Medicaid Essentials.

There is a good argument that the “welfare state” has been created out of changing social needs.  In 1965, as part of his “Great Society” effort to “complete” Franklin D. Roosevelt’s New Deal, President Lyndon B. Johnson signed the law creating Medicaid.  The law extended medical insurance to the “deserving poor”: children, pregnant women, the disabled, and geezers unable to afford long-term care.[1]  By 2013, 57 million people were covered by Medicaid.[2]

In 2014, the Affordable Care Act (ACA) allowed states to extend Medicaid coverage to all those who earned 138 percent of the federal poverty level or less.  Some 31 states expanded Medicaid.  This added 17 million people to the Medicaid rolls.  Even though 19 states did not expand Medicaid, the total cost of the program rose to $574 billion in 2016.

Did the expansion of Medicaid improve health outcomes?  One might suppose that it would take a while to tell.  All the same, Harvard rushed out a study that that found a 6 percent drop in mortality among poor populations in states that expanded Medicaid after 2014.[3]  A Kaiser Family Foundation study found that there isn’t much difference between private insurance and Medicaid—except that Medicaid recipients are just as likely to get care that they wouldn’t have received otherwise.

The aging of the American population poses a huge challenge to Medicaid.  The chief problem is “long-term care”: home health aides and nursing home care.  Medicaid provides for such “long-term care.”[4]  Anyone who exhausts their savings paying for home health-care or a nursing home qualifies for Medicaid.  Better than 60 percent of people—mostly women because women tend to outlive men—in nursing homes are covered by Medicaid.  This amounts to 21 percent of total Medicaid spending and the share is only likely to grow.  About 18 percent of “Baby Boomers” will need nursing home care.  Most of them don’t have the resources to pay for it, so they will become public charges as they/we have been public charges throughout life.

Republicans wanted (and still want) to scale back spending on Medicaid.[5]  In particular, they want to roll-back the Obama administration’s extension of Medicaid to the “working poor” while leaving in place health coverage for the “deserving poor.”  In contrast, the vast majority (70 percent) of Americans favor maintaining Medicaid spending at its current level.

In the near term, there isn’t any real prospect of cutting entitlement spending.  It is a different question to ask if America can afford such spending.  The ACA loaded $875 billion in new taxes on upper income earners.  This seems to be the real source of funding for the ACA, rather than the revenues derived from “mandatory” insurance participation.[6]  The Republican “repeal and replace” plan would roll-back these taxes.  The House version would have cut spending by $834 billion.  Grimy though it may be, this turns into a debate over spending on an “undeserving” past versus spending on an uncertain future.  Boomers should have saved more.

[1] On the distinction between the “deserving” and Undeserving” poor, see  It doesn’t matter if this is a nonsensical distinction.  In contemporary Democratic party ideology, ALL poor people are the “deserving poor,” as re many members of the middle class.  However, Republicans hold the White House, both houses of Congress, and the Supreme Court.  For that matter, it is clear that many conservative Democrats hold to the same beliefs.

[2] “The battle over Medicaid,” The Week, 23 June 2017, p. 11.

[3] Not to be callous, but over two years, the death rate declined by 6 percent and this is the result of extending Medicaid?  Is this reduced or merely postponed mortality or just a short-term deviation?

[4] Fat black ladies from the Caribbean, mon, sticking tubes in you and wiping your ass.

[5] People on Medicaid usually don’t vote Republican.  If the “reform” passes, they never will.

[6] My sons received forms for the last two years in which they were supposed to certify that they had health insurance.  However, they were not required to submit those forms with their tax returns.  That is the “mandate.”

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