Medicaid-for-all: The latest panacea to save US healthcare?

This blog is long overdue and apparently especially timely, given the recent proposals shifting the focus away from Medicare-for-all as a solution to our healthcare problems, toward Medicaid-for-all – in part, due to the perceived political viability of getting more done at the state rather than federal level. So here we go.

First, some basic facts about the program. Established in 1965, Medicaid is the government health insurance program for people with low income (and some disabilities). In 2017, more than 73 million people (~1 in 5 in the US) were covered by Medicaid. Medicaid is a joint federal-state program. It is jointly financed and subject to federal requirements and guidelines, however, states have a bit of leeway in program design and administration, including which populations and services to cover, as well as the methods for paying physicians and hospitals. Federal funds account for ~2/3 of overall Medicaid financing, but actual % of federal funding varies across states (between 50 and ~74%). When it comes to administering benefits, 4 out 5 Medicaid beneficiaries are in some type of managed care plan (i.e., the coverage is administered by private payers).

Given the size of its enrolled population (in between that of Germany and the UK), Medicaid could be examined as a stand-alone healthcare system. So, how does Medicaid stack up on the three things most people want from a healthcare system, namely: high quality, low cost, and easy access?

Let’s start with access, often touted as a key success measure when it comes to health insurance coverage. The latest information from the Kaiser Family Foundation, 10 Things to Know about Medicaid: Setting the Facts Straight, states that “…Medicaid enrollees experience rates of access to care comparable to those among people with private coverage.” Yet, the same report acknowledges that “Gaps in access to certain providers, especially psychiatrists, some specialists, and dentists, are ongoing challenges in Medicaid…” We would argue that access for Medicaid beneficiaries remains an issue, as highlighted by latest report from the National Center for Health Statistics which shows that in 2015, 89% of office-based physicians accepted new patients with private insurance vs. 69% for patients with Medicaid insurance. Moreover, a group of Medicaid beneficiaries in California sued the state in 2017 stating that “Medi-Cal patients have a harder time finding doctors, wait longer for appointments, end up in the emergency room more often and have their diseases diagnosed later than those in other insurance programs”. Finally, one of the arguments for Medicaid expansion under the ACA was that it was going to lower ER utilization since newly insured patients would now have improved access to primary care. Yet, the results have been mixed, with Arkansas and Kentucky reporting a reduction in ER utilization, Maryland reporting no change, while California, Illinois, Massachusetts and Oregon actually seeing an increase in ER use.

What about cost? Proponents of the program state that Medicaid is highly efficient, with per enrollee costs significantly lower than that of privately-insured patients. A significant part of this “efficiency” comes from the much lower reimbursement rates to providers (often lower than Medicare, which has not kept up with the rate of inflation, not to mention physician practice costs). Ironically, the low Medicaid reimbursement rates are cited as a key issue impacting beneficiary access and the rate of Medicaid acceptance in a given state is highly correlated with the level of Medicaid reimbursement there. And while from the patient’s perspective, the low level of cost sharing requirements under Medicaid provides a sense of financial relief, when combined with low reimbursement rates, it sets the stage for potential overutilization of services, driving overall costs up.

And finally, on the topic of quality – the data have been mixed at best, with some studies showing reduced mortality in some Medicaid covered populations (e.g., infants and children, older adults), while others showing no improvement in healthcare outcomes or even adverse outcomes under Medicaid coverage. For example, a 2013 report analyzing The Oregon Experiment, a 2008 expansion of Oregon’s Medicaid program for low-income adults, showed that, “Medicaid coverage generated no significant improvements in measured physical health outcomes [blood-pressure, cholesterol, and glycated hemoglobin levels] in the first 2 years…” A 2016 study of men with testicular cancer concluded that  „…traditional health insurance—but not Medicaid insurance—was associated with earlier stage of disease at diagnosis, increased treatment, and better survival…” Analysis of outcomes for patients with brain tumors, found a similar pattern with uninsured and Medicaid patients having shorter survival times than privately-insured patients and a differential access to available treatment.

In many ways (given the above data), the Medicaid system resembles the UK National Health Service – low cost and basically free to patients at the point of care, but also prone to access and quality issues. If we are looking for a system that does better on access and quality and at a more reasonable cost than the US – we may be better served by looking at the Netherlands or Switzerland for inspiration. Moreover, the US already has a system that in many ways mirrors Dutch and Swiss healthcare – the Federal Employee Health Benefit Program (FEHBP). Why not extend the model that appears to serve our employees well (after all federal workers and politicians are paid by us, and are supposed to work for our collective good); one that has consistently outperformed Medicare and after which Medicare Advantage plans and part D were modeled, to the rest of the country? As a nation, we could commit to enrolling everyone in an FEHBP-like national exchange of private insurance plans, with government provided means-tested premium support, prescription drug coverage, and the ability to buy-up if an individual chooses to do so.

However, if our employees continue to insist on Medicaid-for-all as the only solution, we feel it is only fair that they all enroll in Medicaid first and fix that system before extending it to the rest of us.