Wednesday, May 30, 2007

Rationing Medical Care for the Poor

Guest Blogger

Anne Alstott

There is another sleazy game afoot in Washington, but this time both parties are complicit. The open secret is that Medicaid, the federal-state program that promises medical and dental care to poor children (among others), predictably fails to deliver promised services, because payment rates for providers are set at below-market levels.

I have a piece in Slate discussing the horrific case of Deamonte Driver, a twelve-year-old Maryland boy who died for lack of dental care. Medicaid dental care is just one example of a formal entitlement that is undercut by below-market pricing. Economics 101 teaches that setting a price below the market-clearing level will produce a shortage. In that sense, the shortage of Medicaid dental care is not accidental – it is engineered. The Medicaid law uses the language of entitlement, and indeed, Deamonte was formally covered by Medicaid. But there is a disconnect between the concept of entitlement and the use of a market mechanism for allocating services. Markets don't understand entitlements; they understand pricing.

My point isn't that rationing in any form should be condemned. Scarcity is omnipresent, and while I'd contend that redistributing resources to provide medical care to children is a social good, society has to fund other social goods as well. But hidden rationing permits political elites to engage in hypocrisy.

The cynical corollary, of course, is that hidden rationing is pervasive in social welfare programs precisely because it has advantages for politicians. My visiting colleague, David Super, has an excellent 2004 article on hidden rationing in TANF and related programs. As he points out, "[s]ystems that lead to procedural denials of substantively eligible claimants, that discourage claimants from seeking or continuing to receive benefits, or that give third parties influence over whether a claimant will receive benefits also have a rationing effect."

David's theme is that rationing in these ways shifts blame to individuals and makes their failure to access benefits a matter of personal choice: she didn't show up prepared for her fair hearing; he failed to submit his lease in triplicate by the first of the month; they refused to miss a day of work to wait in line all day to see a caseworker; and so on. Rationing in this way could in theory be benign, if the people who are filtered out are those for whom the benefits at stake are minimally valuable. But hidden rationing can also, perversely, screen out the most vulnerable – those unable to articulate their case at a hearing, or unable to understand complicated English paperwork, or frightened of being fired if they leave work for a day. In such cases it is the least advantaged who lose out.

As I discuss briefly in the Slate piece, there are a number of possible solutions to the Medicaid dental coverage issue, including (obviously) setting payment rates at market levels. But thinking more broadly, one of the contributing pathologies is that government budgeting takes a libertarian form. The budget for Medicaid, TANF, or any other government program focuses on the outflow of "taxpayers' dollars." Politicians on all sides struggle to minimize budgetary cost, with the focus squarely on dollars spent and taxes raised.

There is no reason to privilege the libertarian budget. An alternative form of budgeting might focus instead on services actually received by poor children in TANF or Medicaid. A services budget could reveal the level of care poor children actually receive (meals provided, trips to the doctor and dentist, and so on). To make the information intelligible, the measures might focus on gaps in the services received by poor children relative to a baseline of appropriate care. For instance, reading that fewer than a third of Medicaid children received any dental care at all in 2005 is a statistic that leaps out for any middle-class parent, who knows that their dentists expect to see every child twice a year. Today, this kind of information may or may not be available, but even when it is, it is left to advocacy groups to dig out the data and make their case.

I am not naïve enough to suppose that a services budget could magically transform the libertarianism that underlies American social policy. But an alternative presentation could help disclose the gaps between nominal entitlements and real services.


And there are plenty of gaps.

I am a foster parent, and have had to fight for care for foster children who are wards of the state; in some cases, foster parents pay for care out of their own pocket.

In another case, one foster child required braces, which the state paid for. Two years later, the braces needed to be removed, but two years after that, the state refused to pay for removal, stating it was an unneccesary service, although the child had aged from 7 to 11 in the interim, and the undersized braces were causing him constant pain.

Another foster parent was accused of abuse by a foster agency for not getting dental care for the child, even though the same agency was part of the parents' efforts to get the dental care that the state refused to pay for.

Beyond that, I know of several families that had to pay out of pocket for psychological therapy that the state or their agency would not provide to foster children, and who were then threatened for taking the child's history outside of the agency/state care program (due to privacy laws).

If children are rescued from abusive domestic situations, the least the state can do is not neglect and abuse them in turn.

Most folks with political pull, or even significant web presence, have never had to deal with Medicaid and its related programs. Even getting initial approval for Medicaid for children is an onerous process that demands a level of literacy and political knowledge that most of the eligible lack.

On top of that, many states have programs that fill in the gap between full Medicaid coverage and actual affordability under such names as KidCare. In practice, these programs work as another rationing mechanism. Often they have separate application mechanisms - so you apply to one, and then get denied because you are eligible for the other, and no data sharing occurs. Even if you know which one you are eligible for, you are often required to first apply to the one you know you will be denied for. Furthermore, if you are at the income line between the two, when you gain full eligibility for Medicaid, you get cancelled on the KidCare and have to go through the whole rigamorole again, since there is no application sharing.

The last is particularly ridiculous - children lose coverage not because they are unqualified, but because they are over-qualified! Of course, it takes months for forms to be processed, and the recipients can't start the applications ahead of time. For children with chronic conditions, this can be life-threatening. These switch-overs can happen on a yearly basis.

This is particularly dangerous for those who need these programs most. Often, they lack high-level literacy, or speak English poorly, or lack knowledge of how bureaucracies (mis)function. Often the rules are highly arcane - forms need to be faxed, but they can only be faxed from specific machines in specific offices without any rhyme or reason. Time frames are short, with little forewarning - if the client is traveling, suddenly they get cut-off with little recourse but to begin again from step one. Often multiple days have to be spent in offices, once again with little-forewarning to work around work schedules. I have known people who simply surrendered, leaving their children without coverage because they simply couldn't navigate the system on their own.

And all this for a system which is supposed to give a minimal baseline for the most vulnerable population, where minimal health care would be a great long term social cost saver. "Compassionate conservatism" indeed.

Get real.

"Scarcity" and "rationing" are hardly terms which can be honestly said in the same breath as Medicaid. Medicaid spending has been increasing by multiples of the inflation rate and GDP growth since the early 90s and is bankrupting state budgets across the country as government added more beneficiaries, turned a blind eye as millions of illegal immigrants added themselves to the rolls, and offer an increasing array of new benefits and drugs.

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Thank you for sharing your thoughts. I've been lucky enough that here in Barrington, dental care is relatively easy to come by.

I can't say that this is anything that I've ever considered yet is quite interesting and appealing to me. I never did think that there would be a problem between immigrants and funding programs as well, which are meant for citizens and students from overseas alike from how I understand it. I hope you guys get back into this discussion as it is very much needed today. I know of good dentists, such as the dentists in Hamilton, but I've never asked them such serious questions. You have my mind rumbling and tumbling now. Thanks for this discussion. It's age matters not.

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