Why not some government mergers?

In the Wall Street Journal, Scott Gottlieb of AEI excoriates Medicaid's wacky reimbursement strategy, which seemingly consists of lowballing everything until the only people who will accept Medicaid patients are Medicaid mills that make up the deficits through fraud*.

One study published in the Journal of the American College of Cardiology (2005) found that Medicaid patients were almost 50% more likely to die after coronary artery bypass surgery than patients with private coverage or Medicare. The authors suggest this may be a result of poorer long-term, follow-up care. Like other similar studies, this one tried to control for the other social and medical factors that are believed to influence patients' clinical outcomes.

Another study in the journal Ethnicity and Disease (2006) showed that elderly Medicaid patients with unstable angina had worse care, partly because they were less likely to get timely interventions or be treated at higher quality hospitals. Three other recent studies showed that Medicaid patients presenting with heart attacks or unstable angina received cardiac catheterization less often than Medicare or private paying patients. This procedure to open blocked heart arteries has become standard care, with ample evidence showing it improves outcomes.

The same trends can be observed in other diseases. For example, a study of adults with cancer published in the journal Cancer (2005) found that patients on Medicaid were two to three times more likely to die from the disease even after researchers corrected for differences in the location of the tumor and its stage when diagnosed.

The federal and state governments are equally culpable for the program's troubles. The federal government matches state Medicaid spending, paying an average of 57% of costs. States expand enrollment in order to qualify for more federal aid. Insurance coverage has become the end itself, with states spreading resources widely but thinly -- without enough attention to the quality of care, accessibility, or whether coverage was actually improving health. States have no obligation to rigorously measure health outcomes in order to qualify for more federal money.

It seems to me that there is no good reason for Medicare and Medicaid to be two separate programs.  Housecleaners are surely no less deserving of decent medical care than Palm Beach retirees, yet we arduously separate the two programs so as to lavish extra care on the more affluent class of beneficiaries.  It's no good saying that the Medicare recipient earned theirs through contributions, because they didn't--people in the system now are net beneficiaries, not contributors.   It's just that on average they're whiter, they speak better English and their subsidized lifestyles are considerably better upholstered.  I'm not sure why any of these entitles them to a better grade of publicly provided healthcare.

*  One of my favorite doctors was running a Medicaid mill, which I faithfully patronized when I was uninsured.  She was charming, caring, and merrily full of ways to help me milk the system, which I had to politely turn down and pay her in cash.  Given the reimbursement schedule Medicaid offers, I couldn't blame her a bit.