NYT Editorial on Medicaid
Medicaid is performing a critical service that the public supports - making sure that poor children get proper medical care, that working families have health coverage and that old people get quality care. The driving force behind the recent upsurge in costs, according to an analysis by researchers at the Urban Institute, was a big increase in the number of people enrolled. The wobbly economy left more workers with incomes low enough to qualify for Medicaid and fewer employers offering affordable health coverage. That is hardly an indictment of Medicaid. The program was doing what it was meant to do, filling a gap for people in real need.
There is a difference between real spending cuts and simply moving the bills into a different account book. People's health needs won't disappear just because Medicaid stops paying for treatment. People will turn instead to hospital emergency rooms, adding to the huge burden of charity care at hard-pressed medical institutions. Medicaid itself is the ultimate victim of cost shifting. A great deal of its cost is due to Medicare's failure to cover some vital services for the elderly - particularly nursing homes. As a result, people of modest means routinely impoverish themselves on nursing home bills, until they qualify for Medicaid. When Medicare begins paying for prescription drugs for the elderly, states will continue to provide the bulk of the money for coverage for the elderly poor. Congress insisted on that to keep down the cost of the new program.
Despite loose talk about Medicaid providing Cadillac services when a Chevy would do, the program is extremely parsimonious in big ways. Most of its beneficiaries are in health maintenance organizations that are often shunned by better-off Americans. It typically pays hospitals and doctors far less than Medicare or private plans, making many doctors unwilling to accept Medicaid patients. Its spending per enrollee has increased more slowly than private insurance spending, and it delivers care more cheaply than a private plan. It's a pretty safe bet that few of the critics talking about overly generous benefits would be willing, in real life, to exchange health plans with a Medicaid recipient.