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Paul Krugman is wrong about Medicaid

Paul Krugman suggests in his New York Times column today that continuing the expansion of Medicaid is the answer to the outlandish cost of health care in the United States. He’s wrong. Medicaid is a lifeline for the impoverished, but the program would have to be reformed to the point that it would no longer be recognizable as Medicaid to be satisfactory for most Americans.

The reason Krugman likes Medicaid is the program’s success at controlling costs. He says that of all the health care delivery systems in the country, Medicaid is the one most like those in Europe, which have much lower costs than ours. If that’s true, it’s only because most of the rest of our fragmented system is completely fucked up.

Among the primary aims of European systems is health care equity — providing everybody with the same access to high-quality health care regardless of income or station. Medicaid does not come close to doing that. Krugman says that care from Medicaid providers is good and that lack of access is greatly exaggerated. In my experience the former is sometimes true and the latter, never.

The level of care and access to it varies wildly from state to state and even from county to county within states. In some locations the government’s role is only to determine eligibility, and the program itself is run in whole or part by for-profit managed care organizations with extremely narrow choices of providers. In others, it remains a government-administered program in which the choice of doctors is limited only by the number of them who choose to accept Medicaid patients — but that number is typically a small percentage of the doctors in the area.

I’ve been a Medicaid recipient in three counties and two states. In Los Angeles, Medicaid was administered entirely by the county government. I received my primary care from a satellite clinic of a highly regarded university-affiliated hospital system. The clinic itself was well appointed, and waiting times were only occasionally excessive. Care, however, was inconsistent. I didn’t know from visit to visit which doctor I would see. The clinic took months to retrieve my records from the low-income clinic (also affiliated with the university hospital system) where I went before I got Medicaid; a mistaken diagnosis at the Medicaid clinic led to several extraneous X-rays that put me over the limit considered safe, and that would have been avoided had my chart been promptly retrieved. And there were other issues that don’t warrant relating but that would almost certainly not have occurred had I been a patient of higher social status attended by a physician in private practice.

Medicaid in San Diego county was run by for-profit managed care organizations with few provider options. Because Medicaid is administered at the county level in California, I had to register with the San Diego office in order to get referrals to specialists, a process that was the earthly embodiment of Catch-22. I ultimately chose the plan with the clinic closest to me. The clinic was perpetually swamped. Waits were usually long and reception areas were sometimes standing room only. I have no quarrel with the care, other than that the staff seemed perpetually exhausted.

It’s no secret to regular readers of the blog that I’ve had my share of mental health issues; that’s how I wound up on Medicaid. I didn’t have a problem with access to mental health providers in Los Angeles, although I did get saddled with a couple of shrinks who were in serious need of shrinks. In San Diego, though, it took months to get a referral and more months to get an actual appointment. This was in part because of the difficulty registering with the county, and in part because the number of providers was so small. Ultimately I saw a psychiatrist once in the year I was a Medicaid patient there, toward the end of my tenure. Prior to that I had to press the nurse practitioner at my clinic to ask her supervising physician to prescribe my psych medications.

Now I’m back in Honolulu, which also uses managed care groups to run its Medicaid program. None of the doctors I had when I lived here before accept patients from either of the managed care groups, and none of the doctors near me do so either. I’m back in a clinic. It’s not the most comfortable environment, crowded and often with long waits, but the staff are dedicated, there’s a pharmacy on the premises and I get to see the same doctor each time. He has referred me to a couple of specialists for non-emergency exams or treatment; three months later in one case and one month in the other, I still don’t have an appointment with either because so many specialists don’t accept Medicaid patients that the ones who do are seriously backlogged.

Other problems exist in addition to the access problems and the issue of drastic inequalities across the system nationally and within states. Among the most serious of these is the provision under which Medicaid agencies can attempt to recover costs from the estates of beneficiaries who are more than 55 years old. This is something that would be unimaginable in any other developed country.

Another problem, the proliferation of for-profit managed care companies within the system, may well destroy Medicaid in all but name. This is a process that began in the 1980s under Reagan, continued under Clinton and accelerated under the second Bush. 28 states now use for-profit companies in at least some locales. The Obama administration recently granted a waiver to Arkansas allowing the state to steer Medicaid expansion-eligible residents into plans sold on the insurance exchange there — a practice other states, particularly the ones that spurned the expansion but will eventually join in, are certain to emulate. What this means is that Medicaid is in the process of being privatized, with government money subsidizing insurance companies and managed care companies. It begins to approximate a voucherless version of the voucher system that Republicans hold so dear, laundering money through consumers to the corporate gatekeepers.

This is not the system Krugman imagines. He’s not alone; most Democrats and many people who describe themselves as progressive are celebrating the Medicaid expansion under Obamacare as an extraordinary advance. In terms of coverage, they’re right. In terms of steering the country toward health care equity, they’re wrong. Medicaid patients are too often treated as second-class citizens, and the problem is likely to worsen without the kind of drastic reform I mentioned earlier.

There are at present about 150 million Americans being served by at least a half-dozen single-payer systems. We need to take the most popular of those systems and expand it to provide cradle-to-grave coverage for everyone in the country, and improve it to achieve the health care equity that Americans deserve and that President Obama has described as a basic human right. We need Medicare for all.

4 comments to Paul Krugman is wrong about Medicaid

  • JackD

    Agreed, but just because we need it doesn’t mean we can have it. In the meantime, I think we’re better off with medicaid than without. Don’t you?

  • As I said, it’s good in terms of coverage. My main point, though, is that Krugman is entirely off base with his main points: the program’s resemblance to European systems, the access to care, and both the prospects and value of expanding the program to significantly more people. It’s a horribly inequitable and often enough demeaning way to provide health care, and the health care providers involved with it say the same things. Nobody accustomed to seeing doctors of their choice and getting appointments with specialists in a reasonable amount of time would accept it; you wouldn’t put up with it, but you’re okay with millions of other people being forced to put up with it because they’re desperate. As for “yes, but …”, if everyone who says “yes, but” said “we have to have this,” we would have a much better chance of getting it.

  • Stephen Kiraly

    Medicaid is the ANSWER to the outlandish cost of healthcare in this country? That is laughable. Medicare is the REASON for the outlandish cost of healthcare. Basically, it all boils down to this: Since 1965, prices for physician services have been set once a year by a board consisting of AMA bureaucrats. After the Medicaid expansion, prices for virtually every physician service you can think of have been controlled and set by this central governing board. Centralized price-fixing schemes are what brought the Soviet Union to its knees. What has happened in this country is that hospitals and healthcare industry managers have learned to game the system. They push medical procedures that will yield the most money for the least amount of time. Since prices are fixed, and may often do not represent the true cost of a procedure. The procedures that a typical doctor orders for patients these days are not sensitive to market forces, and are based more on profits than medical necessity. The centralized board that has been deciding what procedures should cost can not possibly do such a complex job very well. When they notice that some procedures are not being done often enough, they raise the price of that procedure. Costs of medical care have been rising much faster than inflation for at least a couple decades.
    At the same time, the AMA has been working hard to prevent new medical schools from being built and to keep enrollment down. I’ve read about projected nursing shortages for over 20 years. Right now there are shortages of doctors in every specialty except dermatology and plastic surgery. (To become plastic or cosmetic surgeon, usually one must first become a dermatologist.)
    To compound the problem, common sense approaches to lower the amount of money the government spends on Medicare have been blocked. There was legislation to allow Medicare to buy drugs from Canada, medications that often sell for 10% of what price-gouged American consumers pay. Remember when the news media was all over this story, and legislation passed both houses of congress to allow Medicare to purchase medication through Canadian distributes? President G. W. Bush vetoed the bill, and we haven’t heard much about it since. Outrage on the TV news stations has been replaced with pharmaceutical company commercials. Americans have by and large been brainwashed to believe that the USA has the best medical system in the world.
    Now the US pays 18% of GDP for healthcare. This is an astonishing statistic. The next large industrialized companies pay about 12% of GDP, or less, for healthcare, and they have fully socialized medicine. Their costs will certainly keep rising as a result, over time, but in general healthcare costs much less in most other countries, and that is why many Americans have been forced to engage in medical tourism. The new ACA partially solves this problem, but does nothing to control costs. What boggles my mind is that nobody seems to care or realize what has been going on. The average voter has a very short memory.

    Please read this article, as it explains in very good detail how Medicare works, and why it is the reason for the skyrocketing cost of healthcare in the USA:
    http://reason.com/archives/2011/12/13/medicare-whac-a-mole

  • Medicaid, not Medicare, was what Krugman touted and I addressed, and Medicaid isn’t responsible for health care cost escalations. Even with Medicaid payments rising temporarily to Medicare levels, and even with the expansion, it won’t add much to health care cost inflation. Fees will be going back down in two years. It’s just a crappy program for recipients in many ways.

    You’re preaching to the choir here in some respects, although I think you misunderstand either how many countries actually have fully socialized health care, or what fully socialized health care is. I also don’t really understand what you’re saying about centralized price schemes, since a number of European and other states that provide universal health care also incorporate centralized pricing. In any event, when I recommend Medicare for all, I’m recommending Medicare with the fixes you mention. Nobody in this country advocates a single-payer system that doesn’t incorporate cost-saving measures such as system-wide negotiations for drug prices. John Conyers has for some years been pushing a single-payer bill that you might want to look at if you haven’t already. The link is to Physicians for a National Health Plan, which you might also want to explore if you haven’t.

    Many people recognize and care about what’s going on. One major obstacle at this juncture is the subset of people who claim to support universal health care and simultaneously insist that it can’t happen here. Anyway, thanks much for stopping in and commenting.

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