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Why I wish we all had Medicaid

I heart MedicaidMedicaid, a means-tested program designed to provide health insurance to the very poor, has been pejoratively been labeled as “welfare medicine.” The program was hastily constructed in 1965 as an afterthought to Medicare, whose mandate is to cover the costs of health care among older Americans, people age 65 and up,  who have paid into this social insurance system throughout their lives.

The quality of Medicaid has consistently been criticized leaving some to question whether Medicaid is “inferior” insurance and whether a Medicaid expansion is the best way to extend coverage to the working poor and near poor. But what some people don’t realize about Medicaid is that the minimum benefits covered under Medicaid are actually more extensive than the minimum benefits provided under Medicare.

For instance, in spite of being a program geared towards older adults, Medicare does not cover the costs of long term care, whereas Medicaid does. Nor does Medicare fully cover the costs of medicines leaving a so-called donut hole that seniors must fill out of their own pockets, whereas Medicaid does offer comprehensive drug coverage, albeit not without restrictions. Also, recent evidence suggests that once in front of a physician, people with Medicaid are not treated any differently than people with private insurance.

Medicaid programs are typically run as “managed care” programs, which have been criticized for being more concerned about controlling costs than providing quality care. However, increasingly, various types of managed care are seen as the only way to control escalating health care costs. Soon all health care, public or private, may be managed in one form or another.

The main problem with Medicaid is not its generosity in terms of the benefits it covers, or the quality of care provided by physicians, but its stinginess with regards to who is eligible for the program. It is a program that only the very poorest of the poor are eligible for and the rates it pays to providers due to its chronic underfunding stigmatizes the program from health providers’ point of view.

An increasing degree of segregation has occurred with few providers willing to accept Medicaid. Medicaid recipients are largely being relegated to public hospitals and clinics and locked out of the private system. This creates the kind of two-tier system that leads Americans to denigrate public insurance by equating the public sector with services for the poor. Although providers that primarily service Medicaid patients may accept other kinds of insurance, not many people with private insurance use those clinics reinforcing this clinical segregation.

The fundamental problem with all means-tested programs is that they create different tiers of care. One tier for the wealthy or better off and another for the very poor.  In countries, such as the UK, with publicly-financed health care systems that an overwhelming majority of the public make use of, the public system is not viewed as low quality and is forced to maintain a higher standard of quality to accommodate people of different income levels. Essentially, when everyone makes use of public services, the quality tends to be better, and there is no stigmatization.

Medicaid Quote AFoxThink for instance of other public services. Try taking a bus in smaller cities and see who is on board. The perception of public transportation outside of major urban centers like New York City is that it is only for people who cannot afford cars. This gives the impression that “public” transportation is for the poor. Likewise, public schools in many mixed income areas would likely be better quality if the wealthier people in those areas did not opt to send their kids to private schools. This would improve quality for everyone.

In short, the problem with Medicaid is that we all don’t have it. If Medicaid was not a means-tested program exclusively for the poor, the stigma attached to the program would be reduced, reimbursement rates for physicians would be better, and we would all be happier.

Who wouldn’t want to go to a community walk-in clinic and receive same day services? Who wouldn’t want to avoid the hassle of trying to find a provider that accepts your insurance and having to haggle with the insurance company over why some procedure wasn’t covered? Who wouldn’t want to not pay exorbitant co-pays, deductibles and co-insurance each time you go to the doctor? Who doesn’t want long term care coverage for themselves and their aging parents?

The expansion of Medicaid to healthier working poor populations will likely help reduce the stigma of the program and incentivize more providers to accept Medicaid since the relative market power of Medicaid would be greatly expanded. However, due to politics nearly half of states have chosen not to expand their Medicaid programs in spite of generous federal subsidies to finance the expansion.

In reality, if we want to control health care costs and expand access, Medicaid should be seen as a model for how we should do so. Researchers have found that the biggest cause of high and increasing health care costs in the US are the costs of administration and the prices that physicians and hospitals charge which are relatively uncontained and well above international standards for similar procedures. Medicaid and Medicare have each been able to keep the costs of these programs in check by lowering administrative costs and reimbursing providers at very low rates. A wider expansion of these programs to more people would reduce costs while maintaining quality.


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About Ashley Fox

Ashley Fox, Ph.D., is an Assistant Professor at the Mount Sinai School of Medicine, Department of Health Evidence and Policy. Learn more about Ashley here.

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