Medicaid is a safety net that allows people who can't afford private insurance or to pay out of pocket to get healthcare. It pays for doctors' fees, preventive care services, hospital care, mental health care, the majority of women's costs for pregnancy and childbirth and costs for the impoverished elderly who are in nursing homes. It pays for emergency room visits. It pays the costs of care for people who are uninsured and become sick and their healthcare debt makes them so poor that they are then eligible for Medicaid. With small exceptions, all medical bills for those insured under the program are paid by Medicaid, with none of those nasty co-pays left over. It often pays less than other insurance companies for the same services so some providers will refuse to accept Medicaid insurance, but the full spectrum of care is available to patients including such things as organ transplants. Medicaid has different names in different states: Oregon Health Plan in Oregon, Badger Care in Wisconsin, MediCal in California for instance. It has been expanded in 32 states under the Affordable Care Act to cover people making up to 138% of the federal poverty line.
Presently the federal government pays a percentage of the medical bills of the Medicaid insured patients and the states pay the remainder, usually a smaller amount. Medicaid block grants, which have been proposed by Republican lawmakers, would still pay the majority of Medicaid costs, but would pay a fixed amount, rather than a percentage, and that amount would increase at a rate slower than the predicted increase in healthcare costs. Thus the federal government's share of the bill for Medicaid would gradually shrink. This proposed change is temporarily on hold due to snags in Republican's efforts to produce and pass a healthcare bill to replace the Affordable Care Act. I and many other people have shared opinions about block grants over the last month. The bottom line is that they would likely shift costs from federal to state governments without making a major impact on overall costs.
But the real question that arises, as we consider reducing payment for Medicaid, is why we should pay for it at all. That question underlies the question of how to fund it or whether to increase or decrease the resources we put into it. Why should those of us who are taxpayers, especially wealthy and therefore hefty taxpayers, put such a lot of money into a program that pays for the healthcare of people who, by their status as patients qualifying for Medicaid benefits, pay little or nothing in taxes?
This is an awkward and uncomfortable question to ask. My first response, as a person who believes in the inherent worth and dignity of every human, is possibly misguided. That answer, based on a kind heart alone, is that we pay for healthcare for the poorest and most vulnerable because it is the right thing to do and it would be terrible for people to die or suffer from treatable or preventable diseases because they don't have the money to pay for care.
But, according to The Economist, many of the other countries in the developed world came to take on the responsibility of universal healthcare because it was extremely inconvenient to have many of one's citizens sick, especially when they were necessary to staff a war somewhere. To take this further, the best argument (or at least the most robust one, from a political standpoint) for providing healthcare to the poor is that a healthy population makes for a more successful country. People who aren't disabled by chronic diseases or the sequelae of epidemics tend to be better workers, invent more things and require fewer subsidies.
But how can we tolerate, in all good conscience, the staggeringly large national debt that is necessary to fund a program like Medicaid? Our federal deficit last year was $572 billion, almost the same number as our spending on Medicaid. If we just cut Medicaid completely, we would be nearly deficit free. Aside from the fact that eliminating Medicaid won't even begin to be a possibility, and that it is a terrible idea for all sorts of reasons, it is financially stupid. Our debt, alarming as it may be, can be looked at as using borrowed resources to create a healthy and productive country. Paying interest on that debt is the cost of maintaining programs, such as Medicaid, that make us more productive. Debt is a good bargain if we get more in productivity than we pay out in interest.
The most important question, then, is not how to reduce the costs of Medicaid but how to get good value for our money. Medicaid, in order to give good value, needs help. It has excellent aspects. It provides healthcare for many children. That is clearly a good investment. Children, when healthy, grow up to do great things. It cares for poor families who have children, which is clearly a good investment, because healthy families are more likely to raise children who are healthy, creative and self sufficient. It pays for nursing home stays for the elderly after they can no longer afford to pay for themselves. Right now that is vitally important because families and friends who would be required to care for them at home can be freed up to do all of the things that they were intending to do, including jobs and education. Designing ways to allow the old and disabled to be at home rather than in institutions would be better, and that is a direction that Medicaid is trying to take. Caring for people with developmental disabilities or disabilities relating to injury or illness is important because this is specialized work, and not everybody, including their families, necessarily does it well. This is a valid role for Medicaid (though plagued, like much of healthcare, with preventable waste.)
Medicaid's real weakness is that it pays and keeps on paying for the diseases of self abuse and is not designed to make the necessary social impact to prevent the misery that leads to the problems of drug abuse, interpersonal violence, alcoholism and morbid obesity. The endless circle of getting sick or injured because of poor life choices in impossible situations, being patched back together at astoundingly high cost and then returning to the same situation to repeat the process is demoralizing for all involved. From an economic standpoint, it is also Medicaid money wasted. Solving this problem involves creating healthy communities. It needs to happen despite the fact that the people who need this help have close to no political clout. We must continue to treat these people when they come in sick and in need because it should not be the job of caregivers or payers to decide who is virtuous enough to receive care. But Medicaid does not function in a vacuum, and cannot give good value if it is not supported by other well designed social programs, designed to prevent their illnesses. Until we are able to focus reform efforts on the social problems that create some of our sickest and most hopeless patients, a substantial portion of public healthcare spending will not be a good investment.