Medicaid: costs as benefits 

Here's one about a gift that keeps on taking. Last month Citizens for Justice released a study of federal tax cuts and their effects over the next six years. New York, says the group, stands to gain $78.2 billion over that period from the cuts, more than $4,000 per capita. But because the cuts force massive public borrowing, says the group, there'll be hell to pay later: $259.6 billion in added debt over the period --- a net loss to New Yorkers of $181.4 billion, or almost $9,500 per person.

            Nor is the tax system the only place where "giving back" something actually picks more from people's pockets.

            Look at Medicaid --- the federal-state-local program that provides medical care to poor people. Everywhere you'll hear that the program is a huge financial burden, with the implication that it must be cut, or else.

            A new report, Medicaid: Good Medicine for State Economies, from the Washington-based group Families USA challenges the clichés. The program is not a drain on government and the economy, says the report; it's a vital contributor to both. In fact, says the report, the program plays "a unique role" in "stimulating state business activity and state economies."

            The key here is the federal matching contribution. "Every dollar a state spends on Medicaid pulls new federal dollars into the state --- dollars that would not otherwise flow [there]," says the report. "These new dollars pass from one person to another in successive rounds of spending," says the report: Health care workers buy new cars, auto salespeople buy new appliances, refrigerator salespeople buy more groceries, and so forth.

            Using a "business multiplier" factor of 2.1, the report says New Yorkers' $16.1 billion share of Medicaid spending (as of 2001) translates into almost $34 billion in "new business activity." That amount means 300,000 "new jobs created," with $11 billion in total new wages.

            Conversely, says the report, each cut of $1 million in Medicaid spending will cost New York State more than $2 million in "business activity lost."

Before assessing the claims and counterclaims, you first must consider what Medicaid is and does, where it came from, and how politics comes into play.

            First, Medicaid has a chronic identity crisis: It's often confused with Medicare, the federal health-insurance program for people aged 65 and over. (The confusion flows partly from the fact that Medicaid has become a key funder of long-term nursing-home care. This has spurred debate about middle-class families that supposedly "hide" their wealth so their elders can qualify as poor people and garner benefits. The phenomenon calls attention to the lack of a national program for affordable long-term care.)

            What does Medicaid cover? Plenty. First there are federally-mandated services: hospital care, prenatal care, physicians' services, vaccines, lab services, x-rays, nursing home care for people 21 and over, and more. Then come the "optional" services: prescription drug coverage, prosthetics, physical therapy, and more. The beneficiaries include the poor, seniors, the disabled --- practically anyone.

            Medicaid and Medicare, key items on the "Great Society" agenda, were enacted in the mid-1960s. But their history goes back much further.

            A timeline from the Social Security Administration hits the high points: In 1937, a federal Technical Committee on Medical Care was born; a summary "National Health Program" appeared the next year. Then in 1939, Senator Robert Wagner introduced a bill mandating compulsory employer-based health insurance; the bill died in committee. In 1944, President Franklin Roosevelt spoke of an "economic bill of rights," including "the right to good medical care." The next year, President Harry Truman called for "a comprehensive, prepaid medical insurance plan for all people through the Social Security system." The plan "would have covered doctors, hospital, nursing, laboratory and dental services [and] provided benefits financed from Federal Revenues for needy people." Things lurched along through the late 1950s and early 1960s --- but Medicare and Medicaid finally were born.

            The history and public commitment show that Medicaid is not to be trifled with. Yet big changes are on the prowl. The Bush administration and a coalition of some state governors, for example, have floated separate but similar plans to convert the funding system to de facto block grants. The plans would basically allow states more latitude in allocating optional services (some of which are medically necessary), in return for accepting caps on federal outlays.

            Conservative moneyed interests have been weighing in, too --- like the Business Council of New York State. Three years ago, the Council's research arm, the Public Policy Institute, noted New York's Medicaid expenditures are "nearly twice the national average" and thus are "strangling the taxpayers." The Institute implied the state covers too many people and procedures and funnels too much money to "big health-care institutions with well-financed unions."

            Local leaders echo these sentiments. "Every single penny of sales tax our residents pay to Monroe County is used to pay for Medicaid," complained County Executive Jack Doyle this month. (The county now spends around $115 million annually on Medicaid.) Doyle glossed this as a "crisis that threatens the very future of not just our county, but our entire state."

            In recent months, the Rump Group, a commission of local business leaders and a few college presidents, has spoken in softer but no less urgent tones. "Medicaid [and other] costs, along with limited revenue options, are likely to put ongoing fiscal pressures on the county," said the group in its report, Cooperate, Collaborate, Consolidate. In another report, Apathy Is Not an Option, the group cited Medicaid as "a major challenge" that should be subjected to "innovative approaches." That might mean cuts, of course.

How do Medicaid's friends respond?

            First, they emphasize the program is essential for public health. It "reaches people of all ages and from all economic classes" with "primary and preventive services" that these people otherwise would go without, says the Families USA report.

            But what does this mean on a personal level?

            Joanne Scanlon, a regional manager with Planned Parenthood of the Rochester/Syracuse Region, is in a good position to shed some light here. First, she works for a direct provider. Second, she takes part in the New York State Medicaid Defense Group, a coalition of 80-plus organizations that believes "Medicaid matters to all New Yorkers and that dramatic cuts and restructuring proposals at the state and federal levels will adversely affect us all." (The group's member organizations include Citizen Action, Gay Men's Health Crisis, the Hispanic Senior Action Council, the Legal Aid Society, and the Visiting Nurse Service.)

            Scanlon points to a representative case, one involving Planned Parenthood's Medicaid Family Planning Services, a set of reproductive health programs open to women and men enrolled in Medicaid or Medicaid Managed Care.

            "I've got a patient, a young woman who graduated from college, had no health insurance, and went three years without a GYN exam," says Scanlon. The young woman finally got the exam after qualifying for Medicaid, says Scanlon: "She had an abnormal pap [test], but with further testing it came up OK." If the situation had gone on another three or four years, says Scanlon, anything might have happened.

            "Cuts in Medicaid," says Scanlon, summing up, "would push more people into emergency rooms."

            Pushing people toward the emergency room obviously means higher costs. But again, the costs of not getting Medicaid dollars can be high, as well.

            Kathleen Stoll, director of health policy for Families USA and author of the Good Medicine report, considers the picture here. "For a community like Rochester, I would assume that you have an extensive health care infrastructure, so it [Medicaid cuts] will have an impact," she says. (The report notes a very political type of multiplier effect at work, too: "In 2002," it says, "45 states took actions to limit their Medicaid spending.")

            "All of that [money] will stay pretty close to home in Rochester," says Stoll. If Rochester doesn't leverage those federal dollars, she says, the area will lose "job stimulus and economic stimulus."

            That's something to ponder in a locality whose medical centers, universities, and research facilities are touted as key economic engines --- even keys to the future.