Tag: medicaid

ObamaCare’s Latest ‘Glitch’: Medicaid for Millions of Middle-Class Retirees

Remember how ObamaCare inadvertently kicked members of Congress out of their health insurance plans?  (Just kidding!  The Obama administration ignored that part of the law!)

Well, today we learned that ObamaCare also inadvertently gives free health care to millions of middle-class Social Security recipients:

President Barack Obama’s health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.

The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.

Up to 3 million people could qualify for Medicaid in 2014 as a result of the anomaly. That’s because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility.

Medicare chief actuary Richard Foster says the situation keeps him up at night.

“I don’t generally comment on the pros or cons of policy, but that just doesn’t make sense,” Foster said during a question-and-answer session at a recent professional society meeting. It’s almost like allowing middle-class people to qualify for food stamps, he suggested.

What other surprises lurk in ObamaCare’s 2,000-plus pages?

Kudos to Rick Foster and the Associated Press’s Ricardo Alonzo-Zaldivar.

NEJM Study: ObamaCare’s Main Coverage Vehicle Makes Kids Wait for Care

The New York Times reports on a study published in today’s New England Journal of Medicine:

Children with Medicaid are far more likely than those with private insurance to be turned away by medical specialists or be made to wait more than a month for an appointment, even for serious medical problems, a new study finds…

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…

In 89 clinics that accepted both kinds of patients, the waiting time for callers who said they had Medicaid was an average of 22 days longer.

“It’s very disturbing,” [study author] Dr. [Karen V.] Rhodes said. “As a mother, if I had a kid who was having seizures or newly diagnosed juvenile diabetes, I would want to get them in right away.”…

Another physician not connected with the study…said: “It’s interesting to think you even need a study to prove that. It’s pretty much common knowledge.”…

This month, Dr. Rhodes and her colleagues had a similar study published in the journal Pediatrics, finding that dentists were far less likely to accept children with public insurance than those with private coverage, even for an urgent problem like a broken front tooth. Another study of hers uncovered patients’ difficulties in obtaining psychiatric care.

Here’s a graph from the study, showing how often kids with private insurance and Medicaid got appointments with various specialists:

Half of ObamaCare’s projected coverage gains (16 million out of 32 million U.S. residents) comes from expanding the Medicaid program.

From This Morning’s Health Care News

Indiana learns just how much flexibility states have when administering federal health care programs.

A Medicare pilot program bearing a striking resemblance to ObamaCare’s “accountable care organization” program turns out to be a flop.

Newsflash: Medicare’s Soviet-style price controls get the prices wrong.

Obama Admin. Repeats Discredited Cost-Shifting Claim in Federal Court

Defending ObamaCare in federal court yesterday, the Obama administration’s acting solicitor general, Neal K. Katyal, peddled the widely discredited claim that the uninsured increase your and my health insurance premiums by $1,000:

“When people self-finance their health care,” Katyal contended, “that raises the cost of health care overall by $43 billion a year, and that raises the average family’s premiums by $1,000 a year. That will price untold numbers of people out of the market.”

That estimate comes from two left-wing groups, Families USA and the Center for American Progress Action Fund.

When President Obama himself made this claim, FactCheck.org reported:

[Obama] said ”the average family pays a thousand dollars in extra premiums to pay for people going to the emergency room who don’t have health insurance.” That’s from a recent report by Families USA, a group that lobbies for expanded government coverage. But another study for the authoritative Kaiser Family Foundation thinks that figure is far too high.

Serendipitously, the same day that Kaytal was repeating this discredited claim in federal court, USA Today reported:

Jack Hadley, senior health services researcher at George Mason University in Fairfax, Va…has found that privately insured individuals don’t end up paying higher premiums to make up for the uninsured because hospitals that serve lower-income families don’t have a lot of patients with insurance. He said the government pays about 75% of those unpaid hospital bills either by direct payment or through a disproportionate payment of Medicaid. (emphasis added)

How Not to Criticize Medicare Vouchers

Over at The Incidental Economist, Austin Frakt challenges a couple of claims I made on NPR about Medicare reform.  (Here’s how NPR reported my comments in print.)

My claims are pretty simple.

  1. If Medicare subsidizes enrollees by giving them a fixed amount of money, much like Social Security does, they would be more cost-conscious than they are under the current open-ended subsidy, because enrollees who avoid wasteful spending would themselves get to keep the savings.  Put more plainly, people spend their own money more carefully than they spend other people’s money.
  2. Health insurers and health care providers would compete to serve these cost-conscious Medicare enrollees on the basis of both cost and quality.  Prices would fall while quality improves.

I’m not really sure to what extent all this would occur under the Medicare reforms the House passed a couple of weeks ago, because we don’t yet know to what extent each enrollee’s subsidy would resemble a fixed amount of money.

Here’s what Frakt does with my claims:

[A]s I heard these words I wondered if we had any evidence on hand about the relationship between lower premium subsidies and health care cost inflation. Indeed we do! Premiums in the commercial market are subsidized by the government at a lower rate than those in Medicare. [Emphasis added.]

He then throws up the chart, shown below the jump, showing that for common benefits, the rate of growth in per-enrollee spending is “pretty similar” in Medicare and private insurance.  He concludes: “With data like this, I think we need to reexamine some of our theories about what lower premium subsidies can do.”

Oy, where to begin?

First, Frakt does not actually challenge my claim.  My claim is that voucher-like Medicare reforms will lead to reductions in the per-unit cost of producing certain goods and services, and therefore to lower prices. Frakt responds with data on health care spending.  When someone predicts that P will fall, introducing into evidence what has historically happened to P x Q is no kind of rebuttal. The confusion Frakt sows is rooted in the fact that both prices and spending can be accurately described as costs.  Such confusion could be avoided were everyone to honor Cannon’s First Rule of Economic Literacy: Never say costs when you mean spending.

Second, though the tax preference for employer-sponsored health insurance distorts relative prices the same way an open-ended subsidy does, it is not a subsidy.  This isn’t really relevant to the matter at hand, but it’s worth emphasizing to avoid such silliness as this.

Third, it would be great if there existed one chart that would settle once and for all whether Medicare or a free market does a better job of containing costs.  Alas, this is not that chart.  Frakt uses it to make a less-ambitious point about the effects of larger versus smaller policy-induced price distortions, but its shortcomings nevertheless confound that comparison, too.  In addition to measuring increases in spending (whose effect on social welfare is ambiguous) rather than increases in cost (which are always bad), this chart handicaps private insurance by leaving off three or four years of explosive growth in per-enrollee Medicare spending (1966-1969).  Worse, it reeks of endogeneity problems.  Amy Finkelstein finds evidence that Medicare itself increases spending among those with private insurance (mostly by increasing hospital capacity), and that this effect has grown over time.   Moreover, as Medicare spending rises, so do average marginal tax rates, which increases the price distortion created by the tax exclusion, which increases spending on private insurance.  For all the play it gets on the Left, this chart serves no useful purpose that I can discern.  Economists should be embarrassed to use it.  If it were a farm animal, and social scientists farmers, they would have to take it behind the barn and put a bullet in its head.

Fourth, we are not yet at the point where we need to reexamine the theory that demand curves slope downward.  There is ample evidence to show that Medicare enrollees will respond to voucher-like reforms by choosing more economical health plans, and that health plans and providers will respond with greater efficiency.  Thomas Buchmueller reports:

Two notable experiments…took place in the mid-1990s: the University of California (UC) and Harvard University both offered a menu of plans that varied in generosity, but adopted a “fixed dollar contribution” policy. The plans also varied significantly in cost, so employees had a greater incentive to consider price when selecting a health plan…

In both cases, employees were quite sensitive to price, and were willing to switch plans to save as little as $5 per month in out-of-pocket premiums…In addition to this demand response, participating insurers lowered their premiums in order to compete for enrollment.

Fifth, there is plenty of evidence that prices can and do fall in health care – from research on the markets for laser-eye and cosmetic surgery, to the work of Clay Christensen and his colleagues, to the research of David Cutler and Mark McClellan.  (If spending increases while prices are falling, it is because changes in Q dominate changes in P – which could be due to all these open-ended government subsidies and other price distortions.)

Finally, as a response to the general theme of that NPR story: we’re a long, long way from the point where we have to worry that reductions in the growth of Medicare spending are going harm enrollees’ health.  Relying on data from the Dartmouth Atlas, President Obama’s Council of Economic Advisers reminds us that “nearly 30 percent of Medicare’s costs [spending!] could be saved without adverse health consequences.”  And there is plenty of evidence, from the RAND Health Insurance Experiment and elsewhere, that plans with greater cost-sharing or care management reduce utilization without harming patients’ health.

I cannot fathom what has opponents of Medicare vouchers so spooked.  It cannot be the effects that vouchers would have on Medicare enrollees and taxpayers.

Tuesday Links

  • “Given America’s large-scale, long-term nation-building mission in Afghanistan, another chapter remains unfinished.”
  • It doesn’t make a lot of sense to refer to a government whose intelligence service assists military efforts by al Qaeda and the Taliban against U.S. troops in Afghanistan as an ‘ally.’”
  • “Terrorists are not superhuman.”
  • “Physicians must either make up for this shortfall by shifting costs to those patients with insurance — meaning those of us with insurance pay more — or treat patients at a loss.”
  • Is America in a libertarian moment?


Monday Links

  • “Sadly, in Egypt’s case, a freely elected civilian government may prove powerless in the face of the deeply entrenched and well-organized military.”
  • “Washington politicians from both parties, and bureaucrats, have for decades successfully decreased our freedom and liberties as they have regulated more and more of our lives, including our retirement.”
  • “The Ryan proposal correctly focuses on achieving debt reduction through spending cuts, but this very gradual debt reduction schedule is a weakness that could lead to its downfall.”
  • “Nearly two years ago Sen. McCain, along with Senators Graham and Lieberman, was supping with Qaddafi in Tripoli, discussing the possibility of Washington providing military aid.”
  • Cato media fellow Radley Balko joined FOX Business Network’s Stossel recently to discuss your right to make video recordings of police, and why exercising that right frequently is vital to liberty: