ObamaCare’s Present and Imminent Medicaid Woes

By Lambert Strether of Corrente.

Hitherto, I’ve focused mostly on the ObamaCare exchanges, or the “marketplace,” because that topic is technically interesting to me, because it affects me personally, and because I think it’s the “thin end of the wedge” for future neo-liberal delivery of such social insurance as our betters deem necessary profitable. (For example, and I grant with no evidence, I picture a “Retirement Marketplace,” with lots of 401k brochureware, and Social Security as the “public option.”) As a result, my Medicaid coverage has been limited to the unconscionable “estate recovery” clawbacks for Medicaid payments to over-55s.

However, many observers believe that ObamaCare’s success, such as it is, is due to the expansion of the existing Medicaid program, not the, er, innovative Marketplace, so it’s time to take a look at the Medicaid state of play. (I’m going to skip the King v. Burwell mess entirely.)

I’ll quickly cover three topic areas: The usual random variations in coverage, waivers, and the impending loss of Medicaid’s temporary subsides for doctors. And, because I’m lucky enough to be a little bit new to Medicaid, I’ll welcome reader commentary even more than usual, especially from those with personal experience with the program.

The Usual Random Variations in Coverage

As we showed in perhaps overmuch detail in “ObamaCare’s Relentless Creation of Second-Class Citizens” (one, two, three, four, five, six) ObamaCare creates random variations in access to care via income, age, jurisdiction, employment status, marital status, and other personal characteristics. ObamaCare, then, is in no sense and has never been, and is not designed to be, a program that provides “universal coverage.” In no sense does ObamaCare consider health care as a right. Rather, ObamaCare is a program designed to deliver health insurance to certain market segments along certain channels, some of them pre-existing, and all of them designed to reinforce the position of the private health insurance industry in the health care system. Random variation by jurisdiction is especially evident in Medicaid:

While nationally the share of Americans without health insurance declined from 20 percent in 2010 to 16 percent by the second half of 2014, a divide has opened between states that agreed to expand Medicaid and states choosing not to. Thirty-five percent of adults below the poverty line remained uninsured in states that did not expand eligibility, compared with 19 percent in states that did.

So, if you live in the wrong state, tough luck, pal. Pain City for you!

Here’s a splendid example of the luck of the draw from Pennsylvania. The Philadelphia Inquirer:

Healthy Pennsylvania was the signature plan of Gov. Corbett. His administration got the green light from the Obama administration in August 2014 to start the program. Under the program, people in the expansion are getting less coverage than current recipients [another random variation]. And the Corbett administration had also been in talks with federal officials about reducing benefits for those traditional Medicaid recipients.

The chaos and the logjam of applicants waiting for approval are partly due to the Department of Human Services’ asking people to supply detailed personal financial information – bank account statements, life insurance statements, vehicle value, and retirement account statements – that is not required under Medicaid expansion.

For example, the letter from the state requesting the financial information also says that supplying the information is optional, said Kyle Rouse, a navigator with the Health Federation of Philadelphia.

[Kyle Rouse, a navigator with the Health Federation of Philadelphia] said a client brought the letter to him because she was confused. “It confused me as much as it confused her, because in the same letter it said the information was optional but they were requesting it.” …

What Rouse and other navigators and advocates have learned is that if their clients don’t supply that information, their application gets stalled or denied.

“The value of your bank account is irrelevant to your eligibility under the extension category,” said Kyle Fisher, a staff attorney for the Pennsylvania Health Law Project. “But practically, to get an eligibility decision as soon as possible, I would suggest that you have that information.”

Leave aside the partisan change or at least shift from a Republican governor to a Democrat in November 2014, which may improve this absurd and degrading situation where the optional is mandatory; what conceivable justification is there for a United States citizen to be subjected to this situation — where the bottom line, for some, must be the denial of needed care — because they live in Pennsylvania, and not New York or California? None that I can see.

But the random variations is, in fact nationwide, grossly obvious, and a consequence of ObamaCare’s system architecture. The Hill:

Since the court’s decision, just over half of states have opted to open up eligibility for the program in exchange for millions in new federal funding. States will take on an increasing share of the costs as the years pass, however, which has stoked skepticism among conservative governors.

Entirely justified skepticism, as we will see when we get to Medicaid fees.

Several states, such as Arkansas, have tweaked the rules for the Medicaid expansion with a waiver from HHS.

Colorado’s Democratic Gov. John Hickenlooper, who serves as NGA president, also said Tuesday that the waiver process should be streamlined.

“Lets make it easier to get those waivers done, and in many cases, make them permanent,” Hickenlooper said during a “State of the States” address, calling for “flexible federalism.”

“Flexible federalism” means giving local oligarchies the power to screw their locals as hard as they can. Just so we’re clear.

The meeting comes during a major momentum shift for Medicaid expansion, largely driven by hospital leaders in expansion-less states that are becoming increasingly desperate for the extra cash.

Last month, Tennessee Gov. Bill Haslam (R) took a major step toward making his state the first in the deep South to approve the expansion.

Again, what justification is there for this? Are citizens from the deep South lesser human beings, and less deserving of access to health care, than citizens in other states?

Fun and Games with Waivers

And so we come to “Section 1115.” Kaiser Health Foundation explains:

Under the Affordable Care Act (ACA), Medicaid plays a key role in efforts to reduce the number of uninsured by expanding eligibility to nearly all low income adults with incomes at or below 138% FPL ($16,105 per year for an individual in 2014); however, the Supreme Court ruling on the ACA effectively made the expansion a state option. As of November 2014, 28 states including DC are implementing the expansion. Under flexibility provided by the ACA’s Medicaid expansion, as well as pre-existing federal Medicaid law, the Medicaid expansion is being implemented differently across states in terms of what specific benefits are provided and how those services are delivered. To date, a limited number of states have obtained or are seeking approval through Section 1115 waivers to implement the expansion in ways that extend beyond the flexibility provided by the law. However, looking ahead, more states may pursue alternative models as a politically viable way to expansion in order to extend coverage and capture federal dollars.

Ah yes, “politically viable.” Too bad the Democrats blew it — assuming good faith — in 2008 – 2009, but perhaps they will figure out how not to suck in 2016. There’s always hope!

Anyhow, waiver proposals vary from the merely mischievous, like Utah’s workhouse requirement, to the truly dangerous, like Tennessee’s proposal. Vox:

[Tennessee governor Bill Haslam’s] proposal would rely on two separate plans for anyone above 20 (those younger would stay in a traditional, public insurance program): the Volunteer Plan and the Health Incentives Plan.

The Volunteer Plan is what is especially different about Haslam’s proposal: it would use Medicaid dollars to help low-income workers who qualify for Medicaid buy private coverage through their employer instead. Instead of having the worker contribute a premium, the state would step in to cover all or part of the monthly premium….

This is not something any other state has proposed to the Obama administration, and it could be controversial. It’s probable that the employer plans would cover fewer benefits than Medicaid [profit; administration, CEO bonuses] typically does (Medicaid, for example, often covers transportation to the doctor, a benefit that does not turn up in private coverage). Tennessee says it wants permission to put Medicaid enrollees in plans, then, that do not cover all Medicaid benefits. It’s not clear that the Obama administration would be on board with this.

The second program, the Health Incentives Plan, tries to make the public Medicaid program look more like private insurance. It adds in co-payments and premiums (the lowest-income Tennesseans would be exempt, and there are caps on how much an enrollee could spend). Plan members could also lower their costs by participating in “healthy behaviors.”

So, in essence, Tennessee wants to privatize and crapify Medicaid as much as it can, and is asking for a waiver to do it. Since that is perfectly aligned with the Obama administrations larger goals, not to say worldview, no doubt the waiver will be granted. Yay!

Loss of Temporary Medicaid Subsidies

The mind reels at this one. Here’s the set-up. Forbes:

Obamacare increased Medicaid reimbursement rates for primary care physicians to Medicare levels—but only for two years, 2013 and 2014.

“Only for two years.” Shenanigans like this is why Red State governors aren’t utterly insane not to trust the Feds never to cut their subsidies.

And yet one of the primary ways Democrats planned to increase the number of insured under Obamacare was by expanding Medicaid to millions more. In order to stifle opposition from physicians and states to their Medicaid expansion, Democrats drafting Obamacare included a two-year bribe to buy support. That increase just expired and lower Medicaid reimbursement rates are back.

So how low the lower reimbursement rates go? How bad are the cuts? They are very bad. Urban Institute:

Overall, primary care fees in the Medicaid program would fall an average of 42.8 percent in 2015 if no extension of the ACA primary care fee increase policy were granted. The fee reduction would be even larger — 47.4 percent on average — in those states that do not plan to extend the fee bump using state funds. To put the magnitude of these fee reductions in some context, consider that the projected Medicare fee reduction under the sustainable growth rate formula was 24 percent in 2014. …

And cuts in reimbursement will almost certainly lead to cuts in the delivery of care:

[S]ignificant drops in primary care reimbursement may lead physicians to see fewer Medicaid patients, potentially leading these patients to have difficulty finding a physician or getting an appointment. Although payment is not the only factor in physician acceptance of Medicaid (Long 2013), research has demonstrated a correlation between lower payment rates and fewer physicians accepting new Medicaid patients (Decker 2012).

I’m just shaking my head at this. New York Times:

Just as millions of people are gaining insurance through Medicaid, the program is poised to make deep cuts in payments to many doctors, prompting some physicians and consumer advocates to warn that the reductions could make it more difficult for Medicaid patients to obtain care.

Dr. George J. Petruncio, a family physician in Turnersville, N.J., described the cuts as a “bait and switch” move. “The government attempted to entice physicians into Medicaid with higher rates, then lowers reimbursement once the doctors are involved,” he said.

Again, shaking my head. Democrats get doctors and patients into the program — and go all triumphalist at the enrollment numbers! — and then after two years, they pull the rug out. Sorry, no more Medicaid for you! What conceivable justification for this cruel bait and switch[1] can there be? I can’t even come up with a Machiavellian one.

Conclusion

It’s almost as if the Obama administration was bound and determined to prove that government can’t do anything right (except shovel loot into the coffers of the 1% as fast as they can, of course. But that’s bipartisan).

NOTES
[1] To be fair, the entire Obama administration has been a bait and switch of colossal proportions. So there’s that.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

64 comments

  1. Christopher D. Rogers

    Lambert Sir,

    Not too sure if you noticed the UK Parliaments debate of TTIP yesterday, but at the heart of the debate was fears over loss of sovereignty and the privatisation of the NHS system in its wake. Suffice to say, our neo-liberals are are rubbing their hands with glee at the prospect of the introduction of a similar criminal enterprise on our shores. Rather than learn the lessons of its failure, as you clearly state, the genius of RomneyCare/ObamaCare is its ability to transfer wealth so much more rapidly from those in need, to those with accrued wealth already beyond their imaginations – indeed, many actually owning hospitals, never mind the joy to the insurance sector, which is never want for upping costs, whilst delivering less – in this instance bankruptcy and death.

    Perhaps its all a cunning ploy by the faux-Progressives to make “single-payer” look good, although look what happen in Vermont recently with their idealism. Somehow I believe the threatened final dismantling of the NHS in the UK may be the final straw in alerting our electorate to the full-on horrors of neoliberalism and unfitted greed – my heart really does go out to most of you over the Pond, who have to put up with this shit. And to think our greedy buggers wish to import this “exceptionalism” into the UK – God help us is all I can add.

    1. Yves Smith

      The TTIP and the TPP have much broader agendas than affecting health care, although that is a bennie. As much as we talk about single payer here, with the country moving to the right, it’s not on the political agenda here at all and not perceived as a threat, and hence is implausible as a motivator for the bill.

  2. Bridget

    I wonder how Medicaid reimbursement to physicians stacks up agains payments to physicians in universal care systems.

    1. Louis

      To really do an “apples to apples” comparison, you’d probably have to factor in some other variables: e.g. physicians in many other developed countries don’t leave medical school 6 figures in debt, so the return on investment (i.e. what they need to charge) doesn’t need to be as high.

      You’d probably also want to factor in the fact that most, if not all, other developed countries have cost-control provisions, including with drug prices.

      1. Bridget

        “You’d probably also want to factor in the fact that most, if not all, other developed countries have cost-control provisions, including with drug prices.”

        Of course I would. That’s pretty much the point. On the road to universal coverage, cost control has got to start somewhere,right? Just NIMBY,.

  3. Auburn Parks

    Or the scam architecture that is the subsidies system.

    My health insurance costs pre-ACA = $90 per month
    My insurance costs post-ACA = $150 per month but I got a $60 per month credit for the first year in Chicago on $25K reported income
    This year, my reported income increased to $30K and my credit decreased to $2 per month even though the same bronze plan i had last year increased in price by $2 per month. So thats a $700 a year cost increase to me and the only difference in my coverage pre-and post ACA is my deductible went up from $2500 to $6000 (BAD) but at least now I have a yearly spending cap of $6000 (GOOD). Thanks Dems, thats one hell of a great law you guys spent all that political capital passing (sigh).

    Its almost as if the whole system was set up to keep the amount of money the Govt spends down, so we can save some fiat digital entries on the computers at the Fed. God knows we wouldnt want to run out of keystrokes by doing medicare for all.

    This is exactly the type of idiotic policy that the prevailing Govt budget as a household budget thinking makes inevitable. The Govt trying to save its IOUs for fear of running out of its IOUs. Its madness.

    1. flora

      correlation isn’t causation, but look what’s happened to generic drug prices after ACA full implementation. From October 20,2014 LATimes:

      “[The congressmen] cited the example of the asthma drug albuterol sulfate. The average cost for a bottle of 100 pills was $11 last October, the pair said. The average charge by this April was up to $434.
      “The antibiotic doxycycline hyclate cost $20 last October [2013] for a bottle of 500 tablets, the congressmen observed. By April, the price was $1,849.”

      http://www.latimes.com/business/la-fi-lazarus-20141021-column.html

  4. roadrider

    I live in Maryland and went on Medicaid last May after the premiums for my COBRA coverage (already high) were doubled thanks to an Obamacare “feature” that allowed the insurer to replace formerly group rates to individual age-based rates. The new plan did not cover anything that the old plan didn’t and had more and higher co-pays so it was not a case of an inferior plan being replaced by an adequate plan. I had resisted going on Medicaid for a few months because I’m over 55 and was concerned about the clawback issue but with the premium rise I had no choice since i was out o work.

    Maryland uses privately owned managed care organizations (read: HMOs) to deliver The biggest problem I’ve had was in finding a primary care physician that would accept the coverage. The majority of the PCPs listed on the plan web site were not accepting new patients and even some that were listed as participating and accepting new patients actually weren’t. This is another “tax on your time” (and sanity) that Obama-bots and other ACApologists often ignore. The plans’ databases are typically out of date or otherwise incorrect as changes in doctors participation and acceptance of new patients are not updated frequently enough. Its up to the patients to call the doctors and check their status (I’m sure this is an issue with the marketplace plans but not one I’ve encountered previously with employer coverage).

    Another issue is finding information on the doctors credentials and experience. I was very unimpressed with the quality of doctors in the plan. Since I had some existing serious medical issues its not the case that “anyone with an MD will do”.

    There nothing that infuriates me more about the ACA than the attitude of Obama-bots that anything is better than nothing when it comes to medical care providers and that all the need to address is minimal access to preventive care for those who never had insurance before. They don’t seem to realize that there are plenty of us who have lost our middle-class jobs and good employer coverage (and have been unable to regain them due in no small part to the cruel austerity policies championed by Obama and the Democrats) that are being thrown into their rigged marketplace and expanded Medicaid bins and that some of us have needs that go far beyond minimal preventive care.

    1. Jim Haygood

      ‘The plans’ databases are typically out of date or otherwise incorrect as changes in doctors participation and acceptance of new patients are not updated frequently enough. Its up to the patients to call the doctors and check their status.’

      Can you imagine this occurring at any place else you shop, where you click on the ‘Find a Store’ button and it lists locations that are closed?

      Actually it happened to me only once. Radio Shack listed a store which, when I went by, had closed a few weeks ago. An indication of management problems? You bet. Radio Shack will file for bankruptcy in early February.

      An entity that can’t even keep track of its current providers is profoundly broken.

      1. roadrider

        Its not that they can’t – they just don’t give a shit and why should they? Who is going to make them? The customer base is, by definition, either captive due to their circumstances or temporary and will fly the coop as soon as they get a better alternative. The government doesn’t appear to be interested in fixing this either.

        The web sites for the MCOs are just as badly designed as the Exchange Marketplace sites. My MCO’s site doesn’t let you filter provider searches by their status WRTO accepting new Medicaid patients only by their status WRTO their employer plans. You have to click through two screens for each doctor to find out if s/he is accepting new Medicaid patients and even then the information can be out of date or just plain wrong.

        1. fresno dan

          I feel for you.
          Its all Potemkin reform. You got Health insurance – Rah, Rah!!!! The fact that you don’t actually have a doctor, or it takes two months to get an appointment is just not in the metrics…

        1. sgt_doom

          I would challenge anyone to read this collection of essays, Morbid Symptoms, Health Under Capitalism, from the Socialist Register, and still believe that capitalism and healthcare go together!

          The democratic-controlled Washington state legislature recently voted down the exchange database, which would have allowed the display of competitors’ prices and rates, a major selling point for Obamacare.

      2. Lune

        Jim-
        Your comparison is invalid for one reason: Radio Shack *wants* you to go to their store. They only make money when they get you to shop with them. Ergo, it behooves them to keep their store list up-to-date or else someone will drive to their nonexistent shop, then go to the Best Buy next door and buy their stuff from there.

        In contrast, health insurance companies *do not* want you to go to a doctor. That’s a loss. The harder they make it for you to find a doctor, the more likely that you will give up in frustration and deal with your health problem without seeking care.

        Indeed, if you’re even on their website looking for a doctor, that means chances are you are currently (or will, in the near future) cost them a ton of money, so the goal isn’t only to keep you from finding a doctor, but to make the whole process so frustrating that you cancel your policy altogether and try to find another insurance company. Barring that, the goal is to make it confusing what’s covered and what’s not, so that the very first medical service you seek drains your bank balance so much that you can’t afford next month’s premium, leading you to drop their insurance at the very time you actually need it. The years of premium that you paid in therefore becomes a nice profit.

        That’s the cold-blooded logic behind private, for-profit health insurance. If they wanted you to find a doctor or get care, they would make it easy.

        (P.S., if you think I’m being too cynical, first, I’m a doctor and see this quite often, second, google the term “health insurance rescission” for practices that make what I describe seem like child’s play)

    2. DPS

      roadrider,

      If your “mco” charges capitation fees, they could be subject to being recouped through the MERP, eventually (for plan enrollees age 55 and up).

      And, it is my understanding that this is possible even if the Medicaid beneficiary never ‘darkens the door’ of a health care provider.

      (Might be worth checking out.)

      Good luck!

    3. DPS

      You might want to check with the Administrator of Medicaid in Maryland to find out if “mco” capitation fees are subject to the MERP (since you’re over age 55).

      Good luck!

      1. roadrider

        Doesn’t matter – I had no other viable choice at the time I signed up and I still don’t. My only hope is to get a job either with benefits or that pays enough to afford one of those overpriced, crapified, don’t-get-sick Obummercare policies (and I’m already sick).

  5. diptherio

    One thing that really chaps my @ss about this is the overt paternalism involved. The people who design and run the system (and who have enough income/wealth to not be subject to the tender mercies of Medicaid) are “the adults” and anyone poor enough to be in the system is a “kid.” That’s how they seem to treat you anyway.

    Plan members could also lower their costs by participating in “healthy behaviors.”

    “If you eat your vegetables, you can watch an extra cartoon after dinner”

    You know what the most unhealthy thing you can do in this country is? The one thing that is pretty much guaranteed to lower your lifespan and the quality of your life while you’re here? Being poor. And despite the implication that the poor need to be tricked and coerced into doing the healthy thing, that they’re just not smart enough to make their own decisions, unaided, it is not any poor person who designed this fustercluck of a program, not the poor who have caused healthcare prices to skyrocket, not the poor who have been responsible for designing the architecture of our supremely dysfunctional system. No, that’s all been done by people who aren’t poor, and who feel like that fact makes them somehow superior to those of us who are. Screw ’em, the deluded a-holes.

  6. Jim Haygood

    Very roughly speaking, for physicians, privately reimbursed care is profitable, Medicare is ‘at cost,’ and Medicaid is below cost — a kind of subsidized pro bono publico professional charity. Business Week supplies an example:

    “What [Medicaid] pays doesn’t even come close to covering expenses,” says Pat Howery, the administrator at Colorado West Otolaryngologists, an ear, nose, and throat clinic in Grand Junction.

    For a basic office visit, Howery says, UnitedHealth Group (UNH) pays $119 and Medicare $73; Medicaid comes in at $52. “You can’t make this up in volume,” he says. In January the clinic began limiting each doctor to two Medicaid appointments a day.

    http://www.businessweek.com/articles/2014-04-10/doctors-shun-patients-who-pay-with-medicaid

    Now let’s apply Econ 101 to this Bizarro World setup. Force businesses to offer services below cost, and what’s gonna happen? That’s right, class: supply goes down! From the same BizWeak [sic] article:

    ‘About 46 percent of physicians accept Medicaid, according to a 15-city survey last year by staffing firm Merritt Hawkins. That’s down about 10 percent from four years before.’

    So even as Medicaid is expanding its customer base, reimbursements are being slashed to push the minority percentage of physicians accepting it even lower. How effed up is that? One can only admire the ‘reverse Midas touch’ evil genius of Democratic ‘leaders’ who gave us this pig in a poke.

    Politician, heal thyself!

    1. ambrit

      Jim;
      I can see a scheme floated where Med students do their Internships at Medicaid and Medicare centres, sort of like the old Charity Hospitals in Louisiana. (The best trauma doctors came from there. The interns received a “crash course” in trauma due to the prevalence of “Gun and Knife Club” cases they saw on a very regular basis.) It could also be spun as a sort of professional level AmeriCorp public service. Require all Med students to do two or three years of this ‘public service’ in order to get their M.D. and you have a very cheap, in all ways, “Public” health service for “the Masses.” (I’m sure the private medical sector will go along with this. It kills multiple birds with one stone. Better trained entry level physicians, (as a result of a more intensive experience due to dealing with a higher risk population.) A professionally socialized labour group, (a similarity of experiences will engender a similarity of outlook.) and a group already indoctrinated to expecting lower compensation, (more money for executive pay packages.)
      As an added bonus, you will start to establish a formally sanctioned two tier society. Now the peons will know their places! Happy days! The Millennium (the First that is,) will have arrived!

    2. ProNewerDeal

      is this actually true that physicians taking say a Medicaid 1 hr (or whatever time duration) patient appointment “lose money” on that 1 hr appointment? Or do they just make less money than their typical rigged cartel “market” profits? What percentage of a physician’s revenues is “overhead” of the billing clerk, malpractice insurance, etc?

      I honestly do not know, but wonder if Enron-type fraudulent accounting is occurring here when physicians state “we lose money on Medicaid”. Since US physician salary (and all healthcare costs in aggregate) are ~2+X the aggregate OECD physician, & ~1.5X Canadian physician salaries, if this is actually true, it implies an obviously incorrect notion that being that a majority of physicians in other OECD nations “lose money” as if they were an investor-backed startup company, or the set of all >1000 worldwide men tennis players that have any ATP ranking points.

      In other words, I suspect that if a US physician even solely took Medicaid, they would have plenty of patients given the physician shortage, & at WORST perhaps their net income would be $90K or some such, as opposed to “actually losing money”.

      IIRC from economist Dr. Dean Baker’s free book “The Conservative Nanny State”, the AMA owns enough poli-trick-ians, & uses various ways to rig the market. One way is that they purposefully keep the number of annual physician professional degree graduates artificially low, such that the US physician per capita rate is significantly worse than most OECD nations.

      1. Jim Haygood

        46% of physicians accept Medicaid, down from 56% four years ago. If physicians could treat these patients even at marginal cost, why would they pass them up? They are voting with their feet, en masse.

        Imagine if we had ‘Medicaid for plumbers,’ where a plumber would receive $52 for a home visit, instead of the going rate of $119. Good luck trying to find a plumber who would show up to fix your clogged drain today, this week or even this month. No incentive, no ‘snappy service.’

        1. ambrit

          Jim;
          I being a plumber, allow me to bring to your attention a salient point concerning the centre of power in this -three- way relationship. Your average plumber here Down South would get maybe $22.50 of that $119.00. (I have encountered many employers who pay less than this.) Why, because the actual worker is an employee, not a stakeholder. Add some overhead, say, $5.00 an hour for ‘social taxes’ and $20.00 an hour for physical overhead, and your worker eats up roughly $47.50 of your hourly charge. (These overhead figures will vary by locale, but will do for purposes of explication.) Let us allow 10% for local sales taxes. Now we are looking at $59.50. So, roughly $60.00 an hour to the boss. But wait, it’s not all Moonlight and Magnolias for Ol Massa. If, as is common, you are dealing with a shop that is associated with a “Name Brand” national chain, figure that about 5% to 20% of the initial bill is skimmed off of the top for disbersal to the “Investors” and the National Management. Sadly, now Ol Massas take is whittled down to “only” about $48.00 an hour. That I could live with. (Gives self dope slap. Twice.) The owner did indeed put a lot of work and worry into building his or her business. But $12.00 to some faceless outside Rentiers? (This doesn’t include the initial investment. Roto Rooter requires an initial cash down payment of $50,000. I checked.) Not if I had my way. Also, if your proprietor was getting that $60.00 an hour, the workers would give him or her some strong pushback. (One does not have to just up and go if confronted by rapacious management. Sometimes it is more fun to stay on and slowly destroy the firm from within.)
          So, a Medicaid Plumber isn’t out of the question. Just ask all of the plumbers, like me, who do work for little old ladies, widows and orphans for cost. Bad business. Yes. If that is all you want out of life.

        2. Jim in SC

          Physicians might make money treating medicaid patients if they weren’t paying forty percent of overhead employing office workers to argue with insurance companies.

          1. pdooley

            As a retired exploiter of the ill & infirm (i.e. primary care doc) I think 40% is too low. When I was in private practice, I had to earn $250/hour before I paid myself a salary. Most of that overhead was, indeed, required for staff to argue with insurance companies. It was not unusual to have payment for services flatly denied. Insurers phone lines were routinely understaffed, and my nurses spent hours waiting for a human being.

            Incidentally, the AMA is not the political power it used to be. The real power resides with the insurance companies. Even very large medical groups and hospitals, there is major asymmetry in bargaining power when fees are being negotiated.

      2. ginnienyc

        To address one point: Medicaid physicians never devote as much as 1 hour to a patient, even a new patient. The outer limit is 15 minutes; the average is 8-10 minutes.

    3. Ed S.

      Jim,

      Not to pile on, but the underlying assumption is that the practice is fully utilized. So if my choice is $119 vs. $73 vs. $52 I will (as a profit maximizing rational economic actor, which neo-liberalism presumes is our only state) pick $119 (and note it’s probably $119 + the patient co-pay).

      But if I’m not fully utilized, then my choice may be $52 or $0 – in which case $52 is much better. So I need to increase utilization (or decrease availability) to maximize my profits. Ain’t economics grand!

      Finally, the question is how much actual time is being spent with the patient for $52. If it’s like most medical practices, it may be no more than 5 minutes. So jamming 6 to 8 patients into an hour yields anywhere from $300 to $400. Now not as good as $720 to $960, but not chump change either.

      Annualize the “medicaid” numbers — $300/hr x 6hr/day x 200 days / year is a gross of $360,000 per year. Not G550 level, but not poverty either.

      1. ProNewerDeal

        Ed S, nice “envelope calculations”. It seems non-credible that such physicians are actually “making a net loss from Medicaid”

      2. Lune

        Ed-
        (NB, I’m a physician, whether that means I am more informed or more biased, you can decide :-)

        Your calculations are incorrect:

        First, your numbers don’t take into account overhead. If every time a physician saw a medicaid patient $52 went straight into his pocket, trust me, there would be no shortage of physicians willing to see them.

        The general overhead for many primary physicians (I’m not one, but based on what i know of their practices) runs to about 50%. The biggest components of that are staff salaries, malpractice insurance, office space, and billing services (outsourced billers usually take ~6-7% of gross). $52 does not cover this overhead for the patient visit (or potentially just barely meets it). That’s why many physicians lose money on Medicaid.

        Second, even if you assume that a physician only sees the patient for 5 minutes, the assumption that that’s the only time needed to care for the patient is false. Documentation requirements are so onerous that these days, it easily takes *more* time generating all the paperwork than it does seeing the patient. So at best, your “5 minute” encounter takes 15 minutes easily.

        Third, 6-8 patients an hour would yield daily clinic load of 36-48 patients in your 6 hour day. Even the most efficient physicians I’ve ever seen, who sometimes can manage 40 patients a day, do so in a 10-hour day with 2 hours spent charting when they get home! IOW, it takes even the most efficient physicians 10-12 hours to see the number of patients you think they can see in 6 hours.

        Finally, the proof is in the pudding: if your numbers are even remotely right, then the least-paid primary care physician (someone who sees nothing but medicaid patients all day) would make $360,000, and the average PCP would likely make $500,000. Yet the average salary for PCPs is around $200k, and that’s with all sources of insurance. Unless PCPs are adept at using accounts in the Cayman Islands to hide income, I’d say your assumptions are way off…

        1. pdooley

          These calculations reflect my experience as a primary care doc. Except for the estimate of a $200K salary, which I never approached in 35 yrs. of practice. Of course, a practice in the rural south involves a lot of Medicaid and “No-pay” patients. In this environment, you don’t refuse care to a neighbor you will meet in the supermarket, even if you want to be a “rational economic actor.”

  7. ambrit

    What is even more down the rabbit hole about the Medicaid ‘bait and switch’ is that here Down South, the ‘Red States’ get a massive subsidy from the Northern and Western ‘Blue States.’ Here in Mississippi, the debate is shifting to the amount of money the State is ‘missing out on.’ Even with the lower fees figured in, the hospital monopoly centres are eyeing those extra Federal dollars hungrily.

    1. Jim in SC

      It’s not clear that there is, in fact, such a subsidy for the Red States. If you exclude, highway building, military bases, and snowbirds’ social security and medicare payments, the Red States may be subsidizing the Blue States. I have never seen a clear accounting of it.

      1. ambrit

        But haven’t you just excluded the majority of the Federal budget? I’d argue these ‘excluded’ items are the subsidy.

        1. Jim in SC

          The comments section in this recent NYT article by Richard Florida addressed the question of subsidies:

          http://www.nytimes.com/2015/01/04/opinion/sunday/is-life-better-in-americas-red-states.html?_r=0

          In short, the argument is that military bases have to be mainly in Red States, because you don’t want them to be in highly populated areas. Federal highways go through these great open spaces, in part to move tanks and troops easily, but also as farm to market roads, which benefit the entire country, and help subsidize food prices everywhere. And, of course, retirees follow the sun and sell their expensive Northeastern houses in favor of smaller digs in the SouthEast and SouthWest.

          Can you really call the disparity in federal funding a ‘subsidy’ taking all this into account?

  8. Llewelyn Moss

    What a gawd awful mess.
    Now now, we musn’t blame the Democrats (/sarc). It was the Health Industrial Complex lobbyists that wrote this monstrosity and handed them the bill to sign. But hey, Senator Jim Baccus got his ambassadorship to China for this mess. So someone did ok.

    1. ambrit

      Jim Baccus. Isn’t he now living on “some uncharted lonely isle” in the South Seas with Gilligan and the Skipper?

      1. Llewelyn Moss

        Hahaha. Thurston Howell, III, I was indeed an rabid Gilligan Island fan. You caught me having a flashback there.

    2. Vatch

      An internet search indicates that Max Baucus does not speak Chinese. This would appear to be a less than optimal situation.

  9. Denis Drew

    The real fun is going to begin when people who cannot afford ACA because of the outrageous — to the working poor — deductibles (deductibles not covered by subsides, last I heard) start getting charged penalties because they cannot afford buy the coverage!

  10. flora

    Great post. Thanks.
    ” “The chaos and the logjam of applicants waiting for approval are partly due to the Department of Human Services’ asking people to supply detailed personal financial information – bank account statements, life insurance statements, vehicle value, and retirement account statements – that is not required under Medicaid expansion….”

    Sounds like Pennsylvania has decided to inventory the Medicade enrollee’s assets for future claw backs.

  11. Antifa

    Excellent coverage, Lambert.

    I know you chose to skip over discussion of King v. Burwell, but one small point on that topic is highly relevant to Medicaid: when the SCOTUS shuts down the Federal Exchanges in June (which is why John Roberts went out of his way to take the case), about 8 to 10 million formerly insured people are going to have to turn to Medicaid, putting even more stress on this underfunded system.

    It’s going to get worse before it ever gets better.

  12. John Yard

    Just today ( Jan 16 ) Covered California ( Obamacare ) blocked UnitedHealth Group from selling insurance in California in 2015. The rationale was that UnitedHealth did not participate in the initial Obamacare rollout. An LATimes article quoted Califonia Insurance commissioner Jones criticizing this, saying ‘it protects the big insurers market share and hurts consumers”.
    We seem to be moving away from traditional regulation to a guided/protected capitalism with very close connections between the state and industry.
    Also of interest is how Obamacare is preempting the state regulation of insurance . Covered California opposed an initiative in the last election ( it failed ) which gave more powers to the State Department of Insurance to regulate health insurance rates .

  13. Propertius

    To be fair, the entire Obama administration has been a bait and switch of colossal proportions. So there’s that.

    Much as I dislike Obama, I don’t really think this is the case. If you listened carefully to what he actually said during the ’08 campaign, it was pretty clear what he was going to do, whom he was going to do it to, and whom he was going to do it for.

    He said he wanted to “give health insurance companies a seat at the table” (May 31, 2007), and by God he did.
    He said he’d increase the use of drones (even in Pakistan, a nominal ally), and by God he did.

    Okay, he did sling a load of BS about “a robust public option”, but it was pretty obvious that was just to prevent anyone from listening to single-payer advocates. It (as you often pointed out on Corrente) was so obviously absurd that nobody in his right mind would pay attention to it.

    How could anyone with two functioning neurons claim not to have known how this was going to turn out?

    1. different clue

      The answer to that question would be very interesting and well worth finding out. Because, as you know, many millions of people with two neurons did not figure this out. Why is that?

  14. Jim in SC

    Lambert: I regret you have to deal with this Medicaid system. Someone with your organizational and writing skills should be making big bucks somewhere with a Cadillac health insurance plan. I could probably say this about many people who post here, but you’re the most obvious. Thank you for writing such a thoughtful piece on this subject.

  15. cripes

    @Jim in SC
    With the surplus of advanced degree holders working as adjuncts at $2,600 per course, driving cabs and buying groceries with SNAP cards, I think your comment is outdated and more than a bit classist.
    You’re missing the point of all this, which is to submerge the former middle classes in economic serfdom.

  16. Oregoncharles

    ” Are citizens from the deep South lesser human beings, and less deserving of access to health care, than citizens in other states?”
    Well, uh: “the states fighting marriage equality are the same ones that fought racial equality.”
    these state governments are presumably elected. (And no, I’m not a big fan of the Union – political, that is.)

    1. Lambert Strether Post author

      Ye, one can make the argument that Lincoln turned out to be right on the slavery thing, but wrong on the Union thing; let them go, bless their hearts. I guess I don’t want throw the ordinary poor schlub under the bus because of their sucky former slave-power local oligarchy. And that’s probably good politics too….

      1. Jim in SC

        According to Lincoln himself, his personal opinions about slavery did not enter into his decision to issue the Emancipation Proclamation. It was a war measure alone. His enduring theme was, ‘maintain the union at all costs.’

        Much of the antipathy towards the South comes, in my opinion, from a willful ignorance of the history of the North regarding slavery, not only in colonial times, but between 1776 and 1860. Learn more at:

        http://slavenorth.com/

        1. Lambert Strether Post author

          I don’t see why Lincoln can’t get it right on slavery as a war measure. And the Union was clearly brought into making by the mother of all sausage making. see here on Dark Bargain.

          That said, I don’t hear a lot about pre-Civil War Northern wage workers escaping to the South. Would there be a reason for that?

          1. Jim in SC

            Actually, Lambert, there was a lot of movement of people from North to South prior to the Civil War. I doubt they were wage workers, as there was no wage labor for white people available in the South. Slave labor did all the work, including all the skilled work, and this left the white working class in a pickle. But whites moved South for diverse reasons: to earn meager livings as teachers (see ‘Ebony and Ivory,’) though, like the slaves, they typically just earned room and board; as engineers, building railroads and cotton mills; and in various positions managing both the slave trade and cotton production. Thirty per cent of the white population of New Orleans–in the 1800-1830 time frame– had been born in the North. My sense is that white people who came South prior to the war were either better heeled or better educated than the Northern population in general.

            1. Jim in SC

              That was an inspired bit on ‘Dark Bargain,’ Lambert. Gouverneur Morris clearly didn’t know he wasn’t going to get a favorable hearing in Philadelphia, as it had elected six mayors who were slave traders. John Jay was also strongly opposed to slavery, but Morris and Jay were clearly in the minority. The economy of Massachusetts and other New England states revolved around slavery well into the 19th Century, and New York City was so dependent on the cotton trade that Mayor Alonzo Wood tried to engineer NYC’s secession along with the South’s. Though I don’t think a US warship ever fired on Manhattan, as depicted in ‘Gangs of New York.’

  17. Lune

    Lambert-
    Another point you should know:

    Medicaid has an equal access requirement that says that states have to set medicaid rates such that beneficiaries have access to care that’s at least equal to the general population. There have been several lawsuits against states saying that their payment cuts violate this equal access requirement. The Obama Justice Dept has filed amicus briefs stating that this equal access requirement cannot be enforced (i.e. that states can disregard the equal access requirement and cut payment rates even if that means medicaid patients have much worse access to care than the rest of the population)

    Check out this article about it:
    http://www.nytimes.com/2011/05/29/us/29medicaid.html?_r=2&scp=1&sq=medicaid%20obama&st=cse&

    The choice quote:
    “I find it appalling that the solicitor general in a Democratic administration would assert in a Supreme Court brief that businesses can challenge state regulation under the supremacy clause, but that poor recipients of Medicaid cannot challenge state violations of federal law,” said Prof. Timothy S. Jost, an expert on health law at Washington and Lee University, who is usually sympathetic to the administration.

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