Because Washington insists, more Americans will likely find
themselves with low-quality health care. President Barack Obama
favors an expansion of Medicaid, a welfare program, as well as
the State Children's Health Insurance Program (SCHIP), as a key
component of his health care reform agenda. Aside from the
President's proposal, Senate Finance Committee Chairman Max
Baucus (D-MT) is also committed to a Medicaid expansion.
With the recent enactment of additional Medicaid funding in the
American Recovery and Reinvestment Act of 2009, popularly known as
the "stimulus bill," as well as the rapid enactment of the SCHIP
reauthorization, the President and Congress have already made
a substantial down payment on major expansion of public
programs; and because of the "crowd out" of private insurance that
routinely follows such expansion, millions of Americans,
regardless of their personal preferences, will find themselves
in these programs, whether they want to be in them or not. Beyond
that, President Obama and congressional leaders favor the creation
of a new government-run health plan to compete with private health
plans in a national health insurance exchange, which would also
result in an accelerated crowd out of private health insurance
Less Quality for More People
While increasing access to high-quality health care should be a
central goal of health care reform, Washington's insistence on
increasing enrollment in Medicaid will not achieve it. There
are several reasons:
- Poor Access to Care. Because of low physician
reimbursement rates and administrative hassles within the program,
many physicians find it difficult or impossible to incorporate
Medicaid patients into their practices. The resulting low physician
participation leads to reduced access to care for Medicaid
- Poor Performance. In addition to the access problems,
there is a clear record of substandard performance, especially in
the areas of cancer and cardiac care. Medicaid patients commonly
receive a significantly lower quality of care than patients covered
by private health insurance. In Washington, these persistent
quality deficiencies are routinely overlooked in discussions of the
Along with providing only nominal "health insurance coverage,"
expanding Medicaid would have other adverse yet unavoidable
consequences. For example, a substantial number of Americans now
covered in private health plans would be transitioned to
Medicaid simply because it is nominally less expensive.
Indeed, according to the Lewin Group, a nationally prominent
econometrics firm that models health care reform proposals,
Medicaid on average pays only 56 percent of the price of medical
services delivered by physicians in the private sector.
If Medicare, which pays roughly 81 percent of private
physicians' rates, is to be touted as a cost-cutting model for a
new public plan to compete with private-sector health plans, then,
logically, Medicaid should be ideal. Of course, the reality is very
different. So, rather than extending Medicaid's flaws to a larger
portion of the population, policymakers should focus on
providing disadvantaged individuals with "premium support,"
transforming current government spending into a direct
contribution that would enable them to buy into the insurance
plan of their choice.
How Medicaid Undermines Access to
Quality means getting the right treatment for the right
condition at the right time. In the final anasis, it depends
on access to a doctor. Compared to people with private health
coverage, Medicaid enrollees have limited access to physicians. In
2004 and 2005, only 52 percent of physicians reported accepting all
new Medicaid patients and 21 percent reported that they were not
accepting any new Medicaid patients. During that same time
period, 72 percent of U.S. physicians accepted all new
privately insured patients; only 4 percent did not accept any
new privately insured patients.
As noted, a major reason that many physicians limit the number
of Medicaid patients they treat is that Medicaid reimburses
physicians at a substantially lower rate than other payers.
Medicaid payments may even fail to cover the costs of
providing services. In 2003, national Medicaid reimbursement
rates were only 69 percent of Medicare rates; for primary care
services specifically, the rates were even lower (only 62 percent
of Medicare). Since Medicare reimbursement rates are
generally lower than those of private insurance companies, when
Medicaid reimbursement is compared with private coverage, the gap
is even larger.
Reimbursement rates vary across states and, not surprisingly,
state reimbursement rates are directly correlated to physician
participation rates. New Jersey, a state with the lowest
reimbursement rates in the nation (56 percent of the national
Medicaid average and only 35 percent of Medicare), is also at the
bottom in terms of access to care, especially primary care for its
Bureaucracy. Another reason that provider
participation rates are so low is that physicians in the
Medicaid program are burdened with substantial administrative
hassles. Red-tape burdens include payment delays, rejection of
claims for seemingly capricious reasons, pre-authorization
requirements for many services, and complex rules and
regulations for how claims are to be filed. Reimbursement
delays within the program are especially problematic. Like
reimbursement rates, reimbursement wait times vary widely across
states: from an average of 37 days in Kansas to 115 days in
Pennsylvania. In every state, however, the average wait time for
Medicaid reimbursement is appreciably longer than the average
wait time for payment from private insurers.
In a recent study published in Health Affairs,
researchers examined the effect of reimbursement wait times on
physician participation in Medicaid. Compared with physicians
in states with relatively slow reimbursement times, physicians in
the states with the fastest reimbursement times were more likely to
accept some or all new Medicaid patients.
As expected, in the states where providers face low
reimbursement and long wait times, the number of physicians
who accept Medicaid patients was particularly low. However, in
states with high reimbursement rates but long wait times,
physician participation was not significantly higher, suggesting
that raising reimbursement rates without addressing wait times will
not improve access. Other studies of various physician groups, such
as pediatricians, have corroborated the findings that these two
factors contribute to low physician participation in Medicaid
and that fixing one without addressing the other is not likely to
close the access gap.
Discontinuity of Care. "Churning" in
Medicaid--people cycling on and off the program--also hinders
access. Churning makes it difficult to maintain continuity of
care and contributes to the total number of uninsured. From 1998 to
2003, 30 percent of Medicaid enrollees had at least one
uninsured spell, compared to only 12 percent of individuals
with private coverage. Medicaid enrollees, many of whom have
lower educational levels and face language barriers, are required
to complete complicated paperwork to enter or remain in the
program. Documentation requirements and
administrative confusion cause many eligible children and
families to lose their coverage at renewal time.
Why Medicaid Provides Low-Quality
Although quality deficiencies in the Medicaid program cannot be
completely disentangled from the difficulties that enrollees face
in accessing care, it does appear that the medical services
delivered through Medicaid are of lower quality than those
delivered through private insurance, even for enrollees with access
to a physician. As an indirect attempt to measure disparities in
the quality of services, a study of Medicaid in urban settings
showed that the physicians treating Medicaid patients were less
likely to be board-certified than those serving the privately
The track record of previous Medicaid-expansion efforts gives a
good indication of the types of care to which new enrollees gain
access. During the 1980s and 1990s, Congress expanded Medicaid
eligibility for pregnant women. Although a stated goal of this
congressional expansion was to get poor patients into mainstream
private practices, researchers found that all observed increases in
access occurred in public settings, such as public clinics and
hospitals, which have been shown to offer a lower
quality of care. Because of institutional goals or
government mandates, physicians in these settings may have
limited control over the extent of their services to Medicaid
patients--they may be required to serve all Medicaid patients who
come to them.
In an important study published in Pediatrics,
researchers examined the effect of expansions in the Medicaid
program on low-income children from 1989 to 1995. Although the
expansions produced some reductions in non-insurance rates, poor
children did not experience significant changes in either
their level of health-serviceuse or their health status duringthe
period of the expansions, regardless of race or ethnicity.
Mainlining HMOs. Transitioning beneficiaries into health
maintenance organizations (HMOs), an increasing trend in recent
years, has also not solved the quality problems in the Medicaid
program. While enrollment in private HMOs overall has declined in
recent years, the number of Medicaid beneficiaries enrolled in HMOs
has dramatically increased. Transitioning care to HMOs
represents efforts at cost reduction by Medicaid programs and
does not reflect an exercise of personal choice on the part of
beneficiaries. Currently, the proportion of Medicaid
beneficiaries in managed care is more than 60 percent. An
analysis in the Journal of the American Medical
Association found that Medicaid managed-care enrollees
received significantly lower levels of care than private
managed-care enrollees on all but one of 11 important quality
measures included in the study.
How Medicaid Fails Cancer and Cardiac
For a number of reasons, the overall health status of Medicaid
enrollees is, in general, worse than the health status of
individuals with private insurance. This difference in health
status makes a direct comparison of the quality of medical
care in the Medicaid program to the quality of care in private
insurance difficult. However, many studies that have compared
quality of care between Medicaid and private insurance have
shown an independently lower quality of care and worse clinical
outcomes in Medicaid after controlling for potential
confounding factors. The literature for cardiac and cancer
patients in particular reveals extensive shortcomings in the
quality of care delivered through Medicaid.
Cardiac Care. In another important study, published
in the American Journal of Public Health, researchers found
that Medicaid patients who suffered a heart attack were
significantly less likely than patients with other forms of
insurance to receive a number of important clinical interventions
including cardiac catheterization, percutaneous
transluminal coronary angioplasty, and revascularization
procedures. These differences were observed after
adjusting for age, race, sex, household income, patient History
(including History of hypertension, diabetes, cardiac surgery, and
other comorbidities), heart attack type and location, admitting
hospital characteristics, and other factors. The authors of the
study strongly suggested that the financial disincentives of
caring for Medicaid patients contributed to the gap in the quality
of treatment. Other studies have found a similar disparity in the
use of invasive procedures between cardiac patients in Medicaid and
those with other types of insurance.
Further evidence of inferior cardiac care within Medicaid can be
found in research on the management of patients with
non-ST-segment elevation acute coronary syndrome, a common type of
heart attack, for which there are evidence-based guidelines
for diagnosis and management. In a study published in
the Annals of Internal Medicine, the researchers found that
Medicaid patients received fewer evidence-based therapies than
patients with private insurance coverage. The authors controlled
for differences in clinical characteristics, hospital
characteristics (including the proportion of Medicaid patients
at each hospital), sex, and other factors.
The study also found that Medicaid patients were less likely to
be cared for by cardiologists and had worse risk-adjusted,
in-hospital outcomes. Pointedly, the authors suggested that
"restructuring the Medicaid infrastructure and financing may be
needed to promote better quality of care."
Looking at the deficiencies in cardiac care in Medicaid from a
different viewpoint, other researchers, whose study was
published in the American Journal of Medicine, analyzed
whether non-medical factors, including insurance status, influenced
the probability of a patient with a heart attack being transferred
to another hospital. Since only a small percentage of
hospitals nationwide have the capability to perform the full
range of cardiovascular diagnostic and therapeutic procedures, a
reduced likelihood of transfer suggests a reduced access to
necessary cardiovascular services. After adjusting for differences
in hospital characteristics, age, sex, race, cardiac History, delay
in arriving at the hospital, heart attack location, and other
clinical variables, researchers found that heart attack
patients covered by Medicaid were significantly less likely than
those with private insurance to be transferred to another hospital
after admission. This disparity was especially apparent for
patients admitted to hospitals without full therapeutic
capabilities, suggesting that the reduced likelihood of
transfer left Medicaid patients less likely to receive necessary
interventions. The finding of a reduced hospital-transfer rate for
Medicaid cardiac care patients is supported by data from other
Finally, a study published in the Journal of the American
College of Cardiology examined outcomes from coronary artery
bypass surgery and found that Medicaid status was independently
associated with a worse 12-year mortality than for patients with
other types of insurance. In fact, Medicaid enrollees had a 54
percent greater 12-year risk-adjusted mortality than patients
enrolled in other types of insurance plans. Insufficient
access to physician follow-up services and cardiac rehabilitation
within Medicaid was thought likely to be a contributing factor in
this disparity, according to the authors. Several other studies
have found similar increased risk-adjusted mortality among cardiac
patients enrolled in Medicaid when compared to privately
Cancer Care. Controlled studies of cancer patients have
also found differences in quality of care and clinical outcomes
between Medicaid patients and patients with private coverage.
According to a recent study in the journal Cancer,
researchers found that Medicaid patients who were diagnosed with
breast, colorectal, or lung cancer had a two-to-three-times greater
risk of dying from their disease than patients with other types of
insurance. This disparity in outcomes was apparent whether the
patients were enrolled in Medicaid before or after their diagnosis
of cancer and held up even after controlling for other factors,
such as site and stage of the cancer and the gender of the
In another study of cancer patients published in the New
England Journal of Medicine researchers compared stage-specific
breast cancer survival between women with private insurance, no
insurance, and Medicaid. Controls were included for age, race,
marital status, household income, co-existing diagnoses, and
disease stage. The study found that, compared to patients with
private insurance, the adjusted risk of death in the first 54 to 89
months following diagnosis was significantly worse for uninsured
patients, with Medicaid patients faring only marginally better than
the uninsured. According to the authors, the comparable
outcomes of uninsured patients and patients coveredby Medicaid
suggest that Medicaid coverage alone--withoutefforts to
enhance primary care and screening--may be insufficientto improve
outcomes for poor women with breast cancer. Although this
study is somewhat older, the conclusions remain valid and the
quality problems in the Medicaid program have persisted.
More recently, cancer screening rates among older
Medicaidrecipients have been found to fall far short of national
objectives. According to a 2008 study in the Archives of
Internal Medicine, documentation that the primary care
provider recommended colorectal, breast, or cervicalcancer
screening was found for only 52.7 percent, 60.4 percent, and 51.5
percent of eligible patients,respectively. Documentation that
adequate screening procedures were actually carried out was
found for only for 28.2 percent of patients for colorectal cancer
testing, 31.7 percent for mammography testing within two years,and
31.6 percent for cervical cancer testing within three years.
When medicalrecord and claims data were combined, only
approximately half ofeligible patients had evidence of adequate
As jobs disappear and Americans lose their employment-based
health care coverage, the number of uninsured will grow. For
federal and state policymakers, the conventional answer is simply
to enroll more and more Americans in Medicaid and SCHIP. Based on
data from the Kaiser Commission on Medicaid and the Uninsured,
Kaiser Foundation executive vice president Diane Rowland estimates
that for every increase of 1 percentage point in the national
unemployment rate, an additional 1 million Americans will
receive Medicaid for their health care coverage and an additional
1.1 million will become uninsured.
Federal and state policymakers need to get serious and address
not only the problem of the uninsured, but also how to extend
access to quality health care to all Americans. President Obama's
proposal, like Senator Baucus's, would rely on a Medicaid
expansion, as well as the creation of a new, as yet unspecified,
"government-run health care plan" that would compete with
private health plans. This policy prescription is both insufficient
In order to achieve effective health reform, including access to
quality care, it essential to go beyond the simple expansion of the
status quo. Simply counting the number of people who
will be nominally covered under poorly performing public programs
is not the same as expanding access to quality health care.
American taxpayers, who are footing increasingly larger bills for
public health plans, deserve a candid discussion of Medicaid and
how it performs, and what kind of value they are getting for their
tax dollars. Meanwhile, Washington policymakers, who are
largely responsible for some of the most serious problems in the
health care sector of the economy, should at least recognize that
their schemes for "coverage" are not the same thing as providing
quality health care.
Needless to say, federal and state policymakers have given
little attention to the poor access to care in Medicaid or to
Medicaid's track record of providing substandard services. The
evidence for these quality deficiencies persists even after
controlling for possible confounding characteristics among the
Medicaid population, such as income and underlying health
status. Expanding Medicaid will not result in better access to
high-quality health care -- it will merely funnel more Americans
into a flawed system. Serious health care reform should include
efforts to move individuals out of, not into, Medicaid. This
can be done by providing low-income Americans with the financial
support they need to purchase their own health insurance. Personal
control of the flow of dollars in a "patient-centered" health
care system will encourage value-based decisions at the
individual patient-doctor level and will drive demand for a high
level of quality--which Medicaid has failed to provide.
Jeet Guram is a Research Assistant in
the Center for Health Policy Studies, and John O'Shea, M.D., is a
practicing physician and former Health Policy Fellow in the Center
for Health Policy Studies, at The Heritage Foundation.
the taxpayers, the effect of this process is absurd: It is akin to
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