Medicaid Expansion in the 50 States (Obamacare) Means Big Profits for Medical and Insurance Industries at the Taxpayers' Expense
Medicaid Expansion And The Private Sector
Daily Ledes - NY Times columnist Paul Krugman says Republican governors who have changed their mind and accepted Medicaid expansion in their states are doing so because it will mean big profits for their friends in the medical and insurance industries.He points to Florida Gov. Rick Scott, who made his fortunes in the health care industry, as a prime example:
But his support came with a condition: he was willing to cover more of the uninsured only after receiving a waiver that would let him run Medicaid through private insurance companies. Now, why would he want to do that?
Don’t tell me about free markets. This is all about spending taxpayer money, and the question is whether that money should be spent directly to help people or run through a set of private middlemen.
And despite some feeble claims to the contrary, privatizing Medicaid will end up requiring more, not less, government spending, because there’s overwhelming evidence that Medicaid is much cheaper than private insurance. Partly this reflects lower administrative costs, because Medicaid neither advertises nor spends money trying to avoid covering people. But a lot of it reflects the government’s bargaining power, its ability to prevent price gouging by hospitals, drug companies and other parts of the medical-industrial complex.
For there is a lot of price-gouging in health care — a fact long known to health care economists but documented especially graphically in a recent article in Time magazine. As Steven Brill, the article’s author, points out, individuals seeking health care can face incredible costs, and even large private insurance companies have limited ability to control profiteering by providers. Medicare does much better, and although Mr. Brill doesn’t point this out, Medicaid — which has greater ability to say no — seems to do better still.
You might ask why, in that case, much of Obamacare will run through private insurers. The answer is, raw political power. Letting the medical-industrial complex continue to get away with a lot of overcharging was, in effect, a price President Obama had to pay to get health reform passed. And since the reward was that tens of millions more Americans would gain insurance, it was a price worth paying.
But why would you insist on privatizing a health program that is already public, and that does a much better job than the private sector of controlling costs? The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits.The cost argument — government can provide Medicaid cheaper than private insurance companies — then comes down to whether you prefer government control at a lower price or private control at a higher price. It’s a trade-off many say they are willing to make but few do.
Of course, deciding who is to administer Medicaid is the second part of the overall Medicaid expansion debate. The first debate is whether or not Medicaid itself is a worthwhile program.
Many people continue to debate this, but the evidence seems clear that Medicaid has benefited many Americans in need. It’s why the federal government is looking at Medicaid to be the driving force behind a mostly nationalized health care system and why insurance companies welcomed the move with a few minor concessions, like the one Krugman describes above.
It’s the actual health care providers who are trying to decide whether or not a larger pool of Medicaid patients is a viable financial model for their clinics. In areas largely populated by low-wage earning people, it’s definitely the right model. But in more populated areas with a more financially diverse population, accepting Medicaid patients can cost a clinic more than its worth to the doctors.
Doctors, too, seem split on whether they prefer state government administration of Medicaid or private insurance administration. While they dislike the bureaucracy of the state government, using private insurers has created an entirely new set of problems.
In Mississippi, we have two private insurers who administer Medicaid benefits under the Mississippi Coordinated Access Network program. The problem many health care providers have found is that each insurance company covers different drugs, services and treatments, leading to massive confusion among patients. They have argued for a more uniform drug list — like, say, adopting the state Medicaid drug list — but so far they have not found support from the Division of Medicaid.
All that said, expanding Medicaid in Mississippi will certainly come down to private sector demands. Either the private sector will decide an opportunity for profit exists and push lawmakers and Gov. Phil Bryant for expansion, or (more likely) the hospital industry will show the state cannot afford to not expand Medicaid if federal funds for indigent care are pulled.
