How to Improve Medicaid for Minorities

Published June 1, 2005

Ethnic minorities in America, particularly African-Americans, are generally less healthy than whites and suffer from reduced access to quality health care services. This should be unacceptable in the richest and most advanced country on the planet.

There are a range of socioeconomic and cultural reasons for these troubling findings, but one reason in particular typically escapes scrutiny: minorities’ disproportionate representation in the outdated and bureaucratic Medicaid program.

The March/April issue of the journal Health Affairs focused on racial health disparities. It pointed out that, relative to whites, infant mortality rates are 2.5 times higher for blacks, life expectancy is 10 years less, and blacks have significantly higher mortality rates from heart disease, stroke, and cancer.

Health Trends Lagging

The recent trends are not encouraging. In one Health Affairs article, former Surgeon General David Satcher points out the United States has made marked progress in closing the black/white gap in civil rights, housing, education, and income since 1960, but health inequalities remain stubbornly persistent. Standardized mortality rates between blacks and whites have changed very little since 1960.

Using 2002 data, there are 83,570 “excess deaths” annually in the black community as a result of the black/white mortality gap.

Medicaid Failures Fuel Disparity

What is it about the health programs designed for people who are poor and disproportionately minority that has failed so catastrophically to deliver results?

The answer lies in the fact that Medicaid, which serves the poor–who are disproportionately African-American (the income gap needs forward-looking solutions as well)–largely remains a 1960s-era model that is no longer appropriate for twenty-first century health care financing and delivery.

Medicaid is an inflexible system of government-defined benefits and prices that would evoke howls of laughter if anyone suggested it be applied to the markets for food, housing, automobiles, or software. Medicaid’s heavily bureaucratic structure is biased in favor of a rigid status quo and against the kind of innovation that can quickly improve patient care.

In short, Medicaid beneficiaries are segregated into second-tier health care, and it is a second tier with demonstrated costs in lives and in quality of life.

Governors, Outcomes Are Key

What is needed is an entirely new Medicaid system that is outcomes-oriented, not process-based. Those outcomes should include a clear and measurable commitment to eliminating the disparities in health outcomes between different groups of Americans.

Confident, competent, forward-looking governors should be allowed to opt in to a new Medicaid system that cuts them loose from federal hand-holding and stifling red tape. In exchange for that new freedom, willing governors would agree to a defined contribution of federal funds from Washington that increases every year at an amount below their recent growth trend.

The federal government would save money, and minorities’ health care would improve.

Reform Should Be Voluntary

It is important that Congress not compel states to accept the new program. Those governors content with the status quo and secure in their inability to improve the delivery of health care to their poorest and most vulnerable citizens should be allowed to stew in the old Medicaid system.

Allowing a few trailblazing governors, who are closer and more accountable to their constituents than faceless bureaucrats in Washington are, to lead the way would move us closer to a model that best serves the poor.

In addition, instead of auditing the process by which they spend their federal Medicaid dollars, the federal government would audit states based on demonstrated improvements in health outcomes, childhood immunizations, or a closing of the gap in racial health disparities. Washington’s role would change from its current focus on oversight of process compliance to that of auditor of results.

Current System Creates Disparities

Medicaid apologists will quickly make two claims in opposing the granting of this option to states. First, they will say Medicaid is fine but needs more federal money–despite the fact that all states have open-ended access to federal matching dollars right now.

Second, they will say empowering governors to assume more responsibility over their Medicaid programs will strip away federal “protections” and “guarantees” for the poor. They would be referring to the same lofty federal standards that have gotten every Medicaid program in the country to where it is today–one most people with any other option would not choose to join.

The current system, after all, is the one that has created precisely the disparities in health outcome cited in Health Affairs.

Medicaid’s archaic, anti-patient structure is not the sole cause of racial health disparities in America. But Medicaid is clearly not living up to its potential in closing the deeply troublesome gaps. Surely defenders of the status quo wouldn’t mind a little competition between the current system and one where results matter more than process.

Newt Gingrich is a former speaker of the U.S. House of Representatives and founder of the Center for Health Transformation. James Frogue is project director for the center’s State Project and Medicaid Transformation Project. They can be reached at [email protected]. This article appeared originally in the Atlanta Journal Constitution and is reprinted with permission.