Medicaid is No Public Option

The news broke late yesterday afternoon that the Senate Finance Committee sought to broker a compromise measure regarding the Public Option. Giving each individual state a choice of whether or not to provide a public option appeals to fiscal conservatives and red state legislators whose most coherent reservation regarding health care reform is a concern over cost. Still, these kind of messy federal/state mandates reinforce substantial inequality. A Medicaid-style measure like this would mean that those who lived in most well-funded blue states would have superior health care coverage, while those who lived in most, if not all red states would have their health care costs still largely dictated by private carriers, many of which hold near-monopolies in individual states. If the aim of reform is to level the playing field for every American, this falls well short of the stated objective.

Today's Politico contains a brief, but noteworthy column written by Ben Smith, which underscores the controversy regarding Medicaid reform.

The Medicaid expansion would, in a stroke, add 11 million people to the program's ranks by raising the income cap, and one key negotiating point at the moment is the share of that cost the federal government will pick up.

The income cap, however, is only one facet to increasing eligibility. Many states, particularly red states, do not extend coverage to single adults at all, no matter how dire their need. Coverage is often provided only to adults with children and sometimes Medicaid coverage is granted to children only, leaving their parents with nothing. As a result of this, many adults are forced to file for SSI disability to obtain Medicaid coverage, since doing on is the only means by which they might attain any health care coverage at all. However, this removes individuals from the workforce, reduces tax dollars paid into the tax system as condition of employment, and places a drain upon the never-ample General Fund out of which all Medicaid expenses are paid. Removing these strict qualifying factors might costs more in the short term, but the long term consequences are much more detrimental. Someone pays the cost when a person goes bankrupt from enormous medical bills or visits the Emergency Room without insurance, having no means to pay at all. Still, to simplify this unnecessarily as another annoying example of the red state/blue state divide would not be a fair telling of the truth.

Republican governors haven't been the only ones raising doubts.

Tennessee Democratic Gov. Phil Bredesen has been an outspoken foe of the plan, and a senior Republican aide notes that two more left-leaning Democrats are also raising complaints. According to the Columbus Dispatch, Ohio Gov. Ted Strickland "warned on a recent visit to Washington that the 'the states with our financial challenges right now, are not in a position to accept additional Medicaid responsibilities.'

"Strickland said that he wants a health care package that is inclusive and provides for all citizens', but he adds that if Medicaid is expanded, he hopes to see the Federal Government assume the greater portion of the costs, if not the total costs.'"

And New Hampshire Gov. John Lynch last week refused to sign a letter than other Democratic governors sent to congressional leaders urging passage of a health care bill this year, because it failed to "address concerns regarding potential cost shifting to the states," according to a spokesman for the governor quoted by the media.

States do have to adhere to balanced budgets and in times of economic famine like these cannot resort to deficit spending. However, budget priorities are often disproportionately skewed away from social services and relegated to other matters, which are just as wasteful, if not more so than any pork barrel project pushed by a House or Senate member. Before Republicans and Democrats criticize Washington for its excesses or its financial demands, they would be wise to start first in their own backyards. Citing specific instances of pork barrel projects is a rhetoric device which borders on cliche, so I will spare you another retelling of it. Needless to say, room could be made even in a much reduced year of tax revenue. The obscene amount of tax breaks and concessions made to foreign automakers in order to entice them to build auto manufacturing plants is a good place to start. Those states who have never made an attempt to reform their image as little more than an endless supply of cheap labor have shortchanged themselves in ways they seem incapable of comprehending.

A more streamlined approach would, in my opinion, be best. Each state sets its own criteria regarding Medicaid in accordance to how the program was set up in the 1960's and I have no doubt that similarly messy compromises would likely typify the efforts the states willing to institute a public option. Most red states would opt out altogether, of course. I will note that a complete reliance on the superior wisdom and judgment of the Federal Government might be naive, but I have rarely seen any state government be more efficient. What I have seen is a multitude of red states whose efficiency and collective wisdom resembles a Banana Republic combined with a slap-stick comedy routine. That they are the ones who are so quick to shoot barbs at Washington, DC, strikes me as biting the hand that feeds you. Many of these states would have nothing if it hadn't been for the generosity of Capitol Hill and many of their universities would find themselves without needed funding if they couldn't achieve Federal Government grants. So it is here that I'm afraid I can't muster much sympathy for those Governors who rarely pay more than ten percent of the cost of Medicaid anyway. The real lesson to be learned here is that long-term gain is much more important than the facade of short-term cost reduction.