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seniors from purchasing such insurance.30

major front-line agency in the War on Poverty,

entered the scene with subsidized health care,"

Beito writes. "The next year witnessed the end

States

of fraternal hospitalization in the Delta." At

Medicaid also induces responses by states

the time, the leaders of the Knights and

that increase both the seen and the unseen

Daughters of Tabor wrote: "Since 90% of our

costs of the program. Whatever costs

membership is composed of people who are

Medicaid imposes grow with the program's

classified in the poverty category--they are eli-

size and scope. Program attributes that affect

gible for free care at the Mound Bayou

its scope, then, may be considered contribu-

Community Hospital. Therefore, we are losing

tors to Medicaid's unseen costs.

their membership in the order. This puts the

Any state can at least double its money by

Order in a declining position in membership

increasing its Medicaid contribution and

and financial income." Beito continues: "The

obtaining matching federal funds. Some

rapid inflow of federal money dampened the

states, such as Arkansas, Mississippi, New

community's old habits of medical mutual aid

Mexico, and West Virginia, can triple their

and self-help. According to Dr. Louis Bernard

money. In certain cases, states have even been

of Meharry Medical College, `The dollars avail-

able to use federal funds to supplant com-

able from the so-called antipoverty program

pletely funds that they would have appropri-

ruined the International Order of the Knights

ated themselves.

and Daughters of Tabor.'"27

The federal government's open-ended

commitment to match state Medicaid spend-

Beito focused mainly on the effects of feder-

ing alters a state's incentive to fund Medicaid

al subsidies that created hospitals, not Medicaid

relative to other priorities. States receive an

explicitly. However, Medicaid accounts for a

average of $1.30 from Washington for every

notable share of hospitals' income and was one

dollar they spend. Spending $1 on police buys

of the changes that occurred during this period,

having been enacted in 1965.28

$1 of police protection, but spending $1 on

Medicaid buys $2.30 of health care. This

In addition, Medicaid encourages employers

encourages states to expand Medicaid even

of low-income workers not to offer coverage and

beyond what is necessary to assist the truly

encourages low-income workers not to enroll in

needy. According to the Urban Institute,

private coverage. Researchers at the Robert

about one-fifth of adults and children who are

Wood Johnson Foundation surveyed 22 leading

eligible for Medicaid nonetheless obtain pri-

studies on whether "free" government coverage

vate coverage.31 The fact that some 20 percent

crowds out private coverage and concluded that

such crowd-out "seems inevitable." More than

of those who fall within states' Medicaid eligi-

Medicaid

half of those studies found that expansions of

bility criteria can obtain private coverage sug-

encourages

public coverage were accompanied by reductions

gests that many who are actually enrolled in

in private coverage. Some even found that enroll-

Medicaid would be able to obtain private cov-

employers of

ment growth in public programs was complete-

erage. That strongly suggests that states have

low-income

ly offset by reductions in private coverage.29

expanded Medicaid beyond its original pur-

pose of providing medical assistance to the

Medicaid also discourages private insurance

workers not to

truly needy.

for nursing home and other long-term care

offer coverage

States have also used numerous account-

expenses. Jeffrey Brown of the University of

and encourages

ing schemes to secure federal matching

Illinois at Urbana-Champaign and Amy Finkel-

funds, which are then diverted from their

stein of the National Bureau of Economic

low-income

Medicaid programs toward other items.32 For

Research found that 60 to 75 percent of the ben-

workers not to

efits from private long-term care insurance "are

example, the DSH program was created to

redundant of benefits that Medicaid would oth-

provide additional federal funding to hospi-

enroll in private

erwise have paid." They estimate that Medicaid

tals that treat a large number of uninsured

coverage.

by itself discourages 66 percent to 90 percent of

patients.

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