Thursday, February 27, 2014

Senator Shiozawa on why he doesn't want to use Medicaid money to pay for Medicaid

Are they close to taking the Medicaid expansion money?
I contacted Utah Senator Brian Shiozawa yesterday. By way of background, he’s now pushing what appears to be the senate’s main proposal related to taking the ACA Medicaid expansion money. Instead of using the federal money for expanding Medicaid, however, he instead wants to use it to buy private health insurance for poor Utahns. So I emailed this (among other things):
I do wonder, however, why you want to use the federal money to buy poor Utahns private insurance, as was reported yesterday here:
Many studies have shown that Medicaid is more cost efficient per-person than private insurance. I've written up a response to your proposal and wondered if you'd respond and thus facilitate a public discussion of this important issue.
And while I won’t quote him, he kindly responded by saying he was in favor of using the Medicaid money to buy private insurance because
  1. Yes, he wants doctors to get reimbursed more than what Medicaid provides.
  2. He thinks doctors who accept Medicaid are hard to find, and thus wants to make it easier on the enrollees of his yet-to-be-named Utah private/public insurance program for the poor.
  3. He says that this setup would appease his colleagues in the Senate who are worried about crowding out (although he didn’t say this was his view).
I appreciate that he responded so quickly, the fact that he wants to accept the expansion money, and the fact that he provides reasons for his thinking. I’ll take each of his three reasons in turn.

1. Should we feel bad for doctors who have to accept Medicaid’s low reimbursement rate? There’s obviously not a right or wrong answer to this. But considering the fact that (a) health care costs are insanely expensive in the US and (b) even pediatricians (who are among the lowest earning physicians) make around $150,000/yr, forcing doctors to accept a lower reimbursement rate than private insurance would provide just doesn't seem wrong. Nations with universal health care world-wide basically set the price of their health services to keep costs down, and they’d be stupid not to do it considering the leverage their size provides. Same with Medicaid: If we don’t use the leverage provided by Medicaid’s size (and instead go the private insurance route), we’ll use tax dollars less efficiently and provide health coverage for fewer poor people.

2. It’s true that not every doctor accepts Medicaid, just like any particular employer-based insurance plan doesn't allow you to go see just any doctor. However, this study found that 84% of Utah physicians accept Medicaid, whereas the rate is about 66% nationwide, which I’m sure is better than what I’d find with the good insurance provided by my employer. Overall, however, we’ll have people in Utah on Medicaid whether we expand or not. If we're concerned about acceptance rates, we can either make it more difficult for those currently with Medicaid to find a doctor by marginalizing Medicaid or make it easier on Medicaid recipients to find a doctor by bringing 58,000 poor Utahns into the system. While certainly some doctors will continue to refuse Medicaid, many more would start accepting it with that many new potential clients (which would make it easier on all who are enrolled in the program).

3. Many conservative politicians are worried that by expanding Medicaid we’ll induce poor people to switch to Medicaid even if they already had private insurance (this is the crowding out that you might have heard of). While yes, this does happen, overall there aren't a lot of poor people with employer-based health insurance. For example, a family of 4 at 138% of the poverty line (where the Medicaid expansion might reach), makes only $32,000/yr and often doesn't have private health insurance. This study, for example, found that only around 20% of those newly enrolled in Wisconsin’s Medicaid expansion already had private health insurance, and similar figures have been found nationwide here, here, and here. Here’s the kicker though: Sen Shiozawa’s plan wouldn't avoid this (negligible) problem, as people who previously paid for their own private health insurance could just switch to private insurance paid for by the state of Utah. The conclusion of this piece explains it well.

Overall, sticking with a pure Medicaid expansion would be the wiser choice, as it’s more cost-efficient, it's widely accepted, and the (low) crowd out isn't any worse than under Senator Shiozawa’s plan. Local officials don’t need to reinvent the wheel only to provide a more inefficient program.

I sent him this and will let you know how he responds.

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