Our Healthcare System: Could Reforming Medicaid Free Up Money For Education?

Just because conservatives, myself included, believe (quite rightly) that the individual mandate portion of the Patient Protection and Affordable Care Act is completely outside of the scope of what Congress is constitutionally permitted to regulate, it doesn’t mean that we also believe that nothing should be done to improve our health care system.

Indeed, what was once the best healthcare in the world has become expensive, byzantine, and difficult to understand. We could argue about the reasons–repeated government interventions in the healthcare market going back several decades, the rising cost of living, an exploding Baby Boomer generation, longer life spans, and so on–but the reality is: it’s more expensive, and it’s hurting all of us, especially those on the lower end of the economic spectrum.

We’ve all had the experience of dealing with the logothetes of one insurance company or another, of hospitals, or Medicaid and Medicare administration. It’s almost never easy to find an answer, and it’s a daunting and intimidating process.

I can’t help but pause here and wish that the next time I call I could find a helpful “Mr. Incredible”-like insurance agent ready to help me.

Gilbert Huph: I’m not happy, Bob. Not happy. Ask me why.
Bob (aka “Mr Incredible”): Okay. Why? Gilbert Huph: Why what? Be specific, Bob.
Bob: Why are you unhappy?
Gilbert Huph: Your customers make me unhappy.
Bob: Why? Have you gotten complaints?
Gilbert Huph: Complaints I can handle. What I can’t handle is your customers’ inexplicable knowledge of Insuricare’s inner workings. They’re experts! Experts, Bob! Exploiting every loophole! Dodging every obstacle! They’re penetrating the bureaucracy!

If you’ve not had to deal with said bureaucracy, stay tuned. You turn will come. Mine came when on Christmas Eve a year ago, we found ourselves in possession of a two and a half year-old with a small metal bead stuck up her nose. You know the kind–they’re like the bearings in a skateboard.

We were visiting family in a different state, out of our “network,” and the doctor’s office we ambushed fifteen minutes to closing lacked the tools necessary to remove the bead. Kindly, the office called around to each clinic in the area, but again, no luck. Every office was either closed or lacked the right tool.

Our next stop was, you can guess, the Emergency Room. To make a long trip into a short story, let me summarize: two hours later, we waited for all of twenty seconds in a small room while a doctor inserted a small tool into our daughter’s nose and removed the metal bead with almost no pain or blood. It was just that easy.

We were half way to the car in the parking lot before we realized that not only had we never been asked our billing information, but we had also been told “oh, well get it later” every time we offered to give it.

My wife returned to give our billing address to the hospital, asking at the same time what the damage (to our checking account) would be. Not only did no one know, but they didn’t know how to find out. Several weeks would pass before we got the bill. Would you believe it was upwards of a thousand dollars?

For all of the twenty seconds it took the doctor to remove the bead? If you’re shocked, it’s with good reason. Don’t get me wrong: I don’t begrudge the doctor his skills, his availability in the ER on Christmas Eve, or his costs (which include, no doubt , insurance costs and medical school). In fact, I laud him for it.

No, what I begrudge is all of the other factors that went into creating the bill. Despite our effort that same night to pay the bill (at that point, we actually had cash and a check book), the hospital accountants (see the above mentioned logothetes) had to perform an analysis that was not limited to just the doctor’s time, insurance, and costs…

…or did it? What were those costs? All of the people who came to the ER for routine care they couldn’t afford to take to regular clinic? That the hospital expected to be picked up through Medicare payments? When it came down to it, it really had little to do with the value of the care or the additional costs caused, largely, by distortions to the market from government intervention.

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Which brings us back to the Affordable Care Act, or Obamacare. Is it the wrong way to deal with the healthcare problems? Perhaps. Is it constitutional? Not likely. But being both poor policy and unconstitutional does not mean that there are not other ways to address healthcare’s problems.

In today’s Salt Lake Tribune, Pat Jarvis, noting that perhaps it wouldn’t be so hard to fund education if we could save costs in places like Medicaid. “We waste $1 trillion annually on inefficient and poor quality care,” said Jarvis in the Salt Lake Tribune. “One of the costs of that waste, much of which comes from tax revenues to support public health programs like Medicaid, is the lack of adequate money for public education. That is particularly true in Utah, where we have the lowest per-pupil expenditure in the nation.”

Logothetes of the world begin to quiver in fear. And pay their union dues.

Jarvis gives seven ideas for reforming our healthcare system on a state wide basis. Without levying a direct opinion on whether they would work, I think it at least bears observation that they all deal with reallocating incentives to change how healthcare is managed.

Let’s begin with Medicaid. Here is a list of seven reforms that would save hundreds of millions of taxpayer dollars over the next 10 years:

1) Millions of Utah tax dollars are being spent on administrative expenses for Medicaid managed care. This program can be eliminated without any impact on essential services to Utah’s medically needy and the health care providers that serve them.

2) Millions of dollars are wasted annually on excessively high pharmaceutical costs because the already existing Medicaid preferred drug list is too limited in its application in Utah.

3) U.S. health care financing, including Medicaid, routinely pays for inappropriate care. Establish a Medicaid Benefit Commission this year with authority to identify commonly performed medical/surgical interventions which have little or no clinical science behind them. Second, adjudicate medical malpractice claims for Medicaid beneficiaries without punitive damages or jury trials.

4) Reduce obstetrical and newborn care costs paid by Medicaid through rewarding high performing hospital practices, which reduce elective inductions and the related unnecessarily higher rates of c-sections and NBICU admissions. And increase eligibility for post-natal contraceptive services for women delivering babies financed through Medicaid.

5) Reduce use of long term care services through better financed home health care delivery.

6) Develop improved quality care strategies for high cost Medicaid financed chronic health problems.

7) Develop a statewide hospital injury prevention program.

Could this work? There’s no doubt that the motivation to reform entitlement programs like Medicaid seems to come primarily from the right and the large, silent majority in the middle. Democrats, content to ride on the life or death of Obamacare before the Supreme Court, have repeatedly avoided discussion about the long and short term costs of failure to reform Medicaid. Even long term Republicans in Congress have, at least until recently, failed to lead out on entitlement reform.

If there was ever a time to begin assessment of our priorities to find a way to create a sustainable healthcare system accessible to all, now is that time. The reality is that these options are fast becoming non-negotiable, and the window of time to fix them is becoming smaller. It’s time to look at and pass substantive reforms.

APROPOS: If you’re interested in “the rest of the story,” I spent many a day calling and negotiating with the hospital and the ER. Would you know that the more they hear from you, the more specific the bills become? And the more specific they get, the better they can actually assess the real cost of the procedure? At the end of the day (which day was sometime in May, almost five months after our two-year old stuck a metal bead up her nostril), we ended up paying a fraction of the original bill, yet something that I was glad to pay in appreciation for getting that bead out of my daughter’s nose. If only it hadn’t taken so long to get a straight answer from the bureaucracy.

For more on healthcare and entitlement reform, see also my posts on “The Human Cost of Ignoring Medicaid Reform” and “Pension Reform: What’s Your Plan?”

[Salt Lake Tribune]