What to do about Medicaid?

Avik Roy responds to my post. He lists several more studies that find Medicaid patients have far worse outcomes than privately insured ones and the uninsured too. I’m not going to undertake a literature review. I don’t have time. So, I’m not really debating the merits of the studies Avik Roy cites or whether they are representative of the entire body of work in this area.

So, let’s presume they are credible and representative, then what is the implication? Should we make Medicaid more like private insurance or more like no insurance? Should we Federalize the program?

I believe that everyone should have access to affordable insurance that facilitates access to affordable, high-quality care. (I’m happy to skip the insurance part and just get everyone access to the care, but that’s not how our system works right now.) If Medicaid doesn’t fill that role for low-income individuals, some of whom are very sick and/or disabled, then it should be reformed. That probably means spending more money on it.

I’m not getting the sense that’s what Roy has in mind. He writes that “most people can afford to take on more responsibility for their own care, and indeed would be far better off doing so.” That sounds like he wants to make Medicaid more like no insurance.

Why is it that folks on Medicaid don’t supplement it with their own spending? If they do, why is that supplementation not sufficient for them to have better outcomes than the uninsured? One has to answer those question in a way that doesn’t also imply that if they didn’t have Medicaid and were uninsured, they’d spend their money more wisely and achieve better results than they can with the support of Medicaid.

Is Medicaid forcing them to receive worse care? That suggests severe information asymmetry. How does being uninsured fix that problem?

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