Expanding Medicaid would harm current enrollees

With provider networks shrinking, more plan participants would worsen situation

By Geoffrey Lawrence
  • Tuesday, November 20, 2012

Gov. Brian Sandoval is pondering whether to expand Medicaid eligibility in Nevada to include those earning up to 133 percent of the federal poverty line, including single, childless adults.

By all rights, current Medicaid enrollees should be holding their breath. 

Why? Because any Medicaid expansion in Nevada will mean reduced access to care for those currently enrolled.

Advocates of expansion regularly over-simplify the issue. They assume that loosening eligibility requirements so that more individuals qualify for Medicaid would translate directly into more low-income families getting greater access to quality health care. 

That would be true only if Medicaid eligibility really translated into people having access to quality health care.

In truth, health-care providers are turning away Medicaid patients at ever-higher rates. 

A 2008 survey of physicians by the Center for Studying Health System Change revealed that only 40 percent of physicians accept all new Medicaid patients

In other words, the majority of health-care providers are turning away Medicaid patients.  That means Medicaid benefits aren't nearly as great as they appear on paper, since ever-fewer doctors will accept Medicaid as a form of payment.

Why do doctors refuse Medicaid patients?  It's because policymakers have repeatedly cut the Medicaid reimbursement rates to physicians as a way of controlling the program's costs. 

It's the same approach that has made care notoriously hard to come by in the "universal care" programs of Canada and Great Britain.

Here in the U.S., the fastest growing state budget item for more than a decade has been "free" Medicaid. Consequently, for state policymakers trying to balance budgets, cost control has been a top priority.

The result of their short-sighted solution, however, is that providers must forego higher earnings from other patients when they agree to treat Medicaid patients. In extreme cases, providers lose money by seeing Medicaid patients, because the reimbursement levels don't even cover the physician's costs. 

Doctors, however, don't incur the financial and time costs of attending medical school so they can lose money. Consequently, most have just decided to no longer accept new Medicaid patients.

This means that — among the few doctors who continue to see these patients — care is essentially rationed. Stories increasingly abound of Medicaid patients not being able to get a doctor's appointment until it was tragically too late. 

The case of 12-year-old Deamonte Driver speaks volumes about the impact of health-care rationing on Medicaid patients. 

Driver, a beneficiary in Maryland, developed a toothache. It should have meant only an $80 extraction. 

However, because only 900 of Maryland's 5,500 dental care providers were accepting Medicaid, and these providers faced a backlog of patients, the Driver family — after calling more than 20 providers — was unable to get a timely appointment for Deamonte. 

Soon, the youth's tooth infection abscessed and the infection spread to his brain.  Deamonte, after complaining of a headache, was rushed to the hospital. He received two brain surgeries, but tragically died less than a month later.

If Medicaid guaranteed access to care, then this tragedy would never have befallen the Driver family. In reality, however, Medicaid only guarantees access to a waiting list that is already over capacity.

If Sandoval and Nevada lawmakers elect to push more individuals onto this waiting list for rationed care, it will only further strain the ability of the few providers who still accept Medicaid to treat these patients. 

In this respect, policymakers expanding Medicaid would be like writing a check they know is going to bounce. Some individuals would receive the promise of greater access to health care, only to later learn that the promise is empty. 

Worse, the additional strain that such an expansion would place on the shrinking network of Medicaid providers would mean that individuals who are currently Medicaid eligible would face higher competition for the few available time slots with these providers. 

In other words, for the most vulnerable populations, their access to care would actually diminish as a result of Medicaid expansion.

If Nevada's policymakers really want to improve health-care access for the most vulnerable populations, they should shun eligibility expansion and instead institute reforms that put beneficiaries in control of their health-care dollars. 

Structuring Medicaid benefits around a Health Opportunity Account, for example, would allow beneficiaries to purchase medical care directly from providers — even when those providers refuse to accept standard Medicaid rates

At the same time, HOAs give beneficiaries incentives to economize and avoid superfluous care. Why? Because they get to keep a majority of the funds in their account even if they gain employment and lose their Medicaid eligibility.

Advocates of market-oriented policies aren't heartless. They just recognize that markets are more effective at alleviating human suffering than are government-centric approaches, which regularly fail to achieve their stated objectives.

It might initially seem intuitive that a Medicaid expansion would benefit the less fortunate — until you actually think about it.

Geoffrey Lawrence is deputy policy director at the Nevada Policy Research Institute. For more visit http://npri.org.

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