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In a values-oriented society, the goal for the American health care system should be to provide everyone access to needed care, regardless of income, race, or health status. However, America’s health care system doesn’t meet this goal. In fact, the system is in crisis, leaving out too many and costing too much. One program that does meet its intended goal of providing health care coverage to low-income individuals and families is Medicaid. On the eve of its 40th anniversary, Medicaid should be recognized for its effectiveness and efficiency in insuring more than 50 million indigent children, working families, seniors, and people with disabilities. But instead, today’s policy discourse includes changes to Medicaid’s entitlement structure and funding methodology that fundamentally undermine the program’s ability to provide health care to the neediest populations.

Medicaid has demonstrated its efficiency in the most challenging times: during economic downturns and times of rising health care costs. Between 2000 and 2003, the number of uninsured escalated by 5.1 million. While private insurance coverage declined by 3.9 percent, Medicaid and the State Children’s Health Insurance Program (SCHIP) enrollment grew by 2.1 percent. This increase in enrollment primarily caused the increase in Medicaid spending, not inefficiencies in the program that so many of its opponents point to in arguments for restructuring. In fact, a recent report by Holahan and Ghosh found that the growth in Medicaid spending per enrollee was actually less than that of private insurance spending. Medicaid’s entitlement structure ensures that low-income people will not fall through the gaps in the private health insurance system.

Medicaid has also proven effective in providing health coverage to low-income racial and ethnic minorities, who comprise roughly half of Medicaid enrollees. One in five non-elderly African Americans, Latinos, and American Indian/Alaskan Natives are covered by Medicaid. Interestingly, the uninsured population has a similar make-up – more than half of the 45 million uninsured are racial and ethnic minorities. Reports conducted by the Institute of Medicine and Health Affairs have shown that, when all else is constant, racial or ethnic minorities experience serious barriers in attaining access to health care, compounded by their lower likelihood of having insurance. Although Medicaid cannot alone address societal barriers that make access to health coverage more challenging for ethnic and racial minorities, it does mitigate the secondary barrier by insuring a large percentage of low-income minorities.

Yet, despite Medicaid’s efficiency and effectiveness in providing needed health care, it is again under attack at both the federal and state level. Today Congress is considering $10 billion in Medicaid cuts over five years, and the president has named a commission to overhaul the program. The National Governors Association (NGA) has also issued its set of ideas on reforming Medicaid.

But even without federal action, some states, like Missouri and Tennessee, have scaled back eligibility criteria, causing hundreds of thousands to lose coverage. But in possibly the most disturbing example of state cutbacks in the Medicaid program, South Carolina’s “Medicaid Choice” waiver is not only redefining eligibility requirements, but undermining the program’s safety-net entitlement structure.

South Carolina’s Medicaid program, like others, has experienced increased demand and therefore, increased costs. With 7 percent unemployment, an average per capita income of less than $28,000, and a low-income minority population that makes up more than 50 percent of the state’s Medicaid population, the state’s program costs have increased. This is despite the fact that South Carolina already has among the lowest eligibility limits in the nation.

In response, South Carolina has proposed a drastic waiver plan. South Carolina’s waiver gives Medicaid beneficiaries three types of public health accounts (PHAs) that are effectively capped vouchers that allow private insurers to define benefits. This waiver eliminates current standards for benefits and cost-sharing and drastically alters Medicaid’s safety-net entitlement structure.

By design, one PHA leaves sicker patients with unmet health care needs. All three PHAs shift the rising cost of health care onto the beneficiary through increased co-payments and out-of-pocket expense, which could cause individuals to forego or delay needed care. And the three PHAs no longer mandate child disease prevention services such as those included in Medicaid’s Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program. The waiver may be able to incur short-term budget savings with the PHA design and funding caps on expenditures, but at the consequence of increased long-term costs – in dollars and maybe even lives.

Over its 40 year history, Medicaid has provided access to essential health care services to the country’s neediest populations. But with 45 million uninsured and significant barriers to care, short-term budget fixes such as South Carolina’s “Medicaid Choice” waiver are not the answer. Medicaid has laid the groundwork for values-oriented health coverage by providing everyone eligible with needed health care regardless of income, race, or health status. We should demand that our policymakers expand Medicaid, not cut it, as part of a larger plan to provide universal health care to all people in this nation.

Meredith L. King is the health policy research analyst at the Center for American Progress.

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