over the past month The Clarion-Ledger has highlighted aspects of Medicaid that make the program feel indispensable, with Sam Hall proclaiming that anyone who questions Medicaid’s “valuable services to deserving people” is just plain ignorant. As someone who cares about improving health care for the poor and disabled, however, I find Medicaid’s poor health outcomes shocking. With flexibility from Washington and a focus on quality, states like Mississippi could provide better care for families in need.

It’s difficult to argue with heart-wrenching stories about how Medicaid is helping Mississippi families. For the price — $8 trillion over the next 10 years — one would hope advocates could find a few good stories. Not every Medicaid story has a happy ending, though. A University of Virginia study found that Medicaid patients are more likely to die than the uninsured, and far more likely to die than those with private insurance.

Another story we are not hearing is what the “gold-standard” Oregon Health Insurance Experiment found: that Medicaid recipients, compared to the uninsured, use a lot more health care services without experiencing improved physical health outcomes. The Oregon study also demonstrated that the primary beneficiaries of Medicaid are not patients but hospitals.

 In effect, Medicaid is a very expensive health insurance plan with narrow networks and a very inefficient mechanism for transferring money to hospitals.

The worst thing about Medicaid is that it is crowding out innovative solutions that could deliver better care — not just more services. Breaking up this big-government Medicaid monopoly is going to require hard work from all of us. Here are three questions to start the conversation.

First: Does Medicaid provide good insurance for low-income families? 

As many as 50 percent of primary care physicians in Mississippi are not accepting new Medicaid patients, as compared to 7 percent not accepting new patients with private insurance. As mentioned, Medicaid patients also have, at best, the same health outcomes as the uninsured. Clearly, Medicaid is inferior insurance. State and federal policymakers should facilitate the development of better insurance products tailored to low-income customers.

Second: Is Medicaid a cost-effective way of reimbursing hospitals for uncompensated care? 

In spite of studies (and common sense) showing otherwise, hospitals claim they are losing money on Medicaid. Under federal law, hospital emergency rooms are prohibited from turning patients away. Medicaid is a pricey backdoor mechanism for funding this mandate. Tax credits might be part of the solution for private hospitals. In addition, nonprofit and public hospitals should offer more charity care — certainly far more than the tiny amount provided now under vague “community benefit” provisions.

Third: Is Medicaid the best way to help families facing extraordinary medical costs?

Prior to Obamacare, Mississippi had developed a high-risk insurance pool to help people with significant health care challenges. We need more creative thinking about risk pools (for instance, an income tax credit for donations to nonprofit-managed risk pools); and we need to focus on supply-side deregulation (encouraging telemed, expanding scope, and eliminating certificates of need) that will lower costs and unleash new medical technologies. These reforms are better than depending on a Medicaid program that will be sorely tempted to ration care to high-need populations even as it expands coverage to able-bodied childless adults, for which the Obamacare Medicaid expansion curiously offers a higher federal match.

Finally, I appreciate The Clarion-Ledger trying to inform readers about Medicaid, but I urge a good dose of old-journalism-school skepticism. When the director of Medicaid boasts that there is virtually no eligibility fraud, perhaps it would be helpful to note that other states are uncovering significant irregularities. Or when a Medicaid activist asserts that Congress’ repeal-and-replace bill is going to remove thousands of children from Medicaid, it would be appropriate to fact-check this number, or at least note that these children are going to go back on CHIP, a different insurance program run by the Division of Medicaid.   

I am confident we can all agree on the necessity for fresh thinking about health care. Instead of just thinking about it, though, I hope Congress gives states freedom to demonstrate how they can either radically improve upon Medicaid, or even better, develop targeted solutions aimed at helping the diverse populations Medicaid is currently failing. 

Jameson Taylor is vice president for policy at the Mississippi Center for Public Policy in Jackson. He can be reached at [email protected].


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