Taking Medicaid Away from Those Who Need It the Most
Cruel and Usual: Republicans Prepare to Gut Medicaid
West Virginia is a very red state; Donald Trump received more than two thirds of its votes last year.
It’s also a poor state, left behind by the 21st century economy. Because incomes are low, it pays very little in federal income taxes — less per household than any other state.
However, at least the great majority of West Virginians — more than 94 percent — have health insurance. The reason for this good news is that unlike many red states, WV accepted Medicaid expansion under the Affordable Care Act, which was passed in 2010 but didn’t fully go into effect until 2014. The effect was dramatic; Medicaid now covers more than a quarter of the state’s population:
And Medicaid covers 45 percent of the state’s children.
But now the Republicans West Virginia helped put in power are preparing to impose savage cuts on a program that has literally been a lifeline for many in the state, in order to help offset the cost of huge tax cuts for high-income Americans, hardly any of which will trickle down to WV voters. Populism!
We’ll be hearing a lot of lies about Medicaid in the weeks ahead, starting with Trump’s arithmetically impossible claim last week that Medicaid won’t be “touched” by the planned spending cuts. So here are two things you should know about a program Trump and his allies have in their crosshairs: it’s extremely important to many Americans, and it’s much more cost-efficient than the rest of our health care system.
Medicaid is really, really important
I often encounter generally well-informed people who are surprised to learn that Medicaid is a much bigger program, in terms of the number of people covered, than Medicare — 69 million versus 48 million. The perception that Medicare is much more important may reflect the fact that Medicaid still costs taxpayers less than Medicare. This is partly because older people have higher health costs than the young adults and children who make up much of the Medicaid population. But it’s also because Medicaid is quite cost-efficient; more about that shortly.
There’s also, let’s be frank, a perception that Medicaid is politically unimportant, that conservatives can safely target it for cuts, because it’s mainly a program for inner city people of color. But that was never as true as people imagined and is definitely not true now. Again, consider West Virginia. It’s one of America’s most rural states and overwhelmingly — 90 percent — white. Yet as we’ve seen, it’s deeply dependent on Medicaid.
In fact, Medicaid is especially important for rural and small-town Americans, even if they aren’t beneficiaries themselves, because it helps keep health care accessible.
Hospitals have been closing across much of rural America, because there aren’t enough paying patients to keep them operating; the picture at the top of this post shows one such hospital, in Cuthbert, Georgia. Georgia is one of the states that, unlike West Virginia, refused to accept a federally funded expansion in Medicaid under the Affordable Care Act. As a result, fewer Georgians are able to pay for medical care. Rural hospital closures have been overwhelmingly concentrated in these “non-expansion” states.
All in all, if Republicans think they can slash Medicaid without paying a heavy political price, because only Those People will be hurt, they’re going to be mightily surprised. According to one recent poll, 71 percent of Trump voters say that cutting Medicaid would be unacceptable.
Medicaid is cost-efficient.
Some conservatives claim that we can achieve big cuts in Medicaid outlays by eliminating wasteful spending, because that’s their rote line. And there’s surely some waste in Medicaid, as there is in any large program. But there is nothing comparable to the massive overpayments Medicare makes to insurance companies selling Medicare Advantage plans. Funny how that never comes up in conservative diatribes against waste, fraud and abuse.
In fact, compared with other parts of the U.S. health care system, Medicaid stands out for its remarkably low costs. Making comparisons among different types of insurance coverage can be a bit tricky, because the populations are different; for example, people in poor health often have low incomes, and hence qualify for Medicaid. But careful comparisons that adjust for these differences find that Medicaid is a lot cheaper than private health insurance:
How does Medicaid manage this? It has lower administrative costs than private insurance, in part because it doesn’t have to devote resources to marketing, determining eligibility, denying coverage, and so on. It also pays providers less, which can sound like a bad thing until you realize that this includes things like bargaining for lower prices on drugs and medical equipment.
I’m not an expert here, but my understanding is that Medicaid, as a program for low-income Americans, has something that, for different reasons, neither Medicare nor private insurers have: The ability to say no. No, we won’t pay for that expensive drug being advertised on TV when there’s a much cheaper alternative that’s equally effective, or close to it. No, we won’t pay inflated prices for medical procedures of dubious effectiveness. And the ability to, say, exclude overpriced drugs from Medicaid’s formulary unless the pharma company cuts its price gives Medicaid a lot of bargaining power.
Does this low cost lead to low-quality coverage? Medicaid recipients may sometimes have trouble finding a doctor, because of those lower payments. Yet according to patients themselves, Medicaid does fine — Americans on Medicaid are roughly as satisfied with their coverage as those with employer-sponsored insurance:
Furthermore, those in poor health, who need health coverage most, appear to be significantly more satisfied if they get their coverage from Medicaid than those getting insurance through their employer:
All in all, if you were looking for a way to reduce America’s extremely high health care costs without reducing the quality of care, Medicaid actually looks like a model rather than a problem case.
Oh, and a quick word about work requirements for Medicaid recipients, which are all too likely to be part of what Republicans try to impose: They’re basically a fraud. There are almost no Americans choosing not to work because they can live on government benefits instead; our social safety net isn’t generous enough for that. The real purpose of work requirements is to create more hoops for people to jump through, to make it harder to collect the benefits they’re legally owed.
Cruel and usual
I don’t know whether draconian, cruel cuts to Medicaid will actually happen. It may turn on whether Republicans in Congress are more afraid of their constituents or of Donald Trump.
But what is worth noting is that what we’re seeing is that for all the talk about how the G.O.P. is now the party of the working class, the policy agenda is as cruelly plutocratic as ever: Take away health care from Americans who need it so you can cut taxes for the wealthy.