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Paul Krugman is wrong about Medicaid

Paul Krugman suggests in his New York Times column today that continuing the expansion of Medicaid is the answer to the outlandish cost of health care in the United States. He's wrong. Medicaid is a lifeline for the impoverished, but the program would have to be reformed to the point that it would no longer be recognizable as Medicaid to be satisfactory for most Americans.

The reason Krugman likes Medicaid is the program's success at controlling costs. He says that of all the health care delivery systems in the country, Medicaid is the one most like those in Europe, which have much lower costs than ours. If that's true, it's only because most of the rest of our fragmented system is completely fucked up.

Among the primary aims of European systems is health care equity — providing everybody with the same access to high-quality health care regardless of income or station. Medicaid does not come close to doing that. Krugman says that care from Medicaid providers is good and that lack of access is greatly exaggerated. In my experience the former is sometimes true and the latter, never.

The level of care and access to it varies wildly from state to state and even from county to county within states. In some locations the government's role is only to determine eligibility, and the program itself is run in whole or part by for-profit managed care organizations with extremely narrow choices of providers. In others, it remains a government-administered program in which the choice of doctors is limited only by the number of them who choose to accept Medicaid patients — but that number is typically a small percentage of the doctors in the area.

I've been a Medicaid recipient in three counties and two states. In Los Angeles, Medicaid was administered entirely by the county government. I received my primary care from a satellite clinic of a highly regarded university-affiliated hospital system. The clinic itself was well appointed, and waiting times were only occasionally excessive. Care, however, was inconsistent. I didn't know from visit to visit which doctor I would see. The clinic took months to retrieve my records from the low-income clinic (also affiliated with the university hospital system) where I went before I got Medicaid; a mistaken diagnosis at the Medicaid clinic led to several extraneous X-rays that put me over the limit considered safe, and that would have been avoided had my chart been promptly retrieved. And there were other issues that don't warrant relating but that would almost certainly not have occurred had I been a patient of higher social status attended by a physician in private practice.

Medicaid in San Diego county was run by for-profit managed care organizations with few provider options. Because Medicaid is administered at the county level in California, I had to register with the San Diego office in order to get referrals to specialists, a process that was the earthly embodiment of Catch-22. I ultimately chose the plan with the clinic closest to me. The clinic was perpetually swamped. Waits were usually long and reception areas were sometimes standing room only. I have no quarrel with the care, other than that the staff seemed perpetually exhausted.

It's no secret to regular readers of my blog that I've had my share of mental health issues; that's how I wound up on Medicaid. I didn't have a problem with access to mental health providers in Los Angeles, although I did get saddled with a couple of shrinks who were in serious need of shrinks. In San Diego, though, it took months to get a referral and more months to get an actual appointment. This was in part because of the difficulty registering with the county, and in part because the number of providers was so small. Ultimately I saw a psychiatrist once in the year I was a Medicaid patient there, toward the end of my tenure. Prior to that I had to press the nurse practitioner at my clinic to ask her supervising physician to prescribe my psych medications.

Now I'm back in Honolulu, which also uses managed care groups to run its Medicaid program. None of the doctors I had when I lived here before accept patients from either of the managed care groups, and none of the doctors near me do so either. I'm back in a clinic. It's not the most comfortable environment, crowded and often with long waits, but the staff are dedicated, there's a pharmacy on the premises and I get to see the same doctor each time. He has referred me to a couple of specialists for non-emergency exams or treatment; three months later in one case and one month in the other, I still don't have an appointment with either because so many specialists don't accept Medicaid patients that the ones who do are seriously backlogged.

Other problems exist in addition to the access problems and the issue of drastic inequalities across the system nationally and within states. Among the most serious of these is the provision under which Medicaid agencies can attempt to recover costs from the estates of beneficiaries who are more than 55 years old. This is something that would be unimaginable in any other developed country.

Another problem, the proliferation of for-profit managed care companies within the system, may well destroy Medicaid in all but name. This is a process that began in the 1980s under Reagan, continued under Clinton and accelerated under the second Bush. 28 states now use for-profit companies in at least some locales. The Obama administration recently granted a waiver to Arkansas allowing the state to steer Medicaid expansion-eligible residents into plans sold on the insurance exchange there — a practice other states, particularly the ones that spurned the expansion but will eventually join in, are certain to emulate. What this means is that Medicaid is in the process of being privatized, with government money subsidizing insurance companies and managed care companies. It begins to approximate a voucherless version of the voucher system that Republicans hold so dear, laundering money through consumers to the corporate gatekeepers.

This is not the system Krugman imagines. He's not alone; most Democrats and many people who describe themselves as progressive are celebrating the Medicaid expansion under Obamacare as an extraordinary advance. In terms of coverage, they're right. In terms of steering the country toward health care equity, they're wrong. Medicaid patients are too often treated as second-class citizens, and the problem is likely to worsen without the kind of drastic reform I mentioned earlier.

There are at present about 150 million Americans being served by at least a half-dozen single-payer systems. We need to take the most popular of those systems and expand it to provide cradle-to-grave coverage for everyone in the country, and improve it to achieve the health care equity that Americans deserve and that President Obama has described as a basic human right. We need Medicare for all.


Cross-posted at BTC News

Average: 5 (3 votes)


quixote's picture
Submitted by quixote on

Well said! I'm not sure where highly intelligent people like Krugman get the idea that Medicaid works. I've never had to use it, but I don't have to do a study to see that it obviously doesn't. Maybe he just looks at some kind of favorable stats and never imagines having to deal with the system himself.

Ocare shovels money at the insurance industry, which would have to make them stronger and get us even further away from any real solution. But the royal web site stuff-up, and now that the back end problems are starting to bite, seems to be laying it out for people. Insurance companies are the problem, not the solution. It's taken months, as usual, but I'm starting to see it outside of Corrente and in the great mass media out there.

Like this in the LATimes, Insureres under fire as Obamacare kicks in: "This whole law is a gift to insurance companies," said Helena Ruffin, a health insurance agent in Venice. "They owe us good customer service."

Submitted by marym on

Krugman and others celebrating the Medicaid expansion are indeed wrong. Thank you for identifying the problems so clearly.

Here's a link to data as of 2011 showing the percentage by state of Medicaid recipients enrolled in managed care organizations; and a link to data as of 2012 indicating that about half of these were for-profit, and also showing that only 11 states had a mandated medical loss ratio for Medicaid.

This, of course, is nothing like what European countries have, which is non-profit insurance.

Submitted by weldon on

Thank you very much for the links. I've been looking for more detailed info about the encroachment of the managed care groups and hadn't found it, so this is great.

TheMomCat's picture
Submitted by TheMomCat on

You are absolutely correct. We need to expand Medicare and apply cost controls to suppliers, including hospitals, and big pharma. Taking out the profit motive is a must. Minimizing & simplifying the paperwork for both patients and providers would also cut costs.

Barmitt O'Bamney's picture
Submitted by Barmitt O'Bamney on

Ah Medicaid, the separate but "equal" of US health care. The Apartheid segregating the poor patients out of sight of the more worthy and wealthy. The steerage class of the misery biz. No wonder liberal Democrat Paul Krugman gives it a like. Do the minimum: pretend to care, but keep the riffraff out just the same.

Submitted by Dromaius on

Yes he is, as you've so eloquently and thoroughly said.

The elite speaks! And gets it wrong again. I think people like Krugman should have to "eat their own dogfood." If Medicaid is so wonderful, Mr. K, go on it for a couple years! Then let's see how much you like it!

Rainbow Girl's picture
Submitted by Rainbow Girl on

Great idea.

Krugman would finally do on-the-ground field work to gather actual data on which to base his next "Like" (which he can also post on Facebook if he wants), sort of like those politicians who have gone on food stamps or joined the homeless for a couple of weeks except unlike them, and because he is a Very Serious Journalist with a (albeit phony) Nobel Prize, he would STAY on Medicaid for at least 3 years to allow the data-gathering mission to yield meaningful information (personal experience with the Medicaid health care delivery system).

He wouldn't be allowed to moonlight with his private insurance during that 3 year period, either. Or accept any elemosinary or charitable care from any non-Medicaid sources.

Alexa's picture
Submitted by Alexa on

Excellent post, weldon.

Plan to post on this topic after the next round of faux fiscal negotiations.

I hope that you get to see your specialists, and that you're under age 55!

(MERP is an unconscionable program, IMHO.)

Five Stars For You! ;-)

Alexa's picture
Submitted by Alexa on

[This list doesn't count the President's or lawmakers special healthcare provided under the military system.]

1) Tricare

(Retirees and family members)

2) VA System

(Disabled Vets, but don't remember all the criteria to participate. Mr. A has very limited VA treatment eligibility. Full benefits (I believe) are for fully disabled veterans. Could be that some "war" veterans, who aren't disabled, can use this system--don't remember for sure, and the regulations could have changed, anyway.)

3) "Active Duty" System

I'm not that knowledgeable about European models, but doubt that they could surpass the one that we participated in (may or may not be the same, today).

Called for an appointment, showed up, and didn't spend a dime!

What can I say, LOL!

I don't recall that we had a co-pay for RX--if we did, it was minute! And it was filled in the same clinic or hospital dispensary that you were seen in.

Mr A had very risky and intricate neurological surgery at a top Army Medical Center, performed by one of the top neurosurgeons in the country (supposedly).

(We had to be medevaced from Alaska.)

Mr A recalls paying less than $20, out-of-pocket, when he was discharged from the surgery. (He can't remember what the actual charges were for.)


Yes,he did pay something!

He was "docked" his rations per diem for each day that he was hospitalized, since he was obviously feed "three squares."

But that was it!

Why not advocate for opening up this system--for a fee, of course. But a fee that is on a sliding scale, as affordable as Medicare, and waived for the very poorest Americans.

Alexa's picture
Submitted by Alexa on

I'm going to "amend" that there was absolutely NO charge for active duty medical care--not because I think there was--but because Mr A can't ABSOLUTELY remember, and I'd like to be accurate in my statement.

He believes that If there was one--it was definitely VERY nominal. So there!

Submitted by weldon on

My doctor has a really persistent nurse practitioner pursuing the appointments. Thanks very much for the kind words -- I've learned a lot from you during the past several months.

Chromex's picture
Submitted by Chromex on

As an attorney that has had to do tax work in the field, my only disagreement ( Krugman, however intelligent he may be, is NOT intelligent when it comes to setting aside ideology) is the idea that so-called not-for-profit companies in medicaid would make a bit of difference.
All one has to do is look at the balance sheets of these not-for-profit companies to see that they are fully for profit. If the balance sheets do not convince you, take a look at salaries of officers and directors and the location of annual meetings ( generally, Bermuda, et al). The glossy annual reports distributed at these meetings are also quite amusing, and the rhetoric used to describe the financial activity often indistinguishable from Pepsi's annual report or other similar "big corporations".
Actual nonprofits do not behave in this manner because they cannot.
What the law allows to be labeled "nonprofit" , most shamefully in the medical field, is a scandal.

Submitted by lambert on

True dat.

Submitted by lambert on

... the only voice calling bullshit on Bush. The only voice in the entire "media." It was horrible. Krugman, to his credit, looked at the numbers on the Bush budget -- IIRC, the first one, though this was a long time ago -- and called bullshit. You have no idea what it was like -- I mean, not even Rachel Maddow or Josh Marshall, horrible though they are.

In fact, I found Atrios through a Krugman column, and was introduced to blogging. So without Krugman, my plan to blog and grow rich would never have been formed.

Now, that was a long time ago. But Krugman, back then, really did perform a very valuable service. But "that was then, this is now."

Cujo359's picture
Submitted by Cujo359 on

There are at present about 150 million Americans being served by at least a half-dozen single-payer systems.

I've generally lumped those Americans into groups: the poor, senior citizens, the military, and prisoners. Am I missing someone? Anyways, a different system for each. Having a different one for the military might make sense, but having so many different systems only adds to administrative costs and the complexity of getting medical care. For that reason alone, I think it would have made sense to combine those services into one.

But then, getting medical care to people really is beside the point, isn't it?

nihil obstet's picture
Submitted by nihil obstet on

The military are served by a health service. As I understand it, veterans are served by a separate health service. I'd guess prisoners are served by different mechanisms in different jurisdictions, but I'd guess that there's generally not a single-payer, but instead a single contracted private business to provide medical services to inmates.

The day of the independent physician is passing. Most doctors are now employees. If health care is a public good, then why pay competing businesses to provide it rather than having a public health service? This is exacerbated by the fact that a large medical organization is likely to own a hospital network which then buys up independent doctors' offices, with the doctors becoming employees. Employed doctors are expected to make referrals to the hospital for tests and treatments. Hospital-owned services can be substantially more expensive than free-standing services.

Unless "single-payer" comes with a whole lot more regulation than has been successfully applied to any public payout system in the U.S., it will leave in place lots of problems. We need a national health service to address these problems.

Cujo359's picture
Submitted by Cujo359 on

Strictly speaking, I don't think you can call Medicare single-payer, either. After all, there is supplemental insurance.

Unless "single-payer" comes with a whole lot more regulation than has been successfully applied to any public payout system in the U.S., it will leave in place lots of problems.

Agreed. The problem I had with the ACA, apart from its dependence on insurance, was that it did almost nothing to make health care more affordable, available, or effective. Most of the problems are still there, plus some new ones added by changes to intellectual property laws for drugs.

Submitted by marym on

With HR 676 - Expanded and Improved Medicare for All there's no supplemental insurance.

NO COST-SHARING.—No deductibles, copayments, coinsurance, or other cost-sharing shall be imposed with respect to covered benefits.

Cujo359's picture
Submitted by Cujo359 on

Thanks for the link. This (and its predecessor, of course) is the only bill anyone in Congress has offered that has any chance of making medical care better and more accessible in the last few years. And yes, I remember the nonsensical bill Sen. Sanders was flogging a few weeks ago.

Only catch is how homeless people would get a card. There are ways to do that, but how they would work out in practice, I don't know.

Submitted by hipparchia on

... of all those different single payer systems.

this one of the reasons why I think that using the "technically correct" term "single payer" is detrimental, and misleading.

what we really want, and need, is one payment system for everybody in this country, paid for with public funding and administered by ONE government agency.

the federal government pays for health care for most seniors and for some disabled non-seniors through medicare (agency: hhs/cms).

the federal govt pays for health care for the active military, some retired military, and (some of) their dependents through tri-care (agency: military). some health care is delivered in military-owned hospitals and clinics by military-employed doctors, nurses, pharmacists, etc, making this a miniature national health service.

the federal govt pays for (some) health care for (some) veterans through va clinics and hospitals, which is yet another federal-govt-owned national health system. (agency: vha)

the federal govt pays the bulk of the premiums of the private health insurance for its civilian employees. (agency: fehbp). the insurance companies act like all insurance companies everywhere in the u.s. - narrow networks (as narrow as possible, anyway), tiered drug formularies, in-network and out-of-network charges, etc.

the federal govt gives $$$$ to the states, which the states then use, with some of their own $$$, to pay for health care for the poor. (agency: hhs/cms + all the various state Medicaid agencies).

the federal govt gives $$$ to the states, which the states then use, with some of their own $$, to pay for private health insurance (generally) for poor and near-poor children who might not qualify for Medicaid. this is the chip program (formerly called s-chip) and the federal govt agency is again hhs/cms, but the program is administered through the states, the states Medicaid agencies, and the insurance companies.

so, while it's technically correct to say that the federal govt is one "single payer" here, the disbursement of funds and the decisions as to who gets what kind of care are wildly complex, convoluted, and inequitable.

"medicare for all" emphasizes not only the "single payer" aspect, but also the "single nationwide administrator" and the "single nationwide program" and the "single nationwide insurance plan" and the "single nationwide network" aspects of a truly equitable system.

Submitted by lambert on

... the government programs have become, which post after post from people with actual experience -- unlike Krugman -- keep showing. I guess I've got to get with the times!

That said, "Medicare for All" (correctly) brings the riposte that Medicare has become infested with rentiers as well, and is also expensive.

I think the error was mine in calling these programs, incorrectly, "single payer" when that is not the technically accurate term.

rexvisigothis's picture
Submitted by rexvisigothis on

I see an easy fix for the access/quality issues you raise vis-a-vis Medicaid, which retains the cost control aspects that so enthrall Krugthulu.

Doctors, like Lawyers, practice under licensure regulations administered by state agencies.

Lawyers have found themselves, in sundry jurisdictions, with a mandated minimum of pro bono hours if they wish to retain their license to practice.

Let x=the percentage of the population covered by medicaid within 5 miles of a particular doctor's office. *To retain their license, all doctors must have a roster of patients in which the percentage of medicaid patients is no less than .95x.

*(If there's a shortage of medicaid patients available, we'll bus them in)

Submitted by Dromaius on

I liked everything you said except for this part:

*(If there's a shortage of medicaid patients available, we'll bus them in)

This is what farmers do with cattle. This is not a way to treat human beings, especially given that people don't all need medical services at once...and given that low income people might not be able to sacrifice a day away from work and/or family to take the "healthcare bus" and stand in line to get served.