March 21, 2007 | WebMemo on Health Care
In spite of Medicaid's growing pressure on state budgets, some governors and state lawmakers want to expand its coverage. They seek to increase eligibility for the program up the income scale and enroll larger numbers of uninsured working families. Aside from the daunting fiscal issues, as a clinical matter, this would be an ideologically driven mistake because Medicaid does not provide high-quality health care. And according to surveys, uninsured Americans would prefer private coverage to Medicaid. Nonetheless, many policymakers insist on pushing them into Medicaid. As editorialists of The Washington Times noted, "That's like forcing people into the medical equivalent of public housing."
A much better option would be to mainstream low-income families into the private health insurance markets, enabling them to secure the kind of coverage that best meets their personal needs.
What the Data Show
Medicaid provides care to over 53 million low-income Americans, and total federal and state Medicaid expenditures will reach $349 billion in 2007. About 57 percent ($199 billion) of the program is federally funded, and 43 percent ($150 billion) is state funded. Medicaid accounts for 22 percent of all state spending. It is the largest expenditure in increasingly strained state budgets, exceeding spending education and other important state services.
Medicaid is burdened by quality issues, at a time when a broad spectrum of health policy analysts have emphasized the need to promote evidence-based medical practice and to secure value for payment for medical goods and services. Meanwhile, there is mounting evidence that Medicaid, as it is currently structured, is a bad value for beneficiaries as well as taxpayers. Not only does it fail to provide adequate access to primary care and preventive services, a recent study shows that Medicaid patients receive inferior care compared to patients with private insurance.
In spite of Medicaid's hefty price tag, Medicaid patients find it difficult to access the health care system. Medicaid payment rates are considerably lower than physician payment rates under private insurance or even Medicare, in which physician payment is a recurrent problem. This has deterred physician participation in Medicaid. According to a 2003 Medicare Payment Advisory Commission (MEDPAC) study, only 69.5 percent of physicians surveyed were willing to accept new Medicaid patients, substantially fewer than the number willing to accept new privately insured patients (99.3 percent), Medicare patients (95.9 percent), and even the uninsured (92.8 percent). This disparity holds for primary care physicians as well as medical and surgical specialists.
More recent data from the Center for Studying Health System Change (HSC) show a continuation of this trend. About one-fifth of physicians (21 percent) reported accepting no new Medicaid patients in 2004-05, a rate six times higher than for Medicare patients and five times higher than for privately insured patients. Low physician participation in Medicaid has been shown to reduce enrollees' access to medical care. The most important reasons given by physicians for not accepting Medicaid patients are inadequate or delayed reimbursement and the growing burden of Medicaid administration and paperwork.
There is much evidence of Medicaid's inability to provide access to primary care services. The number of Medicaid beneficiaries who use emergency department services (ED) for non-urgent problems is a serious problem in many states. In 2004, the ED visit rate for Medicaid and SCHIP patients (80.3 visits per 100 persons) was higher than the rate for those in any other payer group, including those in Medicare (47.1 visits per 100 persons), without insurance (44.6 visits per 100 persons), and with private insurance (20.3 visits per 100 persons). In addition, a greater portion of ED visits by Medicaid/SCHIP patients in 2005 were classified as non-urgent or semi-urgent (35.7 percent) than visits by self-pay patients (23.7 percent), according to data from the National Ambulatory Medical Care Survey.
Once Medicaid beneficiaries gain access to the health care system, they receive inferior quality of care compared to patients with private insurance.
For example, patients with non-ST segment elevation acute coronary syndromes (NSTSE ACS), a form of heart attack, benefit significantly from innovative therapeutic approaches, including early invasive management strategies. These measures have now been incorporated into the guidelines of the American College of Cardiology and the American Heart Association. According to a study in the Annals of Internal Medicine, however, Medicaid patients with NSTSE ACS were less likely to receive evidence-based therapies and had worse outcomes (including increased mortality rates) than patients who had private insurance as the primary payer. This study found that these differences in care and outcomes persisted after adjusting for clinical characteristics (associated illness), socioeconomic factors (education and income), and the type of center where patients received treatment. In other words, the most important predictor of treatment and outcome in the study was whether the patient had Medicaid or private insurance.
Moreover, the data also show that Medicaid beneficiaries face more difficulties scheduling adequate and timely follow-up care after initial treatment for an illness than those with private insurance.
So despite the high costs of Medicaid, its enrollees face limited access to care, relatively poor quality of care, and inadequate follow-up care. There is no reason why policymakers, either at the federal or state level, should push even more families into Medicaid. They should instead devise better ways to help families get superior private coverage in a consumer-driven system that is far more responsive to patients' needs.
Given the high cost and poor quality of the services provided by Medicaid, state lawmakers should refrain from expanding it to address the growing number of Americans without health insurance. Instead, state and federal policymakers should move rapidly to a new system that gives patients powerful economic incentives to get the best care for the dollars spent. These incentives should be accompanied by personal ownership of heath insurance policies and the provision of solid consumer information on quality and performance of doctors, hospitals, and other medical professionals.
Such a new system would enhance the doctor-patient relationship
and would be driven by patients' personal decisions and doctors'
professional decisions in an environment of transparency in cost
and quality of care. Specifically, policymakers at the federal and
state level should:
An expansion of Medicaid is the wrong policy for the uninsured and for the taxpayers. Medicaid is expensive and rapidly becoming unsupportable in many states, while the quality of care it delivers is often substandard. Medicaid patients are more likely to face difficulties accessing care, often receive inferior treatment, and are more likely to receive inadequate follow up care than those with private health plans.
Congress needs to restructure the way tax dollars are used to finance health care for low-income individuals, and states need to develop innovative programs appropriate to their needs and allow patients to enroll in the health plans of their choice. Personal ownership of health insurance, and personal control over the flow of dollars in the health care system, will enhance personal responsibility and create powerful economic incentives for patients to demand and receive better value for health care dollars. This is an opportunity currently unavailable to patients enrolled in the Medicaid program.
John S. O'Shea, M.D., MPA, is a practicing surgeon and Health Policy Fellow in the Center for Health Policy Studies at The Heritage Foundation.
MEDPAC, "Access to Care in the Medicare Program," Data Book, June 2004, p. 42.
Peter J. Cunningham and Len M. Nichols, "The Effects of Medicaid Reimbursement on the Access to Care of Medicaid Enrollees: A Community Perspective," Medical Care Research and Review, Vol. 62, No. 6, December 2005.
Peter J. Cunningham and Jessica H. May, "Medicaid Patients Increasingly Concentrated Among Physicians," Center for Studying Health Systems Change, Tracking Report 16, August 2006.
L.F. McCaig and E.W. Nawar "National Hospital Ambulatory Medical Care Survey: 2004 Emergency Department Summary," Centers for Disease Control, Advance Data, June 2006, at "www.cdc.gov/nchs/data/ad/ad372.pdf.
James E. Calvin, Matthew T. Roe, Anita Y. Chen, et al, "Insurance Coverage and Care of Patients with Non-ST Segment Elevation Acute Coronary Syndrome," Annals of Internal Medicine, (Nov. 21, 2006) 145 (10): 739-748
Lindsey Tanner, "Study Says Uninsured Lack Follow-Up Care," Associated Press, September 13, 2005, at www.washingtonpost.com/wp-dyn/content/article/2005/09/13/AR2005091301221_2.html.
This general approach is embodied in the Health Care Partnership Act (H.R. 5864) sponsored by Representatives Tammy Baldwin (D-WI) and Tom Price (R-GA). For a discussion of this approach, see Stuart M. Butler, Ph.D., and Nina Owcharenko, "The Baldwin-Price Health Bill: Bipartisan Encouragement for State Action on The Uninsured," Heritage Foundation WebMemo No. 1190, August 7, 2006, at www.heritage.org/research/healthcare/wm1190.cfm.