Why We Should Worry About Massively Extending Medicaid

Avik S. A. Roy

Michael Kinsley once famously described a gaffe as when a "politician tells the truth." In the think-tank world, a gaffe could be described as when a scholar tells the truth, in ways that the think-tank's friends and allies won't like.

Such is the case with the recent article by Chapin White, which I discussed here. White's paper finds that expansions of the Children's Health Insurance Program -- a government-run health insurance program similar to Medicaid -- did not result in a net increase in the utilization of health services; i.e., in overall access to health care. This result calls into question the wisdom of expanding Medicaid, as the Affordable Care Act does.

Chapin White's think-tank home, the Center for Studying Health System Change (HSC), produces some of the most interesting research out there on Medicaid beneficiaries' poor access to health care, White's piece included. But HSC has pro-PPACA leanings. Its Advisory Committee includes Ronald Pollack of Families USA, a pro-PPACA activist group, and John Rother of the National Coalition for Health Care, another pro-PPACA advocate. HSC's current and past research sponsors include the leading pro-PPACA foundations, such as the Commonwealth Fund and the Kaiser Family Foundation.

At a time when the White House is rallying pro-PPACA activists like Pollack to improve the law's public standing, I appreciate that I am causing White and HSC some headaches by citing their research as a critique of the law. But the implications of White's work on Medicaid are what they are.

I write all this as a preamble to a post by Austin Frakt, in which Austin reproduces an email to him from Chapin White in which White says that I "misrepresent" both his paper's findings and also the Affordable Care Act. But White's actual objections to my piece are more like quibbles, as I will detail below. You can read his paper for yourself, and decide whether you think I've done it justice.

White says I misrepresent his paper in two ways. The first problem is that I state that White's paper "suggests that a critical part of the Affordable Care Act--its expansion of Medicaid coverage to 16 million more Americans--may actually reduce those individuals' access to health care." White points out that he found "the effects of CHIP expansions on indicators of access are mixed," which, he says, does not support my statement.

But White does a great job, in the paper, of pointing out how CHIP tends to reduce access to care. "CHIP plans tend to employ managed care tools, such as gatekeepers and closed panels, much more intensively than private plans," he writes. "CHIP expansions also appear to reduce the average payment rate that physicians receive." A survey from Ingenix Consulting that White cites found that the "national average payment rate for a physician office visit was $81 for a privately insured child versus only $47 for a child enrolled in a public plan (Medicaid or CHIP)." White also cites the Gruber and Rodriguez study that shows that doctors gain more revenue from the uninsured than from patients on Medicaid and CHIP.

White's own study finds that "increasing Medicaid physician fees is more clearly associated with improvements in access," which is a polite way of saying that reducing fees is associated with declines in access. He also notes that "budgetary surpluses and shortfalls appear to be the main factors prompting states to change their Medicaid fees."

White doesn't explicitly state what we all know--that state budgets are collapsing under the pressure of Medicaid's growth, and that PPACA's dramatic expansion of Medicaid will therefore ultimately force states to continue to reduce Medicaid fees. And reduced fees, White's study confirms, are correlated with poorer access to care.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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