The Medicaid-ization of American social services (part 1)

I attended the annual Society for Social Work and Research conference this week. (I also presented some of my own work, supported by the Century Foundation. More about that in due course.)  I was the discussant on a nice Medicaid panel with papers written or co-written by some established scholars–Steven Rathgeb Smith, Scott Allard, and Colleen Grogan—and also by three of our University of Chicago doctoral students: Christina Andews, Rebecca Winitzer, and Matthew Spitzmueller. I’ll let these authors tell their own stories when they are ready. Yet a few points jumped out from their papers that bear telling to a more general policy audience.

It’s not news that Medicaid spending and Medicaid enrollment have really grown. A growing population of low-income children, elderly, and disabled people receive Medicaid-financed medical care. Within certain services, most prominently long-term care, Medicaid is the largest single payer. Rising health care costs accelerated Medicaid’s expenditure growth, both in raising per-person expenditures and in enlarging the pool of Americans who cannot secure coverage in other ways.

The current recession and the stimulus package (a.k.a. the American Recovery and Reinvestment Act) accentuated states’ dependence on Medicaid in several related ways. State governments have long faced clear incentives to finance whatever services they can through Medicaid, since the federal government will then pick up most of the cost. Such “Medicaid maximization” strategies are sometimes derided as a form of states’ illegitimate gaming of the system. I don’t see things that way. Although some abuses certainly exist, for more than forty years Medicaid’s cost-sharing arrangements have been consciously designed to encourage and enable state governments to offer critical services that just would not be offered under other arrangements.

ARRA provided large (though temporary) subsidies through Medicaid. These subsidies were accompanied by maintenance-of-effort requirements that made it hard for states to cut expenditures on core Medicaid services while these subsidies were in effect. At the same time, hard-pressed states have faced deep deficits. Medicaid’s requirements and federal cost-sharing induced states to focus the brunt of punishing budget cuts on large non-Medicaid activities. Social services in such areas as community mental health, substance abuse, public health, and child welfare are among the categories hit hard in our current difficult times.

The Affordable Care Act will even more markedly increase states’ reliance on Medicaid. Of the 32 million Americans projected to become insured as a result of health reform, 16 million are projected to do so through Medicaid. This trend discomforts many progressives, and many others concerned about health insurance  coverage. Medicaid expansion was cheaper than the expansion of private coverage. That helped to make the numbers work.

Given their druthers, many health policy wonks concerned with covering the uninsured would prefer for Medicaid to wither away. They’re right to worry that low-income Americans might receive a lower-tier of welfare medicine if we are not careful.

Those of us whose work concerns the disabled or severely disadvantaged populations tend to be more ambivalent, because Medicaid plays such a multi-faceted role to finance services to this population. Health reform won’t just cover more people. It will expand the range of services that Medicaid covers. And these 16 million people insured through health reform won’t be some random segment of people who need health insurance. These will include some of the most important populations of public health and social service interest. Medicaid will become an even more important payer for services such as emergency department care, outpatient mental health, and substance abuse treatment.

I’ve noted before the predicament of a street person with substance abuse problems who panhandles on the subway. He probably needs treatment of various sorts, but who will pay for it? He’s very poor. But he’s not a vet. He’s not caring for dependent children. Substance use disorders are not qualifying conditions for federal disability programs. Right now,  whatever care he receives is often financed through a hodgepodge of local, state, and federal programs. After 2014, he’ll be Medicaid-eligible. This will not only cover psychiatric and substance abuse treatment, but will also finance his Lipitor and his other health care needs.

To say the least, this will be a welcome development. Yet the broader implications receive less attention than the subject deserves. Over time, this will markedy change the American welfare state, in areas far removed from traditional health care. 

Some unintended consequences and dilemmas associated with this shift are the subject of my next post.

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