May 15, 2017

No, Medicaid isn't broken

One reason the architects of the American Health Care Act want to cut Medicaid spending and give more responsibility to the states is that they believe that the current program is "broken," with inadequate access to physicians and out-of-control costs. This is one of those canards that is repeated so often that many people just accept it as true. Mostly, it is not true.

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Data: Kaiser Commission on Medicaid and the Uninsured analysis of 2015 NHIS data; Chart: Andrew Witherspoon / Axios

Like any big messy public program, Medicaid is very far from perfect, as I learned when I oversaw a Medicaid program for a Republican governor in New Jersey. But on basic measures of access and satisfaction with care, Medicaid beneficiaries look very much like people with private employer coverage despite the fact that they are sicker and poorer. And they're doing better than the uninsured.

The bottom line: Medicaid isn't broken — at least, not any more than private insurance is.

Finding doctors: The biggest problem that's usually cited with Medicaid is that people have trouble finding doctors who will take them. And there are troubles with low Medicaid provider reimbursement rates and physician access, but they vary around the country. It's not hard to find a state, or more typically a region within a state, where physician access is a real problem.

But overall:

  • 74% of Medicaid beneficiaries see a doctor each year
  • 69% for people with employer based private coverage see a doctor each year.
  • People on Medicaid are also nearly just as satisfied with their health care as people with employer coverage.

Costs aren't out of control: Medicaid spending did jump to 10.5% in 2015 with the Affordable Care Act coverage expansion, but it dropped to 5.9% in 2016 and is projected to grow by 4.5% this year.

And per capita Medicaid costs are not rising faster than costs for private insurance. In fact, they're projected to grow more slowly.

Some would say that's because Medicaid underpays providers, and it does pay substantially less than Medicare in many states. Others would say, good for Medicaid; it drives a tougher bargain with providers while getting results comparable to other payers.

The AHCA would take more than 800 billion dollars out of Medicaid over the next decade by reducing funding for the Medicaid expansion and capping federal Medicaid spending. The architects of the AHCA may believe Medicaid dollars are better spent elsewhere or not spent at all, or that somehow states can make Medicaid work better with far less money.

There are many principled conservative arguments for smaller government. But the argument that Medicaid is "broken" is not one of them; it is more urban legend than fact.

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