Medicaid needs a strong dose of competition

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The naïve accuse those who want to reform Medicaid of caring only about costs and not about the poor who benefit from the $384-billion-a-year program.

If only it were true that the 50 million Americans – 924,000 Kentuckians – now on Medicaid truly benefitted.

A new Bluegrass Institute report by University of Kentucky economist John Garen reveals that while Medicaid has more recipients than ever, previous research indicates that the enrollment growth does not correlate with improvement in health.

The only ones that show any significant improvement, Garen writes, are “the small minority of recipients who are extremely poor” – those for whom the program was originally created.

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But even this group faces danger as the safety net is beginning to break.

Net cords can be heard breaking across the commonwealth. Even without the new Medicaid mandates forced upon states by the federal health-care reform, Kentucky faces a 70-percent increase in its Medicaid bills by 2020. Make it 80 percent more if the Obama administration gets its way.

Many new patients leave private insurance plans and join Medicaid, which not only pays providers less but often delays payments. The check’s not in the mail and Medicaid patients aren’t in doctors’ offices.

Forbes columnist Avik Roy recently reported on a new study by the New England Journal of Medicine in which women posing as mothers of children needing medical care tried to make appointments at outpatient clinics. Those claiming Medicaid or State Children’s Health Insurance Program coverage were denied an appointment 66 percent of the time, compared to only 11 percent who claimed private insurance.

Among those that accepted both Medicaid/S-CHIP and privately insured children, the average wait time was 42 days for those with government insurance versus 20 days for the privately insured.

The net finally broke for 12-year-old Deamonte Driver, a black seventh-grader who was being raised in poverty by his single mother in Prince George’s County, Maryland. Deamonte died in 2007.

While his family situation resulted in him moving in and out of homeless shelters, “he wasn’t the victim of gang violence or drugs: instead he died of a toothache,” Roy writes.

After he began having toothaches, it took several months and even more phone calls before even getting an appointment with a dentist. Which was followed by another search of several more months before an appointment could be obtained with an oral surgeon willing to extract Deamonte’s six abscessed teeth.

Less than a week before that appointment, Deamonte began to complain of a headache, which was followed by emergency brain surgery. Within a few weeks, he was dead.

“Deamonte did not die because he was uninsured,” Roy writes. “He died because he was insured: or, more precisely, because he was insured, in bad faith, by the government.”

Roy doesn’t exaggerate when he calls Medicaid “a cruel and inadequate program.”

Remember Deamonte’s story the next time some half-brained leftist labels conscientious policymakers “cruel” because they want to reform the program so that it actually works.

Garen recommends “substantial doses of choice and competition” – such as a health insurance voucher program. Voucher amounts would be determined by income and health condition.

“Major reform is called for to focus the program on the truly needy while using taxpayer dollars carefully,” he said.

Not only would this allow patients to shop for, and negotiate, their own health services, it would result in providers competing for that service. No longer would they be dependent on reimbursement from the federal government.

Such an approach would restore dignity, individual liberty and better care. Perhaps more important, it would avoid some other “cruel” choices, like: Which prisoners will be released, schools closed or programs cut to pay Kentucky’s rising Medicaid bills?

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