John Goodman on Medicaid Outcomes

by Avik Roy

Source: Forbes

I've been mentioning John Goodman's name a lot recently, but he's deserved it. Today, he's published an excellent piece for Kaiser Health News, entitled "Is Medicaid Real Insurance?" that goes through many of the reasons why Obamacare's Medicaid expansion will lead to poorer-quality care for lower-income families. An excerpt:

That raises an important question: How good is Medicaid? Will the people who enroll in it or in private plans that function like Medicaid get more care, or better care, than they would have gotten without health reform? The answer to that question is not obvious. In fact it's probably fair to say that we are about to spend close to $1 trillion over the next 10 years insuring the uninsured and we really don't know what we expect to accomplish by spending all that money.

Here's a stab at an answer. The 32 million newly insured may not get more health care. They may even get less care – because of difficulties getting a doctor. And even if they do get more, odds are that low-income families as a group will get less care than if there had never been a health reform law in the first place.

Health insurance is not health care. Let's say I designed a system of universal coverage in which the government gave every American health insurance. There is only one catch: the insurance plan reimburses doctors and hospitals one-tenth of their costs in caring for the insured. Doctors who participated in the program would be forced to eat the remaining 90 percent.

Would you take me seriously, as a proponent of universal coverage? I would hope not. Because very few, if any, doctors would agree to treat patients covered under such a plan. Indeed, such a plan, by crowding out the private insurance market, and also the ability of individuals to directly pay doctors for their services, would reduce access to care.

On average, Medicaid pays less than 60 percent of the costs of the care of its beneficiaries. In some places, it's much, much lower. And it's only getting worse with time.

Austin Frakt wasted no time reacting to John's piece, with the same arguments that I've debunked in the past: citing observational studies using inadequate databases that don't actually support the argument he makes (i.e., that expanding Medicaid to higher-income populations will improve health outcomes).

Goodman asks Austin a more fundamental question: "Who is going to provide that extra care" that Obamacare attempts to mandate and subsidize?

Austin Frakt responds with what has now become a familiar refrain at his blog: He dismisses studies showing that Medicaid enrollees do worse than the uninsured, touts studies that show the reverse and claims that new Medicaid enrollees are going to get more care than otherwise.

My problem with Austin is the same problem I have with virtually all the defenders of health reform. It has nothing to do with the studies. It is a matter of logic. Namely: what is true for the part is not true for the whole.

Defenders of the new law invariably ignore the supply side of the market. They assume that if you insure the uninsured or give people more generous coverage that they will all get more health care without ever asking: who is going to provide that extra care?

If you assume that primary care resources are already fully utilized (and in urban areas the evidence for that is overwhelming) then one group can get more primary care only if some other group gets less. The absolute worst feature of Obama Care (and it truly is inexplicable) is that close to 310 million Americans are going to get more primary care coverage than they had before. Not just welfare mothers, but Bill Gates, Bill Gates' father, Warren Buffett — everyone in the whole country is going to have access to a long list of preventive care services with no deductible or copayment. If they respond to their new incentives, they will all try to get more care than they were getting before. But since more care will not be forthcoming, the waiting times will grow at every emergency room and in every primary care doctor's office — just as they have in Massachusetts.

Everyone who pays below market is going to be pushed to the rear of the waiting lines. This includes the elderly and disabled on Medicare, the poor and near poor on Medicaid and the newly insured in subsidized private plans that pay little better than what Medicaid pays. In other words, all the vulnerable populations are going to have worse access than before.

Moreover, as doctors leave the system in droves to provide concierge services to everyone who has money and doesn't want to wait for care, access for everyone left behind will get even worse.

So I ask again: what are we going to get in return for almost $1 trillion in taxpayer dollars that we are about to spend insuring the uninsured?

The answer: massive, insoluble budget deficits, and worse health outcomes for the poor and elderly.

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