George Gibbs Center for Economic Prosperity

My exper⁠i⁠ence w⁠i⁠⁠t⁠h Med⁠i⁠ca⁠i⁠d

By: The James Madison Institute / 2014

By Jason Fodeman, M.D. | July 29, 2014The Affordable Care Act may be the law of the land, but some states are still doing their best to avoid it. Nearly half the states have refused to participate in the law’s expansion of Medicaid. Some describe this reluctance as tantamount to a moral crime—see Virginia Governor Terry McAuliffe’s recent statement that expansion’s opponents are “prevent[ing] their own constituents from getting access to health care.”As a doctor, I know this isn’t true. Medicaid is sold to the public as a magic pill that will solve the poor’s inadequate access to medical care. But reality isn’t so simple.Simply put, Medicaid gives patients terrible access to medical care. A recent study found that nearly a third of doctors no longer accept new Medicaid patients. In some states, as many as 60 percent don’t. Why not? Because Medicaid operates in a world without economic logic.Bureaucrats in Washington dictate how much money doctors receive for the treatments and services they provide. Unfortunately, on average they reimburse at less than the actual cost—the average Medicaid reimbursement is 40 percent less than the reimbursement from private insurance.Medicaid payments don’t even match the reimbursement rates for Medicare. Primary care receives 59 cents for every Medicare dollar. Obstetric care receives 78 cents. Overall, Medicaid receives 66 cents for every Medicare dollar—a one third cut for the exact same service.This also explains why Medicaid patients have terrible access to specialists. Their treatments can be the most expensive, yet their reimbursement rates can be the lowest of all. These doctors can struggle to stay in business by participating in Medicaid.This is well and truly perverse. It does no good for Medicaid patients if they have few doctors to choose from. And from my perspective, every doctor I know wants nothing more than to help their patients—we took the Hippocratic Oath, after all. But we can’t fulfill that oath if our practices are teeter on the financial brink.Unfortunately, it’s not just accessibility. Medicaid also fails on the most important metric: Patient health. Every year, doctors, hospitals, and academics release studies showing how Medicaid patients often have incredibly poor health outcomes. Some health care experts even describe it as “worse than no coverage at all.”But the poor still need access to health care—that’s undeniable. So if not Medicaid, what else?The first idea is both simple and radical: Let states divvy up Medicaid money as they see fit, rather than let Washington dictate how it gets spent.This approach has some obvious benefits. Most importantly, it lets states tailor their Medicaid programs to their citizens’ needs. At present, states have little flexibility when it comes to designing their own programs. Yet this one-size-fits-all approach runs counter to the very nature of medicine, which is intensely personal and unique for every patient.This solution won’t solve every problem. That’s why it should be coupled with an even more radical idea: Increase the poor’s access to health care by making it cheaper. Policymakers—both in Washington and in state houses—can easily facilitate this. They need only stop meddling in medicine.Health care gets more expensive by the year—remember last year’s average 41 percent premium increases?—in part because government forces it to. Whether it’s Medicaid, Medicare, or regular private insurance, doctors and health care providers are constrained by the mountains of expensive paperwork, legal compliance, and hoop-jumping forced on us by Washington.The Affordable Care Act alone has created north of 11,000 pages of regulation. Doctors like me can’t comply with this without hiring an army of lawyers, administrators, secretaries, and other staff. This inevitably drives up health care’s costs, which only makes it less accessible for the poor—and, increasingly, the middle class.These lessons are particularly applicable to Medicaid. It fails too many people precisely because policymakers and bureaucrats raise its costs by wrapping it in regulation. At the same time, they cut its reimbursement rates and drive doctors away from the program altogether. This program shouldn’t be expanded—it should be reformed to focus more on patients than paperwork.Fodeman is a practicing physician in Tuscon, Arizona, and a JMI Adjunct Scholar.Read the article here.