Medicaid: A Tale of Two Countries

I recently encountered an article* in the February 15th issue of the New England Journal of Medicine about Medicaid and the various political machinations that have compromised this federal program. Remarkably (to me, though perhaps not to others who have a more cynical view of politics), the support and opposition to the continuation of Medicaid as a major priority for the federal government falls distinctly on party lines: the Democratic party voted unanimously against the Deficit Reduction Act of 2005 that would reduce spending on Medicare and Medicaid and limit the scope of eligibility for Medicaid coverage, and most Republicans voted in favor of the measure. Medicaid, unlike Medicare which is fully funded by the federal government, is a joint federal-state program, requiring extensive cooperation between both levels of governments. The division among governors about the state of Medicaid did not fall on party lines, but rather, many who favored reductions in spending for Medicaid aim to make the program “more manageable” without disenfranchising individuals covered by the program. As this time, states are still figuring out how to best approach their goals for Medicaid under these new federal restrictions and guidelines.

How do these changes to Medicaid, reflecting larger trends in health care coverage regarding the reduction of benefits and the emphasis on “personal responsibility” (i.e. cost-sharing), affect physicians and the practice of medicine?

1. Reimbursements for providing care to Medicaid patients will continue to fall. For a number of years, states have reduced Medicaid reimbursements for physicians using the Sustainable Growth Rate formula. The government sets an expected yearly expenditure for physicians’s services. If the actual expenditure is below this expected amount, payment increases. If the actual expenditure is above this expected amount, payment decreases. Accordingly, the Congressional Budget Office expects a total Medicaid reimbursement reduction of 25-35% over the next few years if physicians continue to provide the same services. Solution? One might suggest that physicians should order fewer tests and use less expensive therapeutic methods, but will patients accept this? In other words, will they accept the judgment of the physician (based on cheaper, but potentially as or nearly as effective diagnostic methods) instead of the results from a (costly) battery of tests?

2. Proponents of the DRA aim to limit benefits as well as the range of beneficiaries. – Medicaid actually provides coverage for some services often not covered by employer-sponsored plans, including mental health care, long-term care, and transportation to the health care provider. Accordingly, with the reductions in Medicaid expenditures, it is likely that these “extra” services will be the first to be cut through the potential lack of foresight from government administrators. Some might not view these services as essential, but a physician who is able to comprehend the extent of an individual’s many difficulties in accessing health care and maintaining a good health status might argue otherwise.

3. With the reintroduction of cost-sharing and provisions to allow the denial of health care services in case the patient cannot pay their share, do low-income patients stand a chance to getting adequate care? A 1986 law, the Federal Emergency Medical Treatment and Active Labor Act, required that hospital emergency departments must provide a medical examination to all patients encountered in their facilities. Previously, many emergency departments, particularly those in private hospitals, routinely denied care to patients who could not pay for services. Is the DRA reopening this Pandora’s box, and furthermore, subjecting the 60.4 million Medicaid patients to new risks of being refused care (as though they were uninsured patients before 1986)? Mr. Inglehart (the author of the NEJM Health Policy Report on Medicaid) suggests that physicians may be put in the gatekeeper role of making the ethically unsound decision to deny care.

4. The DRA provides states with the option of introducing “personal responsibility” requirements that can result in a beneficiary’s expulsion from the program if he/she does not adhere to them. While this sounds reasonable in light of a constant goal in medicine to help patients help themselves (especially through preventative medicine), this also sounds a lot like the Bush administration’s No Child Left Behind Act, a controversial educational reform measure that is notorious for its corruption, harmful overemphasis on standardized testing, and accentuation of problems through punitive responses to poor performance. That is, schools that perform poorly might need the most help (and need more time to bring about positive change), but instead, they are penalized with reduced funding. Would the same happen for patients under need federal-state regulations regarding personal responsibility for health care? Would the patients who need our help the most lose their eligibility? I find these provisions questionable given the likelihood that access to care will be increasingly more difficult to achieve for Medicaid patients with potential reductions in transport assistance and denied services with cost-sharing. Furthermore, physicians, again, might be put in the difficult position of determining whether or not a Medicaid patient is achieving these personal responsibility measures.

5. DRA proponents consistently press for regulations that limit enrollment into Medicaid, and thus, make it increasingly difficult for uninsured patients to acquire coverage. How can this possibly be a good thing? Why is one quarter of the aimed reduction in expenditures coming from Medicaid alone? Given the waning of coverage and eligibility for employee-sponsored health care coverage and the increasing numbers of working individuals and families unable to afford private coverage, how can these measures enacted by the formerly Republican-dominated Congress have a positive, or even just a neutral, effect on the problem of providing care for the uninsured?

Concluding Thoughts

From the politics behind Medicaid reform emerge the core principles of the Republican and Democratic parties, at least on a national scale. While the Democratic party urges the need for providing services to those who do not have the means, the Republican party emphasizes the need for self-determination and personal responsibility in guiding an individual’s success or failure. While I personally am on the left end of the spectrum, I am willing to consider the benefits and faults of all sides and even vote regardless of party distinctions. However, while I understand that fiscal responsibility and management of costs is essential to the overall welfare of our country, I do not believe that these cost-cutting measures should be at the level of the patient, or even the physician. Rather than reduce the services available for patients to acquire and physicians to use, why not reduce the costs of producing and distributing these services?

Dr. Paul Farmer and Partners in Health demonstrated to the world that the expensive treatment regimens for HIV/AIDS could be provided in a low-resource setting like Haiti. The cost to the patients? Nothing. With help from the William J. Clinton Foundation, Farmer showed that antiretroviral treatments (e.g. AZT) with an average annual wholesale costs of $10,622 could be provided for $577 per patient in 2002. By 2005, pharmaceutical companies would charge $719 annually for AZT, while the drug could be acquired generically for $281. While one might expect a drop in price for treatment when generic drugs are made available, would such a drastic reduction in price have happened without the advocacy of Dr. Farmer, Partners in Health, and the Clinton Foundation? I strongly doubt it.

What can physicians do? Besides being advocates for our patients in every way imaginable, we must find ways to push for reduced health care costs while also coordinating with our close allies to help individual patients. Health care technology and pharmaceutical therapies can be provided at significantly lower costs than they are currently, but it may take the passionate work and advocacy of physicians (and other patient advocates) to bring down costs and make expansion of health insurance coverage possible (and not at the expense of the health of patients).

* [The March 2007 issue of the Next Generation provides a link to this article without requiring an NEJM subscription.]

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