If Medicare services or provider rates were cut, or threatened to be cut to balance the budget, the firestorm would be epic. Republicans would accuse Democrats suggesting such cuts of stealing from the elderly. Democrats would accuse Republicans suggesting such cuts of trying to abolish Medicare. AARP would express outrage, and if it didn’t do so loudly enough tea partiers would urge seniors to burn their AARP cards in an incongruous support of a government health care program. So where’s the outrage when states faced with budget cuts look first to cut Medicare’s sister program, Medicaid?
A front page story in the New York Times on Tuesday describes cuts in Michigan’s Medicaid budget, resulting in the elimination of some services and reductions in provider fees. As Medicaid fees were already absurdly low in Michigan, as in many states, the predictable response was that the pool of doctors available to Medicaid beneficiaries shrank even further. Those lucky enough to find a doctor willing to take the low Medicaid reimbursement must be willing to travel long distances, and give up days of work to get necessary care for their sick children. The Times described one such case:
Medicaid enrollees in Michigan’s midsection have grown accustomed to long journeys for care. This month, Shannon M. Brown of Winn skipped work to drive her 8-year-old son more than two hours for a five-minute consultation with Dr. Mukkamala. Her pediatrician could not find a specialist any closer who would take Medicaid, she said.
Later this month, she will take the predawn drive again so Dr. Mukkamala can remove her son’s tonsils and adenoids. “He’s going to have to sit in the car for three hours after his surgery,” Mrs. Brown said. “I’m not looking forward to that one.”
Those who can’t locate a participating physician either do without or wait for the condition to become emergent, at which time they seek more expensive hospital care. How can this program be so dysfunctional? The Kaiser Family Foundation, in a report posted last month, described the countercyclical nature of Medicaid’s finance structure:
During an economic downturn, unemployment rises and puts upward pressure on Medicaid. As individuals lose employer sponsored insurance and incomes decline, Medicaid enrollment and therefore spending increase. At the same time, revenue losses make it more difficult for states to pay their share of Medicaid spending increases. Specifically, a 1 percentage point increase in the national unemployment rate is estimated to result in 1 million more Medicaid and CHIP enrollees and an additional 1.1 million uninsured at the same time as state revenues are projected to fall by 3 to 4%.
So, states need to increase funding for Medicaid just when they are losing tax revenues and are facing pressures in other public service settings. As KFF describes in the report, the problem this year was lessened somewhat by the addition of federal stimulus funding; the funding was apparently not enough to support the program in Michigan, and in any event will not persist nearly as long as states’ projected budget problems.
This is not a new problem. It has often been noted that a health care system for poor people is a poor health system. The reasons are, unfortunately, quite clear. Medicare serves (mostly) the elderly of all income groups. This is a politically powerful bloc: its members vote, and enough of them are financially and socially powerful to protect their turf. Medicaid covers low-income people, including our lowest wage-earners, poor children, and people with permanent disabilities. They have little social clout, by definition little money, and not much in the way of a lobby. So, when times get hard, their programs are on the line.
That brings us to health reform. The current bills rely heavily on Medicaid to bring coverage to the uninsured. That is, as the above discussion makes clear, a risky proposition. In its several forms, current reform bills have promised some increases, often temporary, to the federal share of states’ Medicaid costs. And in a letter to Congressional leaders following a summit earlier this month, the President acknowledged the precariousness of the network of providers on whom we’ll rely to render that expansion more than a charade:
At the meeting, Senator Grassley raised a concern, shared by many Democrats, that Medicaid reimbursements to doctors are inadequate in many states, and that if Medicaid is expanded to cover more people, we should consider increasing doctor reimbursement. I’m open to exploring ways to address this issue in a fiscally responsible manner.
That would be a good step. So would increasing the federal share of Medicaid’s costs. If the current fiscal crisis has shown us anything about our federalist system, it is that the federal government, with its ability to borrow, is much better at responding to emergencies than are the states, with their obligations to balance budgets annually. But ultimately, a program for poor people will always have political, and therefore fiscal problems.
For reform to stick, for expansion of coverage to the poor and near-poor to genuinely serve their health needs over time, we have to tend structurally to our funding system. The achievement of expansion to near-universal coverage would be a statement of solidarity, proclaiming that we’re all in this together. To make that stick, we have to be in our health care financing system together. There will be a list of clean-up work and next steps if and when reform passes. High on that list should be the repair of Medicaid’s shaky fiscal foundation, integrating the interests of Americans across class and income levels. When they’re considering reductions in access to health care, legislators should be just as cautious about harming kids in Flint as they are about harming elders in Scarsdale.