Medicare and
Medicaid, the two mainstays of government health insurance, turn 50 this month,
having made it possible for most Americans in poverty and old age to get medical
care. While the Affordable Care Act fills the gap for people who don’t qualify
for help from those two programs, there are important improvements still needed
in both Medicare and Medicaid.
At the time the two programs were enacted in July 1965, advocates of Medicare,
which today covers 46 million Americans over the age of 65 and nine million
younger disabled people, expected that it would expand to cover virtually all
Americans. Although polls between 1999 and 2009 showed consistent majorities in
favor of expanding Medicare to people between the ages of 55 and 64 to cover
more of the uninsured, it never happened.
Still, its achievement in improving life expectancy and reducing poverty among
the elderly has been enormous. Before Medicare, almost half of all Americans 65
and older had no health insurance. Today that number is 2 percent. Analysts say
that between 1970 and 2010, Medicare contributed to a five-year increase in life
expectancy at age 65, by providing early access to needed medical care. Even
compared with people under age 65 who have insurance, those on Medicare are less
likely to miss needed care or have unmanageable medical bills.
While Medicare, which covers hospital care, doctors’ services and prescription
drugs, is comprehensive, many people are still left struggling to pay premiums,
cost-sharing for various services and the full cost of items not covered by
Medicare, like dental care and extended stays in nursing homes. Roughly half of
all Medicare recipients live on incomes of less than $24,000 per person, and
while the poorest of them get additional help from Medicaid, many do not.
Medicare still lacks a cap on the amount a beneficiary has to pay out of pocket,
the most basic function of insurance. By contrast, the Affordable Care Act puts
limits on beneficiary spending per year and over a lifetime.
The Affordable Care Act has helped Medicare beneficiaries by eliminating
co-payments and deductibles for preventive care like mammograms and
colonoscopies, and by providing discounts for very heavy users of prescription
drugs. It will strengthen Medicare as a system through demonstration projects to
find new ways to deliver care that will improve its quality and lower its cost.
The challenge will be to identify and spread the most promising innovations so
that they benefit not just Medicare, but the entire health care system.
Medicaid, the other part of the medical safety net, is a joint state-federal
program for the poor. For the past five decades, it has been critical in
reducing childhood deaths and infant mortality. It has saved the lives of
patients with chronic conditions like heart disease, diabetes and asthma. Last
year it covered some 64 million people in a typical month and 80 million people
at some point during the year. If Medicaid did not exist, life expectancy in
America would be much lower.
The problem with Medicaid is that federal rules give states great leeway in
deciding whom the program helps. Many states are so cheap that only extremely
poor parents qualify for Medicaid coverage and childless adults are excluded
entirely. Texas, for example, only covers parents who earn up to 15 percent of
the federal poverty level, or less than $4,000 a year for a family of four, and
does not cover other non-disabled adults at all, while other states, including
New York and California, offer far better coverage. The result is huge
differences across the country for assistance to poor, sick people.
The Affordable Care Act was intended to reduce this disparity by offering
additional federal funding for states to expand their Medicaid programs to cover
all adults up to 138 percent of the federal poverty level, or $32,913 for a
family of four. Yet 21 states, the vast majority run by Republican governors,
have chosen not to expand.
Medicaid could be improved by raising its payments to doctors, who often refuse
to take Medicaid patients because the rates are so low compared to private
insurance and Medicare. Medicaid should also cover legal immigrants, who
currently have to wait five years to be eligible, and illegal immigrants, who
are currently denied coverage entirely.
Despite the perennial fear that the costs of these two programs will grow
uncontrolled, spending in both has been growing at a relatively modest rate in
recent years. Medicare and Medicaid have changed and grown over the decades,
through Republican and Democratic administrations, to meet new challenges. Their
performance and popular support has allowed them to withstand
ideologically-driven attacks on their continuance as government entitlements.
These programs succeed, in fact, because they entitle all eligible Americans to
receive the health care they need.
A sweeping national effort to extend health coverage to
millions of Americans will leave out two-thirds of the poor blacks and single
mothers and more than half of the low-wage workers who do not have insurance,
the very kinds of people that the program was intended to help, according to an
analysis of census data by The New York Times.
Because they live in states largely controlled by Republicans that have declined
to participate in a vast expansion of Medicaid, the medical insurance program
for the poor, they are among the eight million Americans who are impoverished,
uninsured and ineligible for help. The federal government will pay for the
expansion through 2016 and no less than 90 percent of costs in later years.
Those excluded will be stranded without insurance, stuck between people with
slightly higher incomes who will qualify for federal subsidies on the new health
exchanges that went live this week, and those who are poor enough to qualify for
Medicaid in its current form, which has income ceilings as low as $11 a day in
some states.
People shopping for insurance on the health exchanges are already discovering
this bitter twist.
“How can somebody in poverty not be eligible for subsidies?” an unemployed
health care worker in Virginia asked through tears. The woman, who identified
herself only as Robin L. because she does not want potential employers to know
she is down on her luck, thought she had run into a computer problem when she
went online Tuesday and learned she would not qualify.
At 55, she has high blood pressure, and she had been waiting for the law to take
effect so she could get coverage. Before she lost her job and her house and had
to move in with her brother in Virginia, she lived in Maryland, a state that is
expanding Medicaid. “Would I go back there?” she asked. “It might involve me
living in my car. I don’t know. I might consider it.”
The 26 states that have rejected the Medicaid expansion are home to about half
of the country’s population, but about 68 percent of poor, uninsured blacks and
single mothers. About 60 percent of the country’s uninsured working poor are in
those states. Among those excluded are about 435,000 cashiers, 341,000 cooks and
253,000 nurses’ aides.
“The irony is that these states that are rejecting Medicaid expansion — many of
them Southern — are the very places where the concentration of poverty and lack
of health insurance are the most acute,” said Dr. H. Jack Geiger, a founder of
the community health center model. “It is their populations that have the
highest burden of illness and costs to the entire health care system.”
The disproportionate impact on poor blacks introduces the prickly issue of race
into the already politically charged atmosphere around the health care law. Race
was rarely, if ever, mentioned in the state-level debates about the Medicaid
expansion. But the issue courses just below the surface, civil rights leaders
say, pointing to the pattern of exclusion.
Every state in the Deep South, with the exception of Arkansas, has rejected the
expansion. Opponents of the expansion say they are against it on exclusively
economic grounds, and that the demographics of the South — with its large share
of poor blacks — make it easy to say race is an issue when it is not.
In Mississippi, Republican leaders note that a large share of people in the
state are on Medicaid already, and that, with an expansion, about a third of the
state would have been insured through the program. Even supporters of the health
law say that eventually covering 10 percent of that cost would have been onerous
for a predominantly rural state with a modest tax base.
“Any additional cost in Medicaid is going to be too much,” said State Senator
Chris McDaniel, a Republican, who opposes expansion.
The law was written to require all Americans to have health coverage. For lower
and middle-income earners, there are subsidies on the new health exchanges to
help them afford insurance. An expanded Medicaid program was intended to cover
the poorest. In all, about 30 million uninsured Americans were to have become
eligible for financial help.
But the Supreme Court’s ruling on the health care law last year, while upholding
it, allowed states to choose whether to expand Medicaid. Those that opted not to
leave about eight million uninsured people who live in poverty ($19,530 for a
family of three) without any assistance at all.
Poor people excluded from the Medicaid expansion will not be subject to fines
for lacking coverage. In all, about 14 million eligible Americans are uninsured
and living in poverty, the Times analysis found.
The federal government provided the tally of how many states were not expanding
Medicaid for the first time on Tuesday. It included states like New Hampshire,
Ohio, Pennsylvania and Tennessee that might still decide to expand Medicaid
before coverage takes effect in January. If those states go forward, the number
would change, but the trends that emerged in the analysis would be similar.
Mississippi has the largest percentage of poor and uninsured people in the
country — 13 percent. Willie Charles Carter, an unemployed 53-year-old whose
most recent job was as a maintenance worker at a public school, has had problems
with his leg since surgery last year.
His income is below Mississippi’s ceiling for Medicaid — which is about $3,000 a
year — but he has no dependent children, so he does not qualify. And his income
is too low to make him eligible for subsidies on the federal health exchange.
“You got to be almost dead before you can get Medicaid in Mississippi,” he said.
He does not know what he will do when the clinic where he goes for medical care,
the Good Samaritan Health Center in Greenville, closes next month because of
lack of funding.
“I’m scared all the time,” he said. “I just walk around here with faith in God
to take care of me.”
The states that did not expand Medicaid have less generous safety nets: For
adults with children, the median income limit for Medicaid is just under half of
the federal poverty level — or about $5,600 a year for an individual — while in
states that are expanding, it is above the poverty line, or about $12,200,
according to the Kaiser Family Foundation. There is little or no coverage of
childless adults in the states not expanding, Kaiser said.
The New York Times analysis excluded immigrants in the country illegally and
those foreign-born residents who would not be eligible for benefits under
Medicaid expansion. It included people who are uninsured even though they
qualify for Medicaid in its current form.
Blacks are disproportionately affected, largely because more of them are poor
and living in Southern states. In all, 6 out of 10 blacks live in the states not
expanding Medicaid. In Mississippi, 56 percent of all poor and uninsured adults
are black, though they account for just 38 percent of the population.
Dr. Aaron Shirley, a physician who has worked for better health care for blacks
in Mississippi, said that the history of segregation and violence against blacks
still informs the way people see one another, particularly in the South, making
some whites reluctant to support programs that they believe benefit blacks.
That is compounded by the country’s rapidly changing demographics, Dr. Geiger
said, in which minorities will eventually become a majority, a pattern that has
produced a profound cultural unease, particularly when it has collided with
economic insecurity.
Dr. Shirley said: “If you look at the history of Mississippi, politicians have
used race to oppose minimum wage, Head Start, all these social programs. It’s a
tactic that appeals to people who would rather suffer themselves than see a
black person benefit.”
Opponents of the expansion bristled at the suggestion that race had anything to
do with their position. State Senator Giles Ward of Mississippi, a Republican,
called the idea that race was a factor “preposterous,” and said that with the
demographics of the South — large shares of poor people and, in particular, poor
blacks — “you can argue pretty much any way you want.”
The decision not to expand Medicaid will also hit the working poor. Claretha
Briscoe earns just under $11,000 a year making fried chicken and other fast food
at a convenience store in Hollandale, Miss., too much to qualify for Medicaid
but not enough to get subsidies on the new health exchange. She had a heart
attack in 2002 that a local hospital treated as part of its charity care
program.
“I skip months on my blood pressure pills,” said Ms. Briscoe, 48, who visited
the Good Samaritan Health Center last week because she was having chest pains.
“I buy them when I can afford them.”
About half of poor and uninsured Hispanics live in states that are expanding
Medicaid. But Texas, which has a large Hispanic population, rejected the
expansion. Gladys Arbila, a housekeeper in Houston who earns $17,000 a year and
supports two children, is under the poverty line and therefore not eligible for
new subsidies. But she makes too much to qualify for Medicaid under the state’s
rules. She recently spent 36 hours waiting in the emergency room for a searing
pain in her back.
“We came to this country, and we are legal and we work really hard,” said Ms.
Arbila, 45, who immigrated to the United States 12 years ago, and whose son is a
soldier in Afghanistan. “Why we don’t have the same opportunities as the
others?”
WASHINGTON
— In a major surprise on the politically charged new health care law, the Obama
administration said Friday that it would not define a single uniform set of
“essential health benefits” that must be provided by insurers for tens of
millions of Americans. Instead, it will allow each state to specify the benefits
within broad categories.
The move would allow significant variations in benefits from state to state,
much like the current differences in state Medicaid programs and the Children’s
Health Insurance Program.
By giving states the discretion to specify essential benefits, the Obama
administration sought to deflect one of the most powerful arguments made by
Republican critics of President Obama’s health care overhaul — that it was
imposing a rigid, bureaucrat-controlled health system on Americans and
threatening the quality of care. Opponents say that the federal government is
forcing a one-size-fits-all standard for health insurance and usurping state
authority to regulate the industry.
This criticism has inspired legal challenges to the new law — with the Supreme
Court set to decide next year whether the government can require Americans to
buy health insurance — and helps explain why public opinion of the law remains
deeply divided.
The law is looming as a central issue in the 2012 presidential race, with
Republican presidential candidates being evaluated on the strength of their
opposition to it. The announcement by the administration follows its decision
this year to jettison a program created in the law to provide long-term care
insurance, a move that disappointed liberal backers of the program championed by
the late Senator Edward M. Kennedy.
The action Friday prompted questions among supporters of the new health care
law. Prof. Timothy S. Jost, an expert on health law at Washington and Lee
University, said, “The new bulletin perpetuates uncertainty about what benefits
an insurer will be required to cover under the Affordable Care Act.” From the
consumer’s point of view, Professor Jost added, “I wish the Department of Health
and Human Services had signaled that there would be more uniformity and less
flexibility.”
Chris Jacobs, a health policy analyst for Senate Republicans, said the new
policy “gives states the flexibility to impose more benefit mandates, not
fewer,” and would lead to higher insurance premiums, contrary to what Mr. Obama
promised in the 2008 campaign.
The new law lists 10 categories of “essential health benefits” that must be
provided by insurance offered in the individual and small-group markets,
starting in January 2014. These include preventive care, emergency services,
maternity care, hospital and doctors’ services, and prescription drugs.
Kathleen Sebelius, the secretary of health and human services, had been expected
to provide details of what services and benefits must be provided in each
category. Instead, in an insurance bulletin issued Friday, Ms. Sebelius said the
federal government would respect the states’ role, giving them “the flexibility
to design coverage options that meet their unique needs.”
Under this approach, each state would designate an existing health insurance
plan as a benchmark. The benefits provided by that plan would be deemed
essential, and all insurers would have to provide benefits of the same or
greater value. Plans could modify coverage within a benefit category so long as
they did not reduce the value of coverage.
Each state would choose one of the following health insurance plans as a
benchmark:
¶ One of the three largest small-group plans in the state.
¶ One of the three largest health plans for state employees.
¶ One of the three largest national health insurance options for federal
employees.
¶ The largest health maintenance organization operating in the state’s
commercial insurance market.
While working on health care legislation in 2009 and 2010, Congress spent many
hours debating how to balance the goals of comprehensive benefits and affordable
coverage.
Sherry A. Glied, an assistant secretary of health and human services, said the
administration’s approach “builds off the experience of today’s marketplace and
will minimize disruption to it.”
Steven B. Larsen, deputy administrator of the federal Centers for Medicare and
Medicaid Services, said, “The state is always in control of what the essential
benefits package is in that state.”
In recent months, federal health officials have taken a number of steps that
could help inoculate Mr. Obama against charges that he was foisting a rigid,
inflexible model of health care on the nation.
Several states have received temporary waivers from tough new federal standards
that require insurers to spend more of each premium dollar for the benefit of
consumers. Federal officials have also provided temporary exemptions from some
provisions of the law for some employers and labor unions offering bare-bones
coverage.
The new law says that the scope of essential health benefits must be “equal to
the scope of benefits provided under a typical employer plan.” But the law
itself specifically requires some benefits not widely available in
employer-sponsored health plans, like “habilitative services” for people with
conditions like autism or cerebral palsy.
Under the new law, each state is supposed to have an insurance exchange or
marketplace where consumers can compare options and buy insurance. Health plans
must offer the essential benefits, regardless of whether the coverage is sold
inside or outside the exchange.
The government will offer subsidies to help low-income people buy insurance
through exchanges. The subsidies will help cover the cost of essential benefits.
States can require insurers to provide additional benefits, but states will have
to pay much of the extra cost.
The law also says that the definition of essential benefits must not
“discriminate against individuals because of their age, disability or expected
length of life.”
Sara
Rosenbaum, a professor of health law and policy
at George
Washington University,
said the new
bulletin “does not offer any guidance
WASHINGTON — President Obama’s budget director said Monday that the president’s
new deficit-reduction plan would impose “a lot of pain,” and that is clearly
true of White House proposals to cut $320 billion from projected spending on
Medicare and Medicaid in the coming decade.
Mr. Obama proposed higher premiums and deductibles for many Medicare
beneficiaries and lower Medicare payments to teaching hospitals and rural
hospitals. He would start charging co-payments to frail homebound older people
who receive home health services. And he would reduce the growth of federal
payments to states for treating low-income people under Medicaid.
The White House said Mr. Obama’s proposals would cut $248 billion from the
projected growth of Medicare in the next 10 years, while shaving $72 billion
from Medicaid and other health programs. A large share of the Medicare savings
would, in effect, be used to pay doctors, who would otherwise face deep cuts in
the fees they receive for treating Medicare patients.
The proposals are part of a package to reduce deficits by more than $3 trillion
over 10 years, beyond the $1 trillion in savings already assumed under the debt
limit law that Mr. Obama signed in early August. The package includes tax
changes intended to raise $1.5 trillion in revenue over 10 years.
Mr. Obama would also allow the Postal Service to cut its losses by ending
Saturday mail delivery. He would reduce farm subsidies by $31 billion over 10
years, require federal employees to contribute more to their pension plans,
force military retirees to pay more for prescription drugs and charge higher
fees to air travelers for “aviation security.”
Jacob J. Lew, director of the White House Office of Management and Budget,
rejected suggestions that the White House was going after rich people.
“If you look at the details of what’s in the plan that the president is sending
to the Congress,” Mr. Lew said, “there is a lot of pain, and it’s spread — it’s
spread broadly and we think fairly.”
Medicare and Medicaid insure more than 100 million people and account for nearly
one-fourth of all federal spending. The proposed savings, which provoked
predictable protests from health care providers, represent less than 3 percent
of what the government expects to spend on the programs in the next 10 years.
Speaking in the Rose Garden on Monday, Mr. Obama said his plan — in the form of
recommendations to a bipartisan Congressional committee on deficit reduction —
“includes structural reforms to reduce the cost of health care in programs like
Medicare and Medicaid.”
The proposal would require new beneficiaries to pay higher deductibles before
Medicare coverage of doctors’ services and other outpatient care kicks in. The
deductible, now $162 a year, is already adjusted for inflation. Mr. Obama would
increase it further by $25 in 2017, 2019 and 2021.
In addition, the White House would increase Medicare premiums by about 30
percent for new beneficiaries who buy generous private insurance to help fill
gaps in Medicare.
Many beneficiaries choose these private Medigap policies because they want the
financial security they get from the extra insurance. But the White House said
this protection “gives individuals less incentive to consider the costs of
health care and thus raises Medicare costs.”
Mr. Obama would raise $20 billion over 10 years by charging higher premiums to
higher-income beneficiaries and by freezing the income thresholds so more people
would have to pay the surcharges.
About 5 percent of the 48 million Medicare beneficiaries now pay the higher
premiums. The proportion would eventually rise to 25 percent under the proposal.
Starting in 2017, Mr. Obama would require certain new beneficiaries to pay
co-payments for home health care, which is now exempt from such charges. The
co-payment would be $100 per episode, defined as a series of five or more home
health visits not preceded by a stay in a hospital or a skilled nursing home.
Howard J. Bedlin, vice president of the National Council on Aging, a service and
advocacy group, said such co-payments would “significantly increase
out-of-pocket costs for many low-income widows with multiple chronic
conditions.” Likewise, Mr. Bedlin said, “The Medigap proposal would shift costs
onto Medicare beneficiaries.”
Mr. Obama also proposed these changes:
¶ Require drug companies to provide additional discounts, or rebates, to
Medicare for prescription drugs bought by low-income beneficiaries. This
proposal, opposed by drug makers, would save the government $135 billion over 10
years.
¶ Squeeze $42 billion over 10 years from Medicare payments to nursing homes,
home health agencies and rehabilitation hospitals. Cut Medicare payments to
nursing homes with large numbers of patients hospitalized because they did not
receive appropriate care in the nursing home.
¶ Require doctors to get approval from Medicare for the most expensive imaging
services.
¶ Revise the formula for calculating Medicaid payments to states, saving $15
billion over 10 years. Restrict states’ ability to finance their share of costs
by imposing taxes on care providers.
¶ Cut $3.5 billion over 10 years from a prevention and public health fund
created by the new health care law.
Another White House proposal would save $20 billion over 10 years by reducing
Medicare payments to hospitals and other providers for bad debts that result
when beneficiaries fail to pay deductibles and co-payments.
Medicaid is under assault these days from nearly every direction. Governors
complain that they cannot afford to put up their share of the money.
Congressional Republicans led by Paul Ryan want to reduce the federal
contribution by $771 billion over the next decade and shift more costs to the
states and low-income Americans. President Obama has expressed willingness to
cut Washington’s contribution by $100 billion over that period to help reduce
the deficit.
Meanwhile, conservative critics of Medicaid — and of health care reform’s
requirement to expand it — have made the outlandish claim that it provides such
poor care that enrollees would be better off having no coverage.
They cite a few studies that seemed to show that, in some cases, patients on
Medicaid had worse outcomes than those without any insurance. They claim this is
because Medicaid pays so poorly that many doctors refuse to treat the patients,
who are then unable to get care or go to the least-skilled doctors.
Those claims have now been refuted by a new study of Oregon’s program, conducted
under the leadership of Katherine Baicker, a Harvard health economics professor
who was an adviser to President George W. Bush, and Amy Finkelstein, an
economics professor at M.I.T. It found that Medicaid patients reported both
better health and more financial stability than uninsured poor people.
The research was made possible by unusual circumstances in Oregon, where
officials had only enough money to expand Medicaid enrollments by about 10,000
people in 2008. They used a lottery to decide who got coverage among the almost
90,000 people who applied. That made it possible to conduct a “gold standard”
clinical trial in which two randomly selected groups with the same demographic
characteristics could be compared — those who won the lottery and those who did
not. None of the studies cited by the critics had randomly selected control
groups.
The Oregon study provides striking results for its first year. The group that
gained Medicaid coverage was significantly more likely to have received care
from a hospital or a doctor, or to use prescription drugs, belying the notion
that enrollees could not find providers. The insured group was far more likely
to get preventive care, like mammograms, and to have a regular doctor.
Those people were also more likely to report being in better physical and mental
health. And they were better off financially: less likely to pay out of pocket,
have unpaid medical bills sent to collection agencies, or need to borrow money
or ignore other bills to pay for medical care.
The critics rightly point out that just because the Medicaid enrollees reported
that their health was better does not mean that it actually was better. In the
second year, researchers are measuring actual blood pressure, cholesterol
levels, blood sugar and other physical data.
The study estimated that the additional care the new enrollees got drove up
spending (from all sources) on the average individual by about $775, roughly 25
percent, above the $3,200 average for the uninsured control group.
Any politicians eager to find savings by denying poor people access to Medicaid
should recognize that they will be harming the health and financial well-being
of highly vulnerable Americans. Expanding Medicaid will increase spending in the
short run. But the nation will benefit from a healthier, more productive
population that, in the long run, may have less need for costly medical
services.
