Thursday, May 05, 2011

On Medicaid, Cinderella and Pumpkin Politics

Ezra Klein writes about the vulnerability of Medicaid today:
There are two reasons Medicaid is more vulnerable than Medicare. The first is who it serves. Medicaid goes to two groups of people: the poor and the disabled. Most of the program’s enrollees are kids from poor families, though most of the program’s money is spent on the small fraction of beneficiaries who are disabled and/or elderly. These groups have one thing in common, however: They’re politically powerless.
The second is who pays. Medicare is a federal program. Medicaid is a state-federal match, and it kills states during recessions, as unlike the federal government, states can’t run deficits, and so they find themselves with increased costs because they have more people in need but decreased revenues. So there are a lot of governors — particularly GOP governors — straining under overstretched state budgets who’d like a way out of their fiscal crisis that doesn’t include raising taxes, and there are a lot of federal legislators who’d like to save money without having seniors mounting protest marches outside their office, and Medicaid begins to look like an answer to everyone’s problem.

Medicaid is the federal-cum-state health financing program for specified groups of the poor. (It's easy to confuse it with Medicare which is the federal health financing program for the elderly.) While attacking Medicare has been called the third rail in American politics (you get electrocuted because the elderly vote), attacking Medicaid has far fewer risks, and the reason, as Ezra states, is in the powerlessness of its recipients and the fact that they mostly don't vote.

It does look like Medicaid has been picked out as the Cinderella who will not go to the ball, after all, by both the Republicans and some Democrats. Something needs to be cut and the neediest among us are also the least likely to mount powerful opposition to such cuts. Both the Ryan proposal of replacing federal matching funds with block grants and the ironically named State Flexibility Act would make sure that the pumpkin stays a pumpkin and doesn't turn into a carriage.

But so would the federal spending caps proposed by Senators Bob Corker (R-Tenn.) and Claire McCaskill (D-Mo.):
More than half of the Senate's Democratic members have signed a letter to President Obama opposing Medicaid block grants as well as spending caps.

"Just like a block grant, a total spending cap fails to account for trends like the aging of the population and rising health care costs," the letter states. "It would require such unprecedented and draconian cuts to Medicaid over time that it would inevitably result in s block grant, spending caps or other radical changes to the Medicaid program."
How fascinating that states should have more flexibility (to kick people off Medicaid, mostly) but that the federal government should have less flexibility! It is pumpkin politics.

The only real hope of not cutting the state budgets by cutting off aid to the most vulnerable might lie in the fact that a quarter of Medicaid funding goes to the elderly, mostly because long-term nursing home stays are not covered by Medicare but by Medicaid, absent private funds for them. Many of these elderly recipients, if not most, were not poor to begin with. Nursing home care is expensive and once private funds are run down it is Medicaid which takes over.

Thus, the Medicaid cuts might mean that middle-class voters will wake up some day finding an extra very large bill for grandpa's nursing home care in their mailbox. Or grandma might be deposited on their front step because there are no longer funds to care for her.

That is the only fairy godmother (badmother?) that I can conjure to help Medicaid.