The Latest Stupid Right-Wing Healthcare Idea

This column had an incorrect headline--I wrote about the brand new 'winger pipedream, South Carolina Medicaid reform, but my editor gave it the headline, "GOP Medicare reform: Pay more for less care." That's true, but that's not what I wrote about. He also left in the editorial italic cues ([ital] and [unital]). Must have been a busy week.

GOP MEDICARE REFORM; PAY MORE FOR LESS CARE
East Valley Tribune, Dec. 11, 2005

Social Security privatization died, and the Medicare drug benefit is a mess, so what’s the latest hot conservative idea? Combine and package them as “Medicaid reform”!

Right-wingers’ latest infatuation is South Carolina’s plan to give most Medicaid beneficiaries a “personal health account” to choose either a health insurance plan or a physician network to manage their care. Some beneficiaries (the healthiest and savviest, only 5,000 people by most local estimates) could even “self-direct” their care.

Unfortunately, this plan combines the worst of Social Security privatization (changing a defined-benefit program into a defined-contribution one, which never works well for the rank-and-file, even if those at the top benefit) and the Medicare drug benefit (with its increased administrative costs, confusion, and mandated inability to negotiate lower costs).

The plan also fundamentally misunderstands the statistical basis of insurance. Under managed care, Medicaid or a private insurer gives a provider a set amount per patient, and with a sufficiently large number of patients, ones that need less care than average help make up for patients who need more. But if you try to make each person meet the average, it just doesn’t work. That’s the South Carolina plan -- hoping that, just like children in Lake Wobegon, everybody’s above average.

Only people covered by really good group insurance (like the federal employee pool), or who never have gotten sick, could like this plan. Personal health accounts are, as one expert put it, umbrellas that melt in the rain. That may be economically interesting, but it’s not insurance -- as you’ll learn if, in healthcare terms, you’re forced to move from the desert to Seattle.

South Carolina’s plan also is based on several falsehoods. It’s not true that Medicaid costs more than private insurance. It’s not true that Medicaid encourages people to use more healthcare than necessary. And it’s not true that Medicaid has more administrative costs than private insurers.

Comparing Medicaid to private insurance is like the joke about the two hikers who stumble across a bear. One guy stops to put on running shoes, and his friend asks, “Why bother? You can’t outrun a bear.” The man replies, “I don’t have to outrun the bear. I just have to outrun you.”

According to the Bush administration’s Centers for Medicare and Medicaid Services, nationally Medicaid’s administrative costs are 6.9 percent of total program costs, while private health plans’ administrative costs average 13.9 percent, twice as much. In 2004, South Carolina’s administrative Medicaid costs were only 4.6 percent. South Carolina essentially plans to triple its administrative overhead and costs -- and that’s before any new costs of counseling beneficiaries on their options and managing the proposed home health networks.

Counseling for beneficiaries would be absolutely necessary. What South Carolina proposes is a Medicaid-based version of the new Medicare prescription drug benefit. You know how simple and easy-to-understand that’s been for your over-65 friends and relations? And how enjoyable you find reviewing dozens, even hundreds, of potential investment strategies for your 401(k) plan? That’s the South Carolina plan!

But the real point of what South Carolina proposes is to give politicians plausible deniability when hundreds of thousands of people pay more and get less care. It’s really about making the poor and working families pay for tax cuts for the rich, the same old story we’re seeing in Congress, too.

South Carolinians got a vivid example of this reality when a U.S. Senate subcommittee came to Charleston to support the plan. The GOP-controlled hearing had a half-dozen Republicans in support and one lone Democratic opponent. No current Medicaid recipient got to speak.

The State newspaper quoted Kimberly Snipes, a Medicaid recipient who sat through the hearing: “You mean they couldn’t find one person out of 850,000 on Medicaid that was educated enough to have any ideas or any thoughts about how money could be saved and how health care could be improved? And they say these are the people they want to empower?”

Medicaid needs fixing, but this plan isn’t it. This latest infatuation isn’t about empowerment, choice, or better care. Instead, it’s all about the Benjamins.