Michael F. Cannon objects to my applying the label “market-based” to Lousiana Gov. Bobby Jindal’s Medicaid reform in a recent article. He notes,
Jindal’s plan is not market-based reform. As a general matter, market-based charity care is just that: private charity. So the only market-based Medicaid reforms are those that remove people from the Medicaid rolls — e.g., federal block grants, eligibility restrictions, etc.
Jindal wants to expand eligiblity. For a welfare program. And we call that market-based?
Jindal may be able to improve the quality of care through greater coordination. Which looks good on paper. But if the quality of care in Medicaid improves, more people will enroll. Only 2/3 of those eligible actually sign up for the program. (Many of the 1/3 who don’t enroll actually have private coverage.) So improving Medicaid benefits could cause enrollment to increase 50 percent. And that’s before Jindal expands the eligibility rules.
With all the additional cost pressure, what’s going to happen to Medicaid payments and enrollees’ access to docs? (There are reasons why Medicaid pays so little.)
First of all, I never called the plan “market-based.” I did say it was “more market-based,” which is certainly true.
Also, I feel like Cannon is missing some of the specifics here. “Greater coordination” in this case really means consumer choice, which is more like a market than the fee-for-service model currently in place. But that’s only one aspect of the plan. I noted in the article that Alan Levine, the DHH secretary, wants to take two public hospitals off of the state’s rolls and make one a private nonprofit hospital.
Cannon is right to be wary of expanding eligibility and crowding out private insurance. However, Jindal doesn’t intend to increase the cost of the program to the state, but rather to use the savings to increase eligibility. As for crowding out private insurance, the plan includes a regulation that prohibits anyone from joining Medicaid if they’ve left private insurance in the past year. Furthermore, plan is aimed to increase coverage among children and caretakers under 50% of the Federal Poverty Level and to give matching contributions on a sliding scale to people with some contributions from employers, in one small area of the state. Neither of these groups is likely to have a whole lot of private insurance to crowd out.
The larger issue that Cannon is missing, though, is captured by this quote of Levine’s:
…every year we don’t do anything about the uninsured, we end up, by default, moving closer to a single-payer system….Because every year, more people get enrolled in Medicare, more people get enrolled in Medicaid, and more people get enrolled in SCHIP… that by itself is having a death spiral effect on private insurance.
That doesn’t sound like somone terribly interested in expanding welfare programs.
In an article in the summer issue of the Spectator, Philip Klein urged conservatives to “learn to care about health care” and included this warning:
Even though Obama has not endorsed [a single-payer health care plan], he ended up with a plan that, if implemented, would expand the role of government in health care while decimating the private insurance industry. So while it would be inaccurate for conservatives to charge that Obama’s plan would represent “socialized medicine” in the immediate term, there’s no doubt that it would put America on the pathway to socialized medicine.
Like Cannon, I would like to see a real market for health care. But every year our health care system becomes incrementally more socialized. Barack Obama wants single-payer, but he is realistic enough to know it won’t happen all at once, and so he is making the necessary changes to pave the way. Jindal is taking the steps to forestall that process and eventually reverse it. That seems like a good-faith free market reform to me.