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Medicare’s future today: Medicaid

By Conn Carroll

The New York Times highlights a study today showing that even if you have Medicaid coverage, that does not necessarily mean you have access to health care:

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The study used a “secret shopper” technique in which researchers posed as the parent of a sick or injured child and called 273 specialty practices in Cook County, Ill., to schedule appointments. The callers, working from January to May 2010, described problems that were urgent but not emergencies, like diabetes, seizures, uncontrolled asthma, a broken bone or severe depression. If they were asked, they said that primary care doctors or emergency departments had referred them.
Sixty-six percent of those who mentioned Medicaid-CHIP (Children’s Health Insurance Program) were denied appointments, compared with 11 percent who said they had private insurance, according to an article being published Thursday in The New England Journal of Medicine.

This is a devastating study for Obamacare and its defenders. First, Over half of the health insurance coverage obtained through Obamacare is through Medicaid eligibility expansions. Second, this study shows that the left’s chosen method for health care cost containment, namely just paying doctors less through Medicare, is destined to weaken the benefits Medicare recipients receive.

In fact, the “savings” Obamacare achieves in Medicare spending are accomplished by lowering Medicare reimbursements below what they currently are for Medicaid. A May 13th, 2011 Centers for Medicare & Medicaid Services Office of the Actuary report explains:

Figure 2 shows the resulting comparison of future Medicare and Medicaid payment rates for physician services relative to private health insurance payment rates. Medicare payment levels in 2009 were about 80 percent of private health insurance payment rates, and Medicaid payment rates in 2008 were about 58 percent. In this illustration, Medicaid payment rates increase to 73 percent of private health insurance levels in 2013 and 77 percent in 2014 and then return to 58 percent. Medicare physician payment rates decline to 57 percent of private health insurance payment rates in 2012, due to the scheduled reduction in the Medicare physician fee schedule of nearly 30 percent under the SGR formula in current law. (In practice, Congress is very likely to override this reduction, as it has consistently for 2003 through 2011.) Under current law, the Medicare rates would eventually fall to 27 percent of private health insurance levels by 2085 and to less than half of the projected Medicaid rates. The continuing slower growth would occur as a result of negative update adjustment factors caused by growth in the volume and intensity of physician services that exceeds the increase factor specified by the SGR formula.

To the extent that Medicare saves money (as Paul Krugman claims it does) it only accomplishes this by paying doctors less than private insurance does. Medicare patients already have a hard time finding doctors who are willing to treat them. As the above NYT story shows, Medicaid patients have an even harder time. And Obamacare is only going to make both problems worse.

Ezra Klein links today’s NYT story to rumors that the debt hike negotiations will include Medicaid cuts and writes: “Cut further and children will either wait longer, or go without coverage altogether. Is that really the right way to start addressing entitlements?”

It depends on how the states choose to cut. If states keep the Obamacare and SCHIP eligibility expansions and save money by paying doctors less, then yes the access problem for Medicaid beneficiaries will get worse. But if states use their Medicaid dollars to tighten eligibility, only making the program available to the below the poverty line, then states can pay doctors more and Medicaid coverage might actually enable the poor to get medical care.

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