Medicaid as if the people in the system mattered

post by Bill Gardner

Tyler Cowen wrote about the future of Medicaid in last Sunday's New York Times.¹ He pointed out several problems -- albeit some are arguable -- with Medicaid. He warned that Medicaid is likely to be heading for trouble because

as the Medicaid expansion [built into the Affordable Care Act] receives more publicity, voters may realize that they want to spend less money on it.

Liberals should look past Cowen's attempts to bait them.² There is a vital message here.

The progressive elements of the Affordable Care Act can be undone by legislation or regulations interpreting that legislation.

The left has comforted itself with the idea that once the legislation is in place, the ACA will become more popular, like Social Security and Medicare did. Time is supposedly on our side.

But it is not. I am confident that many elements of the ACA will become popular when they are in place, such as the prohibition on insurance companies considering pre-existing conditions in issuing policies. However, Medicaid is fundamentally redistributive: it is a program for low income children, low income people in long term care, and people with disabilities, all of whom are unable to finance their own care. These funds come from taxes on more affluent people. There are significant groups in the US that, for reasons that seem good by their lights, do not want to pay for the care of the indigent. They have defeated many previous attempts to achieve a more egalitarian health insurance system, and they are not leaving the field after one defeat. Cowen's piece games out several paths future health care conflicts might take. Liberals need to think this way.

Time is not on our side because the continuing increase in the elderly population, the continuing increase in per-capital health spending, and the increasing fiscal problems of US states will make the redistributive components of the ACA harder and harder to finance. Therefore, we have to make the health care system more popular by making it better, rather than just waiting for the rest of American to see the light. We must urgently solve the problem of health care growth, and we have to improve every aspect of service delivery in Medicaid and elsewhere.

Nevertheless, I come not to praise Tyler Cowen, but to bury him. He discusses future changes in Medicaid without considering the outcomes for the population it cares for. He supports mandated insurance for catastrophic care. If so, which persons and what services, if any, will no longer be covered? If some of the population currently covered will be excluded, does he anticipate that they will receive care financed through some other mechanism? If another financing scheme will cover them, will any money actually be saved? And if no other scheme comes into place...?

In addition, Cowen expects that

The greater likelihood is that, over time, American voters will rebel against Medicaid and dismantle the subsidies that keep the states locked in, and will prefer instead to spend the money on other programs.

This frames the moral structure of the decision to pay for Medicaid like a consumer choice: do I want Medicaid, or other programs like roads, or education? Those are the (seemingly) benign choices. Shouldn't we also consider some of the others things states want to do with their finances, such as reduce taxes altogether? Many states have looming responsibilities for the pensions and health care of retired public sector workers. Should Medicaid be reduced to finance benefits for those more affluent persons? Finally, the Medicaid resistors are cast as rebels against the Federal jailer. However, when voters make this choice, they are usually not consumers making choices for themselves. Relatively few Medicaid families vote, and many patients cannot vote because they are infants in NICUs, demented persons in long term care, or persons with cognitive handicaps in residential care.

Cowen may have views on the likely outcomes of these political struggles for the people served by Medicaid. He may believe -- and I am open to persuasion -- that this population will be better off under his catastrophic care scheme. But let's discuss Medicaid as if the people in the system mattered.

¹If Cowen's views interest you, see the exchange between Aaron Carroll and Cowen here, here, and here.

²Cowen is an equal-opportunity flame-baiter. Marginal Revolution has lots of posts profaning the sacred cows of libertarians and conservatives.