Once the governors took expanded Medicaid payments, they were hooked.
What an irony it is that one of the Republican arguments made now for preserving ObamaCare’s Medicaid expansion is the opioid crisis. Even after the Supreme Court ruled in 2012 that Medicaid’s expansion was optional, some Republican governors got hooked on the promise of federal cash flow to the horizon.
.. Medicaid has become most states’ second biggest budget outlay, behind K-12 education.
.. Medicaid “works” only if no one notices it’s robbing Peter to pay Paul. The Peters getting robbed to make Medicaid work include doctors who are supposed to serve this population.
.. Medicaid paid physicians on average 66 percent of what Medicare paid for services, down from 72 percent in 2008.
.. Medicaid is already a fiscal ruin and lowest-common-denominator medicine. Advocates say it’s better than nothing for the poor or uninsured, but well-controlled studies put even that claim in doubt.
Are the GOP’s Proposed Medicaid Reforms Mean?
Trump has repeatedly praised Canada’s health-care system, which has a very similar structure to Medicaid, as offering a model for the United States to emulate. However, the reforms proposed in both the House and the Senate bills would in fact bring Medicaid even closer to the structure of Canada’s health-care system — only with a far more generous level of funding.
.. Canada’s federal funding system was established in 1957, with the national government providing one dollar for every dollar that provinces spent on hospital and physician services. By the 1970s this arrangement was widely recognized to be causing costs to soar, and the Liberal prime minister Pierre Trudeau reformed this “Canada Health Transfer” so that provinces would receive a fixed annual allocation from the national government.
.. The U.S. Medicaid matching payment to states ($344 billion, or $1,071 per American, in 2015) already well exceeds the Canadian block grant to provinces (US$26 billion, or US$716 per Canadian) — even though the Canada Health Transfer is supposed to cover Canadians of all ages and income levels, whereas Medicaid is dedicated to 21 percent of the U.S. population with low incomes.
.. U.S. federal taxpayers spend an additional $646 billion on Medicare, and $122 billion on other health entitlements such as CHIP or VA — yielding total federal health-care entitlement spending of $3,461 per capita.
.. Canada is not getting more value for money; it is just getting fewer services. Canada’s federal payment doesn’t cover prescription drugs; only hospital and physician services are paid for. Canada also saves money by rationing operating-room time and the ability of physicians to order costly services.
.. Nor does Canada pay significantly less for its physicians than the United States; it just limits access to the expensive ones. In 2010, family physicians earned incomes (net of practice expenses) averaging $159,000 in the United States and US$156,000 in Ontario, while cardiologists averaged $325,000 in the United States and US$283,000 in Ontario. According to the World Bank, the United States has 2.45 and Canada 2.07 physicians per 1,000 inhabitants, while the United States has 0.55 specialist surgeons per 1,000 and Canada 0.35.
.. Waiting lists save lots of money because some patients get better by themselves, others give up seeking care, and a substantial number die before receiving treatment.
.. the allocation of federal payments by open-ended matching has caused funds to be distributed according to how much states can themselves afford to put in. As a result, the states that need help the least received the most assistance. In 2015, Connecticut collected $12,240 in federal Medicaid funds per resident under the poverty line, whereas Alabama received only $4,070.
To keep funds from being captured by the richest states (which generally use them to expand eligibility to wealthier individuals who mostly already had private coverage), it therefore makes sense to cap the increase in funding that each state is able to claim from the federal government every year.
.. The Canada Health Transfer currently increases the funds received by each province at a standard rate of 3.0 percent every year. By comparison, the House GOP’s proposed reform would limit the annual increase in federal payments claimed by each state to a statistic that has increased around 7.0 percent for spending on the aged and disabled and 4.9 percent for that on able-bodied adults and children
Going Small on Health Care
The Democratic bill in 2010 delivered significantly to the party’s base; the Republican bill in 2017 delivers significantly only to the party’s donors.
.. In order to mitigate its unpopularity, Senate Republicans keep making their bill more like, well, Obamacare, which raises the question of why they’re attempting something so complex for such a modest end.
.. the smaller bill would repeal the individual mandate requiring the purchase of health insurance. It would replace it, as the Senate bill does, with a continuous-coverage requirement — a waiting period to purchase insurance if you go without it for more than two months.
.. Instead of wringing almost $800 billion out of Medicaid over 10 years, it would try to reduce the program’s spending by $250 billion — just enough for deficit neutrality.
.. That’s it. That’s the whole thing. Eliminate the hated mandate, keep the exchanges stable, cut a few health care taxes, and pull Medicaid spending downward. Pass the package, declare victory, and pivot to tax reform.
.. Republicans could campaign in 2018 on the credible claim that they had maintained Obamacare’s coverage for most people who wanted it, while reducing its burdens on those who don’t.
.. the Republican Party is too divided on health care, too incompetently “led” by its president, and too confused about the details of health policy to do something that’s big and sweeping and also smart and decent and defensible.
AEI: Improving Health and Health Care: An Agenda for Reform
Those Americans without access to employer coverage should be given a refundable, age-adjusted tax credit that is set roughly equal to the average tax break for an employer plan.
.. This rule would protect persons with preexisting conditions from being charged more, or denied coverage, based on their health status so long as they have not experienced long breaks in insurance enrollment
.. States could also boost insurance enrollment by assigning persons who are eligible for the tax credits but have failed to pick an insurance policy to a default insurance plan. The upfront deductibles for these insurance plans would be set as necessary to ensure the premiums for enrollment would be equal to the federal tax credit, thus ensuring no additional premium would be required from a person assigned to a default plan.
.. Reform of Medicaid must start with changing how the federal government pays for its share of total cost. The program should be divided into its two distinct subparts, one for able-bodied adults and their children and the other for the disabled and elderly.
.. Medicare’s rules for paying hospitals, physicians, and other service providers heavily influence how care is delivered to all patients, not just Medicare enrollees. The program would improve if there were fewer regulations and more emphasis on market-based reforms. The starting point should be conversion of the program, on a prospective basis, to a premium support model
.. HSAs should be a central component of health care in the United States. The accounts provide strong incentives for their owners to seek the best value for their health care purchases, and they provide a ready vehicle for providing additional protection against high medical expenses.
.. A comprehensive reform plan should also reform the health insurance benefit for federal employees so that it operates like a defined contribution program.
Principles for Reform
- Citizens, not government, should control health care.
- Government subsidies should come in the form of defined contribution payments.
- Move power and control from the federal government to individuals, families, and states.
- Suppliers of medical services must have more freedom to innovate and provide better services to patients and consumers.
- Reform must improve the federal fiscal outlook by reducing long-term health obligations.