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April 05, 2011

An Infected Toe, and A Few Comments on Representative Ryan's Medicaid Cuts

Harold Pollack

My brother-in-law Vincent has a chronically-infected big toe. The problem reflects his compromised circulation, brought on by morbid obesity, and by accompanying dermatological problems. It doesn't help that he removes the uncomfortable band-aids that cover the sore. It also doesn't help that he likes to rub saliva over his sores to keep them clean. My wife works with the staff at his group home to address the problem. A podiatrist is on the case. This isn't a huge deal. It's just another thing.

Vincent's services are mainly financed by Medicaid and Medicare. He also receives food stamps, which he signs over to his group home to support his rather Spartan lifestyle. He's entitled to keep $50 per month in discretionary money. That covers everything from a tee-shirt to a trip to the occasional McDonald's trip. That $50 is all many of Vincent's co-workers at his sheltered workshop will have for the rest of their lives.

He shares a converted private home with several other guys. He has his own room. If agency money gets tighter, residents may need to double-up. I hope this doesn't happen. Vincent and his housemates need a private space to retreat when they are frustrated, when they or someone else is acting out, when someone just wants to be alone to watch a favorite TV show.

This morning's Wall Street Journal includes an op-ed by Representative Paul Ryan, In a section titled "welfare reform," it touts Ryan's proposals to block-grant Medicaid and, to my surprise, even food stamps. He writes:

This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls….

This reference to "welfare reform" is both puzzling and insulting. Ryan famously worries that "we will transform our social safety net into a hammock." It hasn't happened yet. Nearly 60 million people, including 30 million children, rely on Medicaid for health coverage. About 4.3 million of these adults and children receive Temporary Assistance to Needy Families (TANF)--traditional welfare. The typical Medicaid recipient is elderly or disabled, or resides in a household headed by low-income working adults. Two-thirds of Medicaid expenditures support services for the elderly and the disabled.

As I've noted here, my wife's parents cared for Vincent in their family home for 38 years, literally to the day my mother-in-law died. If it weren't for Medicare, Medicaid, and Social Security's "disabled adult child" program, Vincent might well be languishing in the back ward of some forbidding public institution.

These programs do not foster welfare dependence or dysfunctional behavior. They allow millions of American families to endure joblessness, illness, and disability with a modicum of dignity and security. Social insurance protects each of us against burdens that would crush any one of us, if we had to face this alone. That's the spirit that animated Social Security at its enactment. The same spirit animated the establishment of Medicare and Medicaid.

Ryan and others deploy the rhetoric of a supposed entitlement crisis to dismantle key pillars of American government. Budget experts have rightly hammered the specifics of Ryan's proposals. I will make two quick comments.

First, it is striking that Ryan and other Republicans are considered brave when they reserve the brunt of budget cutting for the most politically vulnerable constituencies in America. The current generation of affluent retirees are essentially spared. Not only are they exempted from entitlement cuts, they are also provided vastly excessive tax breaks including estate and gift tax cuts and other regressive measures.

Meanwhile, Ryan proposes his deepest and most dangerous cuts in the form of turning Medicaid into a block grant to the states. David Brooks of the New York Times gushes over Ryan's proposal, which he labels "the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes."

"The Ryan budget," Brooks goes on to say, "will please governors of both parties by turning Medicaid into a block grant — giving states more flexibility." Actually, Ryan seeks to hand the states a ticking bomb. The Congressional Budget Office estimates that that Ryan's Medicaid budget formulas would reduce federal payments to the states by about $180 billion between now and 2020, shifting expense and risk onto struggling state governments that are ill-equipped to bear this load. Budgetary consequences for states are even more severe in later years.

This block grant structure provides federal policymakers plausible deniability for cuts such a constrained block grant structure requires and promotes. States will cut already-low reimbursement rates for primary care and specialty physicians, hospitals, and other care facilities. States will reduce the number of people eligible for Medicaid, undermining the steps towards universal coverage enacted in in last year's health reform. States could reduce the range of Medicaid-covered services.

Many states have already eliminated or made painful cuts in coverage for ancillary services. For example, California, Michigan, Nevada, and Utah, have dropped dental or vision coverage for adult Medicaid recipients. Even states that maintain such coverage provide such low reimbursement that people are frequently turned away. If you think such “optional service” matters are unimportant, you try finding a dentist for an intellectually disabled man with health problems who has difficulty brushing his teeth.

Second, we just don't need to do this. Painful Medicaid cuts might be justified if expenditures were going through the roof, but they aren’t. Medicaid spending is rising because growing numbers of Americans are losing health coverage, and because overall health care costs are rising. Over the past quarter-century, per-capita Medicaid expenditures rose at a slower rate than was observed in either Medicare or the overall health economy. Between the year 2000 and 2009, per-capita Medicaid expenditures increased by 4.6 percent per year, far below the average annual premium increase of 7.7 percent for employer-sponsored coverage over the same period. The Congressional Budget Office projects relatively restrained and manageable Medicaid cost growth over the next quarter-century and beyond.

Person-for-person, Medicaid is probably the leanest program in the American healthcare system. Unfortunately, Medicaid recipients are probably the weakest constituency in the American political system. Hence they are vulnerable to things like Ryan's proposed budget. I trust the American people will have the decency to reject these foolish efforts.

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