Medicaid

Why a government run, single payer system is good for business, and good for you and me

August 6, 2005

Why do low-paid American workers need to feed from the government trough of Medicaid to get adequate health care coverage for themselves and their families? Don't those damn commie pinkos on the left realize that this is a waste of money? Why the hell should my tax dollars subsidize some ex-welfare queen's health insurance?

Sounds pretty logical, right? As with most right wing economics, defending our current health care system only works if you remove all of the facts from the debate. The libertarian pipe dream (all government programs are wasteful, everything in the private sector is more efficient because of the invisible hand of the free market) is great if reductionism is your goal. However, if you're trying to achieve actual results in the real world, you need to take facts into account. Like the fact that private insurance companies spend more per patient than Medicare. Like the fact that the much vaunted profit motive has driven up drug costs, as pharmaceutical companies have used their political and economic influence to stifle competition.

In light of the reality of the subject, right-wing attacks against expanding Medicaid are exposed as cruel and tragic. Ask Ford and General Motors.

MYTH: Medicaid costs are up and they need to be brought down to more reasonable levels

The government's free health care offering swelled Medicaid's numbers as many low-income workers are choosing Medicaid rather than insurance from their employer because it is free or nearly free and often provides more benefits, according to an eye-opening report in USA TODAY…

The growth of the health entitlement program – which critics say has become national health care by stealth – has been embraced by both Republicans and Democrats. President Bush has even proposed $1 billion in spending for the next two years "to encourage eligible families to sign up for Medicaid," USA Today noted.

Some experts blame the growth of Medicaid on 1996's landmark welfare reform legislation, which moved millions of welfare recipients off the welfare rolls and into low paying jobs. To make sure these newly employed didn't lose free health benefits, the federal government enacted legislation to extend Medicaid to lower-incomed workers….Now a great number of workers – many who were never on welfare - can also sign on for free health care. Under federal rules, a family of four can earn as much as $40,000 a year in most states and still get government health insurance for children.

--Jim Meyers, “Medicaid’s Costs Soaring,” NewsMax.com, 8/3/05

REALITY

Are Medicaid’s costs soaring? Yes, absolutely. Medicaid costs are up 85% from 1997 to about $330 billion a year. This is a lot of money, no question. And is there waste in the Medicaid system? No doubt. But this is clearly money well spent when you consider that the spending increase has mainly been driven by a 50% increase in the number of benefit recipients. In fact, Medicaid coverage should be spread to even more Americans.

Wingnut commentators all sing in the same key about Medicaid and the government’s role in providing health care for its citizens. What does it say when they condemn their leader for being too generous with social programs? W wants to expand Medicaid spending by 0.33%? Blasphemy! Craziness! What is he thinking?!? Does it really make sense to chastise low-paid workers for seeking free Medicaid coverage instead of paying into their employer’s system? If you made $40,000/year and had to support a family of four, would you choose the free service or the system that you had to pay $400/month just to buy into? Which option do you think a rational person would choose? Does anyone remember compassion?

But the question is, why should we pay for other people's healthcare? It comes down to the costs and benefits of various healthcare systems. It is very easy for people who enjoy generous employer-based health benefits to be jaded and to suggest that the United States should not provide any health coverage to the 40 million Americans who are either un- and underinsured. However, this ignores the unsustainable costs of those benefits, as well as the costs to society of maintaining a large un- and underinsured population. Firstly, American companies cannot continue to compete with competitors from countries where the government provides healthcare, and those costs to American companies are currently inflated due to inefficiencies in our private system. For example, private health care companies spend more on actuarial costs, because they must factor in previous conditions and high risk applicants. That plus the dead-weight costs associated with regulatory and legislative lobbying combine to make private coverage less efficient than a single payer system. Blue Cross spends more per patient than Medicare. Put that in your crack pipe and smoke it, Jack Kemp!

An oft-cited example of the problems with health care coverage in this country is the quagmire that General Motors and Ford Motor Company have found themselves in, particularly as a result of their high health care costs. Looking at Ford, on a per-vehicle basis, Ford spends more money on health care (more than $1,000 per vehicle) than it does on steel. Think about that. From 2000 to 2003, Ford Motor Company’s health care costs rose from $2 billion a year to $3.2 billion. During this same period of time, the number of Ford employees decreased and the richness of the health care benefits provided to employees decreased. Therefore, if health care benefits to employees did not cause the massive spike in health care costs, what did? Ford and GM have to compete with companies from countries with universal care. These companies are at a $1,000+ per car advantage, off the bat. Do you think Rush Limbaugh has a real answer to that? We don't.

Another reality that you won't hear about from the flat-earth crowd are the vast social and economic costs incurred to society by an underinsured work force. As an ounce of prevention is worth a pound of cure, healthy workers are more productive and dependable. How could a creamy-eyed right-wing ideologue spend decades railing against welfare, and then support economic conditions that make working almost impossible for those former welfare recipients who are able to work?

According to a Current Population Report from 2002, 15% of the population of the United States lacked health insurance, which was up from 2001. Also, the percentage of the population covered by employer-based health insurance plans dropped in 2002. In addition, almost 12% of America’s children are uninsured. Again, these numbers do not take into account the portion of the population that is underinsured. These are people who may have catastrophic insurance plans, for extreme medical situations, but who are not able to see a doctor if they fall ill with the flu.

Phil Longman of the New America Foundation wrote a great article in January 2005 that describes the great strides made in the last few years by the VA system in the United States. The VA system has received a technological makeover and has transformed itself from a third-rate medical system to one of the most progressive in the nation. If the United States created and adopted a single-payer system along these same lines, perhaps it could avoid some of the pitfalls and problems that other countries with a single-payer system have encountered. One major problem is that the federal government refuses to allow Medicare to negotiate with drug companies. Where are the free-market prophets on this one? Any real solution to America's health care crisis will necessarily involve lowering drug costs through competition.

A single-payer system (i.e. the expansion of Medicaid to all un- and under-insured Americans) would provide universal coverage more efficiently than our current corrupt and dysfunctional system. This would generate a more productive workforce, and more competitive American business. So the next time that you see the Wall Street Journal decrying the evils of medicaid or any single payer solution to our healthcare crisis, or even worse, denying the crisis completely, remember the facts. Our private system is more inefficient than government run single payer systems. Such a system would reduce costs, make American business more competitive, and make our workforce more productive. If you have any right-wing friends who are in denial about this, send them to have their heads checked, if their insurance will cover mental health.