Medicaid is Not the Culprit

Dr. Siegel’s November 29 column “Don’t Take the ‘Medi’ out of Medicaid” appropriately identifies a financial challenge that is not merely a Medicaid problem but a reflection of the realities of our economic times and a broken healthcare system that has yet to adequately address the issue of cost.

With 1 in 6 U.S. families now living at or near poverty, we have seen considerable growth in Medicaid enrollment since the recent recession. According to a 2010 Urban Institute analysis, Medicaid has been more cost-efficient than private insurance based on spending per enrollee but is growing because of genuine need. States are responding to their fiscal challenges by cutting Medicaid and other expenses. Like Dr. Siegel, we too are concerned about providers denying or limiting access to Medicaid patients because of reduced payments, but that begs the question of what is adequate payment.

According to the Organization for Economic Cooperation and Development (OECD), among industrialized nations, U.S. health spending ($7,960 per person) is more than 50 percent higher than in the next costliest nation, Norway ($5,352), and more than double Britain’s ($3,874) and France’s ($3,978) and the OECD member average ($3,233). This cost difference in America does not equate with appreciably better outcomes and we do far worse on many health indicators such as our 34th place ranking on infant mortality.

We spend more despite other nations having more doctors per capita and nearly double the average number of doctor consultations annually. And yet, a recent Commonwealth Fund study concluded that more than 40 percent of Americans went without care in 2009 because of cost. Our steep costs continue to rise and high-cost procedures such as knee replacement, appendectomy and angioplasty are undertaken far more often at significantly higher costs than in other industrialized nations. As Dartmouth studies have indicated, costs for the same procedures can differ widely at hospitals within 60 miles of one another in the same states. Our health care system needs basic reforms to eliminate such unjustifiable discrepancies and achieve more genuine balance between cost and value.

Dr. Siegel notes that a 2009 study suggested that as much as a third of annual health expenditures are wasteful. He fails to acknowledge, however, that the Affordable Care Act (ACA) is the first comprehensive legislation to foster the kind of scrutiny and innovation that attempts to seriously address the waste, medical error, avoidable care, lack of care coordination, fraud and abuse and dubious care quality he describes. But these efforts are only a part of the answer and will take time to take root in a health care system that has long been too costly, fragmented and overspecialized. We have rewarded more, often unnecessary, care under in our fee-for-service payment system but have done too little to rein in costs.

Dr. Siegel’s inaccurate portrayal of Medicaid coverage of wheelchairs as excessive hits particularly close to home. I live with a spinal cord injury. My injury requires me to use a power wheelchair to maintain a productive and independent life. Medicare is the primary source of government support of wheelchair purchases and most state Medicaid programs, only after ensuring that stringent medical qualifications are met, will pay only the difference in what Medicare does not cover. After lengthy scrutiny, coverage for a medically-necessary wheelchair may be approved but it is not soon replaced as Dr. Siegel suggests. Instead, each wheelchair experiences several years of use, with approval of the costs of maintenance and necessary repairs often requiring long waiting periods. Medicaid’s typical “useful life” requirement for this durable medical equipment is 5-7 years, during which, significant changes in the medical condition of the patient that may require wheelchair upgrading are typically ignored until the minimum 5-year “useful life” is achieved.

Dr. Siegel highlights the Affordable Care Act’s expansion of Medicaid coverage to millions of new recipients – Americans who live at the fringes of poverty and cannot afford insurance otherwise – as merely exacerbating the problem. These are people whose health care costs are now being cross-subsidized by all those with insurance through premiums that have annually risen for small businesses at average double digit percentages, well beyond inflationary growth. The reality is absent coverage, these costs get shifted to those who can pay. Dr. Siegel rightly suggests that many limited care access turn to the hospital emergency room. But lacking coverage, they will often do so after their illness or injury becomes far more serious and costly to treat. Providing coverage to more of the uninsured will help to spread risk more fairly and help deal more directly with these hidden costs of health care.

Medicaid isn’t the culprit here, excessive health care cost is, particularly at a time when our ability to absorb these costs is weakened. We believe that the ACA’s incentives to shift the program’s current bias from institutional care to more home and community-based services and prevention will help measurably in this regard. Dr. Siegel’s recommendation that Medicaid recipients have “more skin in the game” via a system of co-pays is worthy of further exploration but the burden must be placed as well on physicians, hospitals, nursing homes, drug companies and other stakeholders in the healthcare industry who have resisted limits to their choices.

Paul J. Tobin, MSW
President and CEO
United Spinal Association