The Great Society’s Lie

Posted: June 21, 2011 by thesundowner in Uncategorized

Consumer Power Report #277:
The Great Society’s Lie

June 20, 2011
Welcome to the Consumer Power Report.
“The Great Society,” as Ronald Reagan once said, “is great only in power, in size and in cost.”
By now you’ve likely heard about the study conducted by Joanna Bisgaier and Karin V. Rhodes published in the New England Journal of Medicine, which has rocketed around the policy community over the past week. Essentially, it aimed at proving something that is already known by most in the field – and denied only by those ignorant of the truth or with a political motive to deny it: the level of access granted by Medicaid and CHIP is completely insufficient to meet the demands of the population it purports to serve.
As Kathryn Nix writes at The Foundry, drilling down to the essence of the study: “While specialists turned away 11 percent of privately insured children, 66 percent of children with Medicaid were unable to get an appointment. For those who did, the waiting time was 22 days longer than for other patients.” An excerpt:

We completed 546 paired calls to 273 specialty clinics and found significant disparities in provider acceptance of Medicaid–CHIP versus private insurance across all tested specialties. Overall, 66% of Medicaid–CHIP callers (179 of 273) were denied an appointment as compared with 11% of privately insured callers (29 of 273) (relative risk, 6.2; 95% confidence interval [CI], 4.3 to 8.8; P<0.001). Among 89 clinics that accepted both insurance types, the average wait time for Medicaid–CHIP enrollees was 22 days longer than that for privately insured children (95% CI, 6.8 to 37.5; P=0.005) …
We found a disparity in access to outpatient specialty care between children with public insurance and those with private insurance. Policy interventions that encourage providers to accept patients with public insurance are needed to improve access to care.

This study is completely consistent with the findings of a half-dozen other studies over the past several years, stretching as far back as the breast cancer studies of the mid-nineties and more recent research that showed Medicaid to be only marginally better than if you’re uninsured and offer to pay just $20 at the time of the appointment.
Avik Roy notes, the truly depressing part of this New York Times report on the study is that such a thing even needed to be detailed, and that some people seemed surprised by it:

There’s a New York Times article on the NEJM study. The money quote, from a medical director at a Chicago-area hospital: “It’s interesting to think you even need a study to prove that. It’s pretty much common knowledge.” (In the medical community it is, yes, but not in economics departments.)

What the study shows is that the current system, even without the addition of millions of new participants under Obama’s nationalized health care system, is already failing to serve those it promised to provide with care. And the pre-PPACA estimates regarding how many new participants will be standing in line is likely to be on the low side of reality: this NEJM piece is the first major one I’ve seen that notes the same “woodwork” effect Cato’s Jagadeesh Gokhale has studied. They describe it as one of “two potential budget-busting provisions for states” within Obama’s law:

As of 2014, it expands Medicaid eligibility to people with incomes up to 133% of the federal poverty level. A “Maintenance of Effort” rule in the legislation prohibits states from tightening their eligibility criteria before that time. Thus, states must manage difficult budget shortfalls at a time when the enhanced matching rate for federal funding is expiring, but the easiest way to save money – cutting people from the rolls – is simply not allowed. (The enrollment cut in Arizona is a unique case, because the state is simply choosing not to renew a special waiver program that will expire later this year.)
The other large wrinkle in the ACA relates to what happens to people who are already eligible for Medicaid under current law but are not enrolled. Whereas federal funds cover 100% of costs for newly eligible individuals starting in 2014, states receive the traditional federal contribution rate (currently 50 to 75%, depending on the state) for any additional enrollment of people who were already eligible. Millions of low-income Americans are currently eligible for Medicaid but do not participate because of enrollment barriers, poor retention, or lack of information. States anticipate that many such uninsured individuals will come out of the woodwork and sign up for Medicaid under the ACA, thanks to heavy media coverage, streamlined enrollment procedures required by the law, and the individual mandate to obtain insurance.

We launched ReformMedicaid.org out of recognition that Medicaid’s failure is going to become an issue everyone cares about soon enough. But even I didn’t expect it would be this soon.

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