• The sky didn’t fall before, and it won’t fall now

    One of the things I’m fascinated by is the way history repeats itself when it comes to health care reform. Everyone acts as if what we’re doing is crazy new, as if it’s never been done before. This kind of thinking was the subject of one of my favorite Huffington Post columns (which I encourage you to go enjoy).

    I think we’re seeing the same thing again with respect to Medicaid and the ACA. Many of the claims about the expansion’s imminent failure involve arguments that aren’t new. In fact, they were the same as those being employed against traditional Medicaid decades ago. So I had awesome college student TIE-assistant Jaskaran Bains look up media coverage of Medicaid when it was passed. See if any of it sounds familiar.

    Let’s start with Time Magazine, in a piece entitled , “Medicaid: Chaotic but Irrevocable”, from 1967:

    Medi-Cal and other Medicaid programs may well have been overambitious. New York’s certainly was. Most are shot through with manifold abuses and inefficiencies. . . As with Britain’s National Health Service, repeal is unthinkable, though Medicaid may have to suffer some amputations in order to survive.

    Here’s Time Magazine worrying about states’ future share of the program. “Medicaid’s Maladies“, from 1969:

    In theory, the four-year-old Medicaid program gives states what amounts to a blank check from the U.S. Treasury. In practice, the program—designed to finance medical care for the needy—has proved to be a tremendous drain on state treasuries as well. Even though federal handouts cover at least 50% of the costs, several leading Medicaid states —including New York, California and Michigan—have been forced to slash aid to their “medically indigent” because the runaway rise in hospital, drug and doctors’ bills threatened to engulf their budgets in red ink. Now Medicaid’s first state dropout has taken place.

    The Columbia Journal of Law and Social Problems had a lot of in depth coverage. Here’s a bit from, “Medicaid: The Patchwork Crazy Quilt“, from April, 1969:

    In the four years since its inception, Medicaid has suffered extremely severe growing pains.  Expenditures required to finance the plan were surprisingly high.  The classes of persons covered and the types of services provided have varied substantially from state to state.  Too many doctors and hospitals have been unwilling to participate in the program.

    Even then people were screaming that no one would participate. I expect doctors will abandon the program any second now….

    Have you heard the one about how Obamacare is really just a slippery slope to single payer? From the Syracuse Law Review, “Medicaid: Has National Health Insurance Entered by the Back Door“, from 1966:

    As the scope of the program became more widely known, and the implications of the regulations [of Title XIX] were more carefully studied, a storm broke. . . Politicians cried out that the Medicaid tail would soon be wagging the Medicare dog; that a system of national health insurance such as in Great Britain or Canada was being created surreptitiously.

    The New York Times, October 17, 1971, “Medicaid: Why the Program is Mortally Ill”. This could be written about Obamacare, right now:

    Medicaid appears to have some economy-minded antagonists and a great many disappointed lovers, but no friends.

    And lest you think that anything has changed with people complaining about Medicaid itself, here’s the Davis County Clipper, April 7, 1978, “Medicaid Cost Rise”:

    “The near-universal feeling persists that some remedial action is urgently needed in Medicaid,” The Foundation notes. “While virtually everyone is seriously concerned with the high and steadily-increasing cost, every group that provides services to the program believes that its own efforts are not adequately repaid.”

    I could do this all day, but I hope you get the point.

    Let’s all take a deep breath and appreciate what’s going on. Health care is expensive, and changing the health care system is scary. But when Medicaid was passed, tons of people panicked. They claimed that it would bankrupt the states. They claimed that the feds would renege on their promises. They claimed that it was a backdoor to socialism. They claimed that doctors would be paid much less. They claimed that doctors would leave the program in droves. They claimed that no one liked the law. They predicted doom.

    It didn’t happen.

    It’s easy to scream that the sky is falling. Remember when Ronald Reagan told us that Medicare was the death of freedom? At some point, though, you have to look around and realize that things just ain’t that bad. We’ve heard these arguments before. They didn’t come to pass. States have all embraced Medicaid. The feds never broke the bargain. Docs made a fortune in the 80’s. There are more medical school applicants than ever before. At some point, we have to stop giving these arguments so much weight.

    Obamacare will not be perfect. Neither will the Medicaid expansion. We’ll need to fix them. But neither will bring about the end of the republic, just as no health care reform in any other country resulted in the end of democracy itself.

    All of these quotations were from 40-50 years ago. Not only is Medicaid thriving, but just last year, the Supreme Court decided it was so “apple pie” that threatening to take the program away was coercive. I think it’s more likely that’s how we’ll think about the ACA 40-50 years from now, than that any of the doomsday scenarios will come to pass.


    • Thanks Aaron (and Jaskaran). I often present educational sessions on the ACA and make these same points. But, as long as we have short memories and alarmists are able to create alarm, we’ll continue to see this movie. Over and over again . . .

    • One big difference is that, when I’m traveling outside the US, I don’t pay income taxes or FICA taxes, but with Obamacare, I will have to enroll or pay a penalty, in spite of the fact that no care will be available overseas.

      Indeed, Social Security pays benefits to qualified workers no matter where in the world they are traveling.

      • @Jimbino
        This sounds like bunk to me. Income tax is payable on world-wide income, so if you live overseas and are American, you need to pay income tax. There’s an exemption for the first chunk of overseas-earned income, but I forget what it is.

        Further, most expats have some form of insurance, and I’m certain that if those plans don’t qualify now, American overseas business groups will get that changed pretty quickly.

        I’d also bet that if Americans without health insurance coverage overseas start showing up in any numbers abroad and needing the hospital, many countries will do what they do with Russian tourists — require proof of medical insurance.

      • In Europe there are reciprocal entitlements arranged between state systems. I live in England, but visit France frequently and can claim back costs incurred using their (splendid) health system. I am sure the US could negotiate similar arrangements.

    • I think that each of those snippets had a bit of truth to them, even though, clearly, the doomsday scenario didn’t happen. But the fact is that a lot of doctors don’t accept patients, Medicaid is a large share of state of expenses, and the program hasn’t been as successful covering all of the poor as we once hoped.

      I think the mere existence of the Oregon medicaid experiment is proof that there are problems with the program, since the only reason they chose the lottery method was because they were financially unable (or, perhaps, unwilling) to cover everyone who should have qualified for the program.

      • The Oregon study was far too small, based on post hoc analyses of the number of people actually involved, to have any statistical significance.

    • “They claimed…” …and…”It didn’t happen.”

      I beg to differ. I think it did. Medicaid’s options to primary care physicians is limited. Their care is limited and based upon the Oregon study the costs are tremendous and becoming unaffordable to the states while the health care benefits are not being realized. The care in Medicaid is poor and many of the patients are being cared for in Medicaid mills. Corruption is high. Socialism is a system advocating the means of production etc. and collectively owned, Medicaid fits that definition. The states have little choice in dealing with Medicaid.

      The only reason why Medicaid exists today is because each time it is failing more money is spent. This does not mean that I do not support a safety net such as Medicaid for I do, but I do disagree with the characterizations made in today’s blog that inadvertently makes it appear everything is honky dory. It isn’t and if anything almost all those things predicted happened or continue to happen.

      • @Emily
        I don’t think you understand what collective ownership of the means of production are. That would be the VA system, where the Gov’t runs the hospitals. Or Britain’s NHS.

        States do have a lot of choices in dealing with Medicaid. In fact, the Urban Institute concluded that “Medicaid is really 51 different programs, with threefold variations in spending per low-income individual.”

        The differences are reflected in the fact that different states reimburse doctors at different rates, the lowest being the North East, in which some states haven’t changed their rate schedules in nearly 20 year and the highest being in the West. Therefore, is it any surprise that in WY, MN, ND and SD, over 90% of doctors will accept new Medicaid patients and in NJ only 40% will?

        I’d be interested to hear your proposal for ending corruption.

        • SAO, Medicaid is not the free market. You might want to review the works of Friedman, Mises and Hayek for a better understanding of what a free market is. This does not mean that Medicaid cannot exist, but if it does then I believe government has special obligations to the taxpayer in seeing to it that the money is spent wisely and doesn’t interfere with the rest of the market place or crowd out other solutions. This idea of separating the market place from small areas of government intervention (large interventions destroy the market place and cause expenditures that are not efficient or beneficial) seems to be feared by both the left and the right.

          Fraud reduction comes naturally when one is spending his own money, but still exists. Fraud carries both civil and criminal liabilities. Contract law is the judicial solution to fraud, but then contracts have to be designed not to have legal loopholes. An additional control, especially with things like DME where the companies simply change their name, is to create a pre approval process so that these companies cannot open and close before the auditors realize they are billing inappropriately. Additionally new Medicaid cards could be created with pictures and biometric information to make sure the individual being treated is the correct individual.

          There is a difference between fraud and marginal care the latter costing huge amounts of money. Skin in the game helps protect against marginal care. We need patients to be ears and eyes on the ground. There are many ways to add a bit of skin to the game. We need to make sure government funds are spent correctly so there is adequate funding for the people both you and I find needy. The Oregon Study tells us that we are not providing the health benefits we think we are. Politics should have no bearing on common sense.

          • “The Oregon Study tells us that we are not providing the health benefits we think we are.”

            Since you read our posts on this, you know that the study did nothing of the sort with respect to physical health benefits. On those, it was simply uninformative. Are the mental health benefits lower than expected? I’ve not seen anyone substantiate that.

            So, if you want to make this claim, you’ll have to come up with some evidence to support it. That’s how this blog works. Read the comments policy. We’ll let an unsubstantiated comment like this through this time, but it may be the last.

            • Maybe I am wrong, but I thought before these recent results were published that many people felt that this study would demonstrate significant health benefits (medical) and others thought it would not (“…we think we are.”) A lot of emotion was pent up waiting for the ‘proof’. Perhaps you had such a discussion or a similar one on this blog. Perhaps you were more tempered than most. I note Aaron saying:

              “An RCT is pretty much the best way to prove causality, especially if it’s well done. So if you wanted to prove that Medicaid causes bad outcomes (as many do), this would be the way to prove it. This is what they found with respect to health (emphasis mine):”…

              “Here’s one that shows that Medicaid is both good for health and provides a significant financial benefit for it’s recipients. Since it’s an RCT, we can even start talking causality.”


              …And your own (part 1)

              “And this doesn’t count the financial benefits (emphasis mine):”

              One has to read the post to get the context, but you were more tempered in your reply.

            • I have already written about the words I wrote that you quote, and how people have been wrongly excerpting and misusing them, here: http://theincidentaleconomist.com/wordpress/oregon-and-medicaid-how-the-debate-had-changed/

              They also show that as to your first sentence – yes, you are wrong.

        • You’re absolutely right. The biggest problem with Medicaid is that the states are permitted to tinker with it, or to provide alternative programs. In tough times the program is the first target of legislators intent on reducing state expenditures.

      • So Medicaid isn’t perfect. What system is? Do you think the British NHS system is perfect.

        • @Ottovbvs: “So Medicaid isn’t perfect.”

          It is important to know where Medicaid’s failures lie. I know almost no people that believe some type of safety net isn’t needed. Medicaid is a type of safety net. If it doesn’t work well and doesn’t demonstrate the results we expect then it behooves us to carefully examine the program and see why.

          Correction of bad policy can save money leaving more money to spend on those in need or to leave with the taxpayer. Dollars left with the taxpayer might lead to him changing his tires earlier or fixing his brakes. Those types of expenditures sometimes withheld cause loss of life as well.

    • I continue to predict that in a few years, even talking about repealing the ACA will be political suicide. It certainly won’t talk 40-50 years. It won’t even take a decade.

      • Probably will always remain popular to repeal the mandate portion only, which is what most people think the 30-some GOP votes to repeal Obamacare were about. But, even today, polls overwhelmingly favor most of the other major provisions of the ACA, and they can’t stand without the mandate.

        I sort of think that “repeal Obamacare” bills will continue to be introduced for floor debate in each session of congress for years, as a pro-forma way for republicans to prove their conservatism and democrats to prove their liberalism. But in the end, the GOP will always find a way to ensure the bill gets killed before the public looses their benefits.

    • What I always wonder is what these people consider to be viable alternatives?

      Seems to me our civilization has only 2 choices…

      1) find a cost effective way to allow everybody to be able to be treated medically (regardless of whether they can afford it or are perceived to “deserve” it)
      2) allow doctors & hospitals to become militarized to have them turn away people who can’t afford services, and deal with the violent uprisings as people watch their loved ones suffer & die of easily curable & treatable illnesses, as more & more people become unable to afford the rising prices healthcare provided with heavy armed guarded security expenses attached.

      Why is this seemingly never spoken about openly?

    • The paranoid style in conservative argumentation reaches more than just health insurance reform proposals, as this list (which includes Reagan’s thoughts on Medicare as the road to serfdom) made clear:

      “It may be impracticable that our distinctively American experiment of individual freedom should go on.”
      —Senator David Hill (D-NY), in 1894, bemoaning the creation of a federal income tax

      “Woman suffrage would give to the wives and daughters of the poor a new opportunity to gratify their envy and mistrust of the rich. Meantime these new voters would become either the purchased or cajoled victims of plausible political manipulators, or the intimidated and helpless voting vassals of imperious employers.”
      —Former President Grover Cleveland, in 1905, on why women shouldn’t be able to vote

      “I fear it may end the progress of a great country and bring its people to the level of the average European. It will furnish delicious food and add great strength to the political demagogue. It will assist in driving worthy and courageous men from public life. It will discourage and defeat the American trait of thrift. It will go a long way toward destroying American initiative and courage.”
      —Senator Daniel O. Hastings (R-DE), in 1935, listing the evils of Social Security…

      “[The Act represents] a step in the direction of Communism, bolshevism, fascism, and Nazism.”
      —The National Association of Manufacturers, in 1938, condemning a national minimum wage and guaranteed overtime pay

      “It is destroying the amicable relations between the white and Negro races that have been created through 90 years of patient effort by the good people of both races. It has planted hatred and suspicion where there has been heretofore friendship and understanding.”
      —Senator Strom Thurmond (D-SC), Senator Richard Russell (D-GA), and other Southern legislators, in 1956, describing the perils of integrating public schools …

    • Well I certainly hope that you are wrong. I hope that in 40-50 years ObamaCare will have been repealed and replaced with universal Medicare or some other Single Payer type system…

    • There is no doubt that these predictions were being made. But, were they wrong?

      They certainly weren’t spot on, but they weren’t nearly as wrong as you imply.

      1.) Doctors not participating? Many don’t. Indeed, I’m sure you are aware of the vast research showing much easier access to care for those on private insurance than on Medicaid. Medicaid pays a good deal less so access is limited.

      2.) A slippery slope? Well, we aren’t Soviet Russia. However, the very passage of Obamacare perhaps suggests that indeed we are on a slippery slope towards single payer or something similar (which many think is a good thing). Medicaid was on that slope somewhere.

      I’m not trying to defend the folks who were sounding alarms when Medicaid originally came about, but their predictions haven’t been as bad as you imply.

      • An honest question: which slips us closer to single payer, Obamacare working or failing?

        A less honest question: are those most concerned about slipping toward single payer helping Obamacare succeed or sowing the seeds of its failure?

        Yes, Obamacare expands Medicaid. However, one state is doing so in a multi-plan regime (Arkansas). Others could as well. Obamacare also supports an expansion of private coverage.

        • 1.) I’m not sure it makes all that big of a difference. Regardless of whether or not Obamacare is a “success” or “failure” in terms of cost,quality, etc, it is going to be extremely difficult to repeal or even reform and many of the programs and regulations embedded will become “Holy Cows” politically. Once Obamacare is implemented, we will have a more heavily regulated and subsidized health care system locked into place. This shifts the entire debate.

          2.) I don’t think the early evidence bodes well for Obamacare, and I think blaming this on those who opposed it is more evidence that doesn’t bode particularly well. Perhaps, the potential failure of Obamacare is/will be evidence that a larger state really isn’t the solution to our health care woes, or, if you sincerely believe that blame for any failure of the program lays solely on the shoulders of those that opposed it (a view that I do not share), then perhaps a program that cannot or will not be implemented well by both parties is not a good program to begin with.

      • No, if anything their predictions were considerably worse. The author is actually being very generous.

        Medicaid is literally the only thing that allows many people access to healthcare, it is literally a life line to millions who either cannot afford insurance due to poverty, pre-existing conditions or both. The fact that some doctors do not participate is not an indication of its failure.

        You claim medicaid participants have limited access to doctors, when in reality this program offers them the difference between limited access and no access outside of an emergency room.

        As to your second point, the very passage of Obamacare indicates that politicians (bought and paid for by the healthcare lobby) are absolutely desperate to avoid passing single payer; a program that would be far more effective and less costly.

        The predictors discussed in this article were not only wrong, but laughably wrong, and claiming that we are on a “slippery slope” to single payer… well, by your logic we have been on that slope for decades and yet it is actually less legislatively feasible to enact such a law now than it was when medicare was created. Largely due to the healthcare lobby.

        • Mike,

          I’m scratching my head as I read your comments about Medicaid. I agree that Medicaid offers crucial assistance to many lower income Americans. You seem to imply that something I said somehow suggests that I don’t believe this when in fact I do.

          I pointed out that the predictions that many doctors would not participate were at least partially correct as Medicaid patients do have less access than private insurance patients mostly due to lower reimbursements from Medicaid. This doesn’t make Medicaid a “failure”, but it does mean that there are real weaknesses in the system (and there are different weaknesses that are certainly present in the private health insurance market).

          Carroll, in this post, seems to call out those making dire predictions about Medicaid. While it is true that these extreme predictions (Socialism! End of Democracy!) didn’t pan out, it is not as if Medicaid has worked substantially better than predicted. Access to medical care is limited, the system is rife with bad incentives, and costs growth has been insane (the last two are also big problems in the private sector health market).

          The lesson for Obamacare here is that the doomsayers will ultimately prove to be wrong. However, as we have learned recently, the benefits of Obamacare were also vastly oversold to the public. Supporters are slowly admitting that health insurance doesn’t have the incredible effects on health that they originally claimed, that at least some will face “rate shock”, etc.

          In other words, the doomsayers were wrong but so were many of the advocates who greatly exaggerated the potential benefits.

          As to your last point, I disagree about single payer, but that is a different topic for a different time.

    • Sorry, but quoting material from the late 60s isn’t a good excuse to take down Obamacare.

    • Well, health care reform certainly won’t result in the “end of democracy itself” if you define democracy as a system that places 315 million people under the thumb of a central authority. Which apparently is how Dr. Carroll sees it.