#277: The Great Society’s Lie

Published June 20, 2011

“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.

— Benjamin Domenech



It would be silly to think they’re just stopping because they’ve waived all their political allies who really need it, right?

The Obama administration on Friday said it would stop granting new waivers to the health-care overhaul in September following sharp opposition from Republicans who cited the waivers in their bid to undermine the law.

As of the end of May, the administration had granted 1,433 waivers to a part of the 2010 law that prevents employers and other health-plan providers from capping annual benefit payouts below $750,000 a year. Those entities, and any others that secure a waiver by Sept. 22, will be able to keep their one-year waivers, and apply for extensions through 2013.


SOURCE: The Wall Street Journal


At Kaiser Health News, a piece on how PPACA “takes this simple idea and makes it extraordinarily complicated – if not impossible – to execute”:

By adding a litany of new minimum-insurance requirements and regulations to the original bipartisan idea, health insurance purchased through an exchange will likely end up more expensive than it is now.

For instance, mandates on the minimum share of health care costs that insurers must cover for all plans, along with a richer new federal “essential benefits” package, will drive up insurance costs for individuals and small businesses. Federal premium tax credits and cost sharing subsidies on the exchanges will also “bid up” premiums as individuals gravitate toward more expensive coverage.

Overall, the Congressional Budget Office expects that non-group premiums will go up by nearly 30 percent. This cost increase may be offset by the administrative efficiency of buying coverage through exchanges, and if many young and healthy uninsured can find affordable coverage. Conservatives, though, remain worried (and rightly so) that insurance choices on the exchanges may become “rigged” in favor of more expensive plans, driving up costs for taxpayers and driving healthy consumers to remain uninsured.

The health law’s defenders may dismiss these concerns as partisan politicking, but it’s harder to dismiss another criticism: that its exchanges are too heavily prescribed to actually operate. Without clarification or changes from the Obama administration, it will be nearly impossible for them to be fully operational in all 50 states by 2014, as the law demands.

Of course, the main force still pushing many groups and staffers toward embracing PPACA’s perverse versions of exchanges are external lobbyists and those interested in contracting on this “largest IT integration project in U.S. history.” All that stands against them is the interests of ideological principle, the costs to future generations, and the fact that history will judge them for the consequences of their decisions.

SOURCE: Kaiser Health News


The regulatory rulebook is smothering accountable care organizations before they even get started:

The theory for ACOs, as they’re known, is that hospitals, primary-care doctors and specialists will work more efficiently in teams, like at the Mayo Clinic and other top U.S. hospitals. ACOs are meant to fix health care’s too-many-cooks predicament. The average senior on Medicare sees two physicians and five specialists, 13 on average for those with chronic illnesses. Most likely, those doctors aren’t coordinating patient care.

This fragmentation is largely an artifact of Medicare’s price control regime: The classic case study is Duke University Hospital, which cut the costs of treating congestive heart failure by 40% but then dumped the integration program because it lost money under Medicare’s fee schedule.

Intelligent liberals now concede this reality but claim that the government merely needs to devise better price controls. By changing the way it pays, Medicare under the ACO rule is effectively mandating a new business model for practicing medicine. The vague cost-control hope is that ACOs will run pilot programs like Duke’s and the successful ones will become best practices. While the program is voluntary for now, the government’s intention is to make it mandatory in the coming years.

The WSJ quotes the American Medical Group Association, which calls the rules “overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve.” According to a member survey, 93% said they won’t enroll.

SOURCE: The Wall Street Journal


Last week the American Action Forum’s Michael Ramlet and Carey Laferty shared research on the managed care approach to Medicaid and solutions employed in several states in a new paper:

Today, Medicaid enrollees face limited access to lower quality care at the same time that the program’s budget is bankrupting states and the federal government. Without reform, Medicaid will fail to meet its promise to the more than 60 million Americans who depend on it.

The program’s decline has been driven by an inefficient fee-for-service (FFS) payment system that pays providers for more, not better, care. By paying for fragmented care, FFS provides little incentive for different care providers to work together and remove waste from the delivery system.

Managed Medicaid is the solution. By paying a bundled payment for each patient, Managed Medicaid allows states to improve access to care through private insurance networks, facilitate care coordination across providers, instill provider accountability, and deliver better outcomes.

Expect more studies along these lines in the future.

SOURCE: American Action Forum


IPAB is already in the process of becoming the hot-button issue pushed by conservatives on the Hill, as indicated by this piece in Politico by physician-turned-congressman Phil Roe of Tennessee:

I have introduced bipartisan legislation to abolish the IPAB, with more than 120 cosponsors to date. By passing our bill, Democrats and Republicans can declare with a unified voice that charging unelected bureaucrats with patient care decisions is unacceptable. We must preserve Medicare by giving patients the power to control their health care.

The IPAB is duplicitous for many reasons. It shifts health care decision-making power away from the patient. It’s devised to operate without transparency or accountability, bypassing all congressional oversight. It places the focus on slashing Medicare costs, rather than on improving the quality of care.

Under the IPAB, 15 unelected bureaucrats decide what constitutes “necessary care.” The IPAB is likely to create a “one size fits all” solution when it comes to medical care. As a physician, I can tell you firsthand how dangerous this can be. In medicine, every case is unique – and must be treated that way.

In addition, the board’s recommendations can develop Medicare policies and decisions without any transparency, oversight or debate. If Congress fails to change the IPAB’s recommendations, they go into effect. It’s important to note that Congress can only change where to cut – it cannot decide that cuts are too drastic. This could lead to denial of care.

We’ll see if the motivation to turn from IPAB continues as supportive members enter the election season. It certainly makes for some devastating rhetoric. As for competing propositions on costs, Grace-Marie Turner at Galen has several suggestions.

SOURCE: Politico