Page 7


A How to Make Medicaid Popular by Stuart E. Eizenstat The dire problems of the Medicaid program reflect the lack of middle-class support for domestic programs for the poor. The solution becoming part of a universal healthcare system in which the middle class has a stake can become a model of how to regain the public confidence necessary for further social advances. Medicaid and Medicare were passed in 1965, at the height of Lyndon B. Johnson’s Great Society, to serve similar goals: extending health coverage to an underserved population, in Medicaid’s case to poor people and for Medicare to all the elderly. Medicare has largely fulfilled its promise. By providing coverage for virtually every person 65 years and over it has developed a strong and vocal middle-class constituency. Because it is financed and administered centrally by the Federal Government, Medicare benefits, management and cost controls are uniform and stable. Younger workers have an interest in protecting Medicare for the day they and their parents will become beneficiaries. Medicaid, on the other hand, is a disaster from virtually every perspective. Its costs are out of control, imposing a rapidly growing burden on the Federal deficit. For states, which partially finance it and must live under balancedbudget constraints, it is the fastest growing expense. Medicaid began as a $1.6 billion program in 1966, grew to $12.6 billion by 1975, and $52 billion in 1988. By the next fiscal year, it will have more than doubled in four years, to more than $105 billion. Yet only about four million more people are served by Medicaid, now 26 million, than were served in 1975, and the percentage of poor covered by Medicaid has actually dropped from 63 to about 50 percent compared with 96 percent of the elderly covered by Medicare. Physicians stay in Medicare but are dropping out of Medicaid because of lengthy delays in payment and ridiculously low payment schedules. Medicaid pays physicians on the average only 69 percent of what Medicare would pay for common services, and in some states less than 40 percent. Medicaid averages only 57 percent of the market rate of reimbursement for a pediatrician; not surprisingly the proportion of pediatricians who refuse to serve Medicaid patients jumped from 26 percent in 1979 to 39 percent in 1989. The poor who are the supposed beneficiaries find a crazy quilt of eligibility standards depending on the state. Because Medicaid eligibility is tied to each state’s welfare standards, which have failed to keep pace with inflation for some 20 years, 47 states failed to maintain inflation-adjusted benefit levels between 1970 and 1986. In a country that prides itself on fairness, a family of three in Alabama must earn less than $1,416 annually to qualify for Medicaid. There are many causes of Medicaid’s miseries. Its mixed nature, in which the Government contributes 50 percent to 80 percent of state costs but states set eligibility standards and administer their own programs, produces a lack of uniformity in eligibility and services and precludes efficiency or cost control. Its beneficiaries are poor and unorganized. But at the core of Medicaid’s failures is the loss of middleclass support for expanded programs for the poor. In times of economic health, like the 1960’s, a middle-class consensus could be created for programs to benefit those below it on the social ladder. But in times of stagnating income, such as the U.S. has experienced for almost 20 years, this consensus erodes. Social policy has stagnated in the Reagan-Bush era because of middle-class resentment of spending on the poor when many Americans have trouble keeping their own heads above water. This is compounded by the means testing of programs like Medicaid that excludes many deserving workers. Only Medicare provides universal access, and it remains the most popular Great Society program. The absence of middle-class support for Medicaid has made the health of the poor dependent on a small group of dedicated members of Congress. They have been able to mandate that states cover all poor children under Medicaid by the year 2000. But these efforts have gone as far as they can without structural reforms to build more public support. The solution to Medicaid’s problems is to tie it to middleclass health benefits. The time is ripe for combining Medicaid and Medicare into a universally accessible national health care system. There is dissatisfaction with the current system: 19 million working adults and 10 million children in families headed by workers have no health coverage; insured workers worry that their coverage will not follow them to a new job; and soaring health care costs are eating into employers’ profits. By combining broadened access ‘and more uniform eligibility for Medicaid beneficiaries to universal health coverage and strict cost controls, middle-class support can be obtained at the same time for improved benefits for the poor. States should still play a role. They can pay for acute care, with the Federal Government taking over costs for long-term care for the poor elderly. Medicaid will only fulfill its promise if it is consolidated into a broader health care program. Likewise, education, job training, and other forms of Federal aid must be more universally accessible if they are to win the middle-class support needed to have a better educated, efficient and healthy work force. Stuart E. Eizenstat, a Washington lawyer, was President Jimmy Carter’s chief domestic policy adviser. This essay, from The New York Times of September 4, 1991, is reprinted with permission. 4 OCTOBER 18, 1991