The health reform law passed in March 2010 provides for a substantial expansion of the “must cover” population – essentially anyone from a family with income below 138% of the federal poverty line (an amount that varies based on family size). This is a major component of the health reform law: according to the Congressional Budget Office, half the uninsured who they project to become covered as a result of new law will obtain coverage because of the Medicaid expansion…

The constitutional issue, however, is what would happen if a state declined to pay for that portion of the Medicaid expansion not paid for by the federal government? Suppose, for example, a state decided to just forgo the expansion entirely, on the grounds that it could not afford to pay its share of the cost? In that case, the health reform law contains a built-in retaliation – the state would lose all federal Medicaid funding.

Print

The chart shows the percent of households receiving a benefit in each of the education categories. For example:

Over a third of households with heads whose formal education was limited to a high school diploma — the most common type of household — received at least one of these types of assistance in 2010. A majority of households with heads who stopped their schooling before graduating from high school received government assistance in 2010.

Total assistance was about $600 billion in 2010 and it went to almost one half the population.

Source: University of Chicago professor Casey Mulligan at The New York Times’ Economix blog.

Print

Before you rush out to enroll yourself and your family in the cheaper, better, Medicaid system, it might be worth taking some time to evaluate whether the slender evidence in the paper supports such a sweeping conclusion.The paper compares Medicaid with private insurance. The comparison is based solely on data from birth certificates recorded at the time of birth. The measures of infant health include length, weight, weeks of gestation, and 5 minute Apgar score. Though these are numeric variables, the author turns them into dummy variables, reducing their already limited variation. Insurance coverage is based on individual recall 9 months after a child’s birth. Information on coverage before birth is not included.

Apgar scores are measured from 1 to 10. Infants with scores of 7 to 10 are considered clinically normal. The overwhelming majority of infants are clinically normal at birth. In a 2001 study of 151,891 births at Parkland Hospital in Dallas, Casey et al. reported that 131,581 full-term singleton live births had a 7-10 Apgar score, 561 had a 4-6 Apgar score, and 86 had a 0-3 Apgar score. The mean 5-minute Apgar score was 6.6±2.1 in infants born at 26 to 27 weeks of gestation, and 8.7±0.8 in infants born at 34 to 36 weeks.

The data used in Roy’s study are from the Early Childhood Longitudinal Survey, Birth Cohort (ECLS-B). The ECLS-B excluded children who died, thus ignoring an important health outcome. It also had only a 74.1 percent response rate. The existing ECLS-B sample has a mean Apgar score of 8.942 with a standard deviation of 0.682. If the Apgar scores were normally distributed, this would mean that more than 95 percent of all the children in the sample had Apgar’s suggesting clinical normality at birth. In fact, 98.6 percent of the children in the sample were normal at birth. The difference between the Apgar scores of the Medicaid sample and the private sample was -0.096.

It has long been known that people enrolled in Medicaid differ from those with private health insurance in important ways that affect health, and that those differences may not be captured by available data. The goal in this paper was to calculate how large the bias caused by unobservable variables would have had to have been in order to attribute the entire observed performance difference to selection bias. Pioneered by Altonji, the approach makes several assumptions. One is that the observed elements are chosen at random from the full set of factors that determine the outcome for the dependent variable. Another is that none of the included or omitted independent variables dominate the dependent variable.

Unfortunately, the data set includes no measure of maternal health, a variable that is likely to dominate outcomes, at least to the extent that variables with so little variability can be dominated. The observed independent variables are the typical grab bag of variables that show up in educational surveys–child’s gender, mother’s age, weight, and education, father’s age and education if available, the household’s socioeconomic quintile, parents’ marital status, race, geographic region, and urban or non-urban location.

Given that there is so little Apgar variation to begin with, it is not surprising that the author calculates that even a modest amount of selection on unobservables would erase the negative Apgar results for Medicaid. Slightly higher selection on the basis of unobservables would lead one to conclude that Medicaid has better outcomes if one assumes, as the author does, that the people covered by Medicaid are likely to have poorer birth outcomes than those covered by private insurance.

The problem is that we know little or nothing about how the distribution of the risk of poor live birth outcomes varies between the Medicaid and privately insured populations. Estimates of the number of births covered by Medicaid run as high as 40 percent, almost half of all births. State data suggest that mothers covered by Medicaid are likely to be younger, in the sample the average was 2.5 years younger than those who were privately insured, but this is not surprising given Medicaid means testing. Younger women tend to have higher birth weight children than older ones, unless they are very young, aged 17 or less, though this is subject to debate. Mothers insured by Medicaid are more likely to smoke, and smoking is associated with pre-term births and depressed Apgar scores, but older women are more likely to develop diabetes and gestational diabetes which increases risk. Whether socio-economic status affects Apgar scores is subject to debate.

Despite all of the zones of ignorance, the author asserts that “children on public HI [health insurance] appear to fare no worse, and possibly even better than their counterparts on private HI…” She argues that government-provided health insurance outperforms the private sector because CHIP “provides an alternative source of cheaper coverage coupled with a broader range of benefits than private HI.” And she writes that MEPS data show that “the average payments made by Medicaid (and/or CHIP) for medical services per enrollee are smaller than for those by private HI. Since payments constitute the bulk of the costs incurred by the health insurance provider, this simply corroborates the aforementioned evidence of public HI being a cheaper source of more benefits for infants.”

This is true only if one believes that the total cost of Medicaid is reflected by the payments it makes to providers. This is unlikely because MEPS explicitly excludes payments that are not directly linked to individual patients, payments such as grants for public and community health clinics, Medicaid disproportionate share payments, the deadweight loss from taxpayer financing. It also fails to account for the total costs of state and Congressional management and overhead.

Print

Groups protesting the new law include the Minnesota Health Care Safety Net Coalition which represents the clinics, hospitals, and non-profits that receive substantial portions of their budgets from Medicaid and Medicare. They properly note that denying dialysis or ventilators to people who need them constitutes a death sentence. They do not indicate whether they have any plans to raise private money to pay for the continuing medical care for those may no longer qualify for tax funded services.

All aliens in the United States are eligible for emergency medical assistance under Medicaid as long as they meet the Medicaid eligibility requirements of the state in which they apply for benefits. Alison M. Siskin of the Congressional Research Service explains that in 1986, Section 9406 of the Omnibus Budget Reconciliation Act (P.L. 99-509) amended Section 1903(v)(3) of the Social Security Act to define an emergency medical condition as:

“…a medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in — (A) placing the patient’s health in serious jeopardy, (B) serious impairment to bodily functions, or (C) serious dysfunction of any bodily organ or part.”

The GAO further notes that 42 CFR §440.255 specifies that there must be a “sudden onset” of the condition.

The problem with government entitlements, as Margaret Thatcher noted, is that sooner or later one runs out of other people’s money. When that happens with health entitlements, someone must decide who will and will not get care. If ObamaCare outlaws scaling back Medicaid income eligibility or the benefits it provides for the generally healthy, then officials will resort to implicit or explicit death panels for the expensive, gravely ill.

The evidence suggests that U.S. health entitlements have expanded beyond the point where marginal benefit equals marginal cost. One reason for this is that those who live off the river of funding from Medicaid and Medicare know that their best protection against budget cuts is being able to maximize the political outcry when cuts are proposed. They do this by maximizing enrollment. Enrollment has been maximized by nearly continuous lobbying for expanded eligibility, reduced verification of client claims, looser state residency requirements, and the redefinition of what constitutes emergency conditions.

Before entitlements, a vast network of private charities and mutual aid associations provided everything from low cost medical services to income support and outright charity. Since tax dollars were not involved, the focus was on the person rather than on his citizenship or income. People were free of the intrusive monitoring systems that government now requires they participate in in order to run its programs, and innovative independent private groups developed an array of techniques to control moral hazard, techniques that invariably combining rights with private duties and obligations. Since these groups actually used their own money to actually pay for medical care, they had a strong incentive to resist regulatory initiatives that would make it more costly.

As health entitlements expanded, non-profits placed less emphasis on paying individual medical bills. Today, many of the largest health foundations in the United States provide no private support to individuals in need. Instead, they seek to do good by spending other people’s money. They use their money to fund grants, research, and so-called “technical support” efforts that influence people in favor of entitlement program expansion. One result of their efforts is that the expanding entitlement web has effectively outlawed historically important forms of medical charity and moral hazard control and health spending, and costs, have skyrocketed. When fraternal societies provided medical care in mutual self-help societies, for example, receipt was dependent upon prior membership and appropriate conduct by the recipient. When private insurance companies provided individual health insurance, rates were dependent upon health behaviors and individuals were required to pay for a part of their care.

David G. Green neatly summarized one of the main drivers of health care spending in an essay on “Medical Care through Mutual Aid” in Beito, Gordon, and Tabarrok’s book The Voluntary City. “…[I]n the voluntary associations that predated the welfare state,” he writes, “the link between personal payment and entitlement was clear. Once the state intervened, “rights” increasingly became claims to benefits at the expense of other people and no longer the just entitlement of shared responsibility.”

Print

More at Kaiser Health News.

Print

1.  In the State of Oregon, as many as one out of five individuals enrolled in Medicaid aren’t even eligible for the program.(Source: HHS Secretary Kathleen Sebelius letter to Senator John Cornyn. February 25, 2010.)

2.  You can own a half a million dollar luxury home and still qualify for Medicaid. (Source: The Social Security Act: Section 1917(f).)

3.  An entire consulting industry now teaches how to do financial planning around Medicaid’s long-term care offerings, and not surprisingly, taxpayers now finance 40 percent of long-term care services in America through Medicaid. (Sources: The Center for Long-Term Care Reform: Medicaid Planning Quotes and Kaiser Commission on Medicaid and the Uninsured: Medicaid and Long-Term Care Services and Supports. March 2011)

4.  Individuals with an income of $64,000 a year — nearly $15,000 higher than the median household income in the United States — can now qualify for Medicaid. (Sources: U.S. Census Bureau: Income, Poverty and Health Insurance Coverage in the United States: 2010. September 2011 and Associated Press: Millions of middle-class people could get Medicaid. June 2011)

Print

The August study on Massachusetts’s safety net system showed rising patient volume after the state’s health reform. The number of patients receiving care from community health centers jumped 31 percent from 2005 to 2009, while safety net hospitals experienced a 9.2 percent increase in nonemergency ambulatory care visits from 2006 to 2009, researchers from George Washington and the University of Minnesota found.

Lessons for ObamaCare:

The ACA scales back funding for disproportionate share hospitals — a special designation for hospitals with significantly higher shares of impoverished patients — while Medicaid is expected to absorb 16 million more people after 2014.

“The assumption that near-universal coverage will eliminate the need for extra financial help for safety net institutions is false, and Massachusetts provides the proof,” the health policy consultant said.

Print

I’m not insisting on perfect foreknowledge, just common sense. If you insist on marriage prior to pregnancy, you screen out an awful lot of unreliable men. And there are many other excellent ways to filter out cads: Lengthen the courtship, prefer older men, wait for your man to get a steady job, avoid men with questionable family and friends, etc. Even if the marriage eventually ends in divorce, you’ve still greatly mitigated the financial harm to yourself, your kids, and taxpayers.

See his exchange with his critics at Econlog.

Print

Avik Roy, of The Apothecary blog, has published a comparison of various health-related measurements in Texas and Massachusetts. Drawing upon a number of sources, Roy concludes that those who believe more government spending and regulation is good will condemn Texas’ record, but those who believe in individual choice and limited government will cheer it. But what other costs did Texans pay? Or, as Paul Krugman might frame the question: “How many children died in the street to pay for Rick Perry’s tax cuts for millionaires and billionaires?” The answer is “none.”

More importantly, Texans have decided that it’s better to create more jobs than more Medicaid dependents.

Every year, the United Health Foundation produces America’s Health Rankings, which ranks every state along a number of health-related measurements. Some of these rankings have to do with insurance coverage and government spending. But others have to do with the actual state of people’s health. Tables 1, 2, and 3 show how Texas ranks in inputs to the health system, in outputs for which the health system is (partially) responsible, and in causes of mortality.

Table 1 shows five inputs to the health system. Texas does not rank very highly in these inputs, and it is plausible that below average health spending can (to some degree) explain this.

However, relatively poor rankings for inputs are not reflected in generally poor outputs. Table 2 reports 13 health-system outputs. Texas ranks very well in four outputs, and very poorly in four. For the other five, it ranks in in the middle. Note that the health system is not entirely responsible for these outputs. Other determinants of health play a large role. The lesson? Below average health spending may result in lower inputs, but not necessarily lower outputs.

Finally, we look at four causes of mortality. Table 3 clarifies the picture even more. Texas ranks very well in two important causes of mortality, cancer deaths and infant mortality, and ranks about average in two others.

Given these outcomes, it is not at all clear that Texas’ spending more money on the health system would result in better health outcomes. Indeed, throwing more money at the health system would likely destroy Texas’ competitive advantage in attracting people.

During the period 2000 through 2009, Texas’ population grew by 3.9 million people, according to the U.S. Census Bureau. This accounted for 15 percent of the population growth of the entire U.S. Furthermore, over 700,000 of these were not newborns or international migrants, but residents from other states – most of which had much more expensive Medicaid programs and higher incidence of private health insurance, like New York or Massachusetts. And these people came to Texas because that’s where the jobs are. Even Factcheck.org, a liberal watchdog, admits that “the state has added 1,081,900 jobs since December 2000, the month Perry took office. It’s an increase of 11.3 percent during his time as governor. Nationally, employment has gone down in this time frame, declining by 1,295,000, a nearly 1 percent drop.”

Americans clearly value jobs more than Medicaid dependency or the political goal of “universal coverage.” Instead of frittering away his citizens’ prosperity in mindlessly throwing more of their money at Medicaid, or fruitlessly investing political capital in trying to guarantee so-called “universal coverage,” Perry focused on policies that created jobs. Americans have voted with their feet, and they have voted for Perry’s Texas model.

Print

Ron Pollack,
Executive Director,
Families USA

Print