While Democrats Debate, the States Should Get Busy on Health-Care Reform

The Democratic Presidential Race Has Become a Bidding War Concerning Health Care.

Today’s Democratic Presidential candidates are engaged in a bidding war to expand federal control over America’s health-care system. Of course, their bidding has ignored the history of previous Democratic reforms that have done great damage to our health-care system and the economics surrounding it. Lyndon Johnson led the way when he established Medicare whose actuarial basis at the time was known to be unsound. Johnson promised seniors that Medicare would include catastrophic insurance coverage that never materialized, and that “contributions” would be placed into a “trust fund” that was never established. These false promises were Johnson’s version of “if you like your doctor, you can keep your doctor… period.” Further, Medicare, Medicaid and the HMO Act of 1973 expanded the third-party payment system that lit a fire under health-care inflation, a fire that has been compounding for the last 50 years. So who is now complaining the loudest about the high cost of our health-care system? The same Democratic Presidential candidates that are telling us that more federal involvement is required to improve the system. Instead of waiting on the Feds, here is one solution that the states can get busy on that is worthy of a pilot program.

Medicaid Was Well Intentioned, But It’s Doing a Lousy Job of Serving America’s Poor.

Medicaid was an honorable attempt to provide health care to America’s poor. However, there are several credible studies that show the program does not improve health outcomes. For example, a 2013 University of Oregon study published in the New England Journal of Medicine found no significant improvement in health conditions of Medicaid participants over two years of research. Likewise, a 2010 study by the University of Virginia (UVA) reviewed mortality outcomes for patients undergoing eight types of surgical procedures. Adjusting for patient specific risks, the UVA study found that uninsured patients had a 74 percent higher post-operative mortality rate when compared to those with private insurance, an outcome that one might expect. However, those insured by Medicaid had a 97 percent higher mortality rate than those with private insurance. In effect, Medicaid patients had higher mortality rates than the uninsured.

Is It Possible That the Uninsured Might Be Healthier Than Those Covered by Medicaid?

For most of us, the idea that the uninsured would see better medical outcomes than those on Medicaid would seem counterintuitive. However, when we look a bit deeper at the underlying incentives created by Medicaid, the story becomes clearer. Prior to becoming a chief architect of Obamacare, MIT economist Jonathan Gruber coauthored a 2007 study that analyzed compensation data from four thousand physicians to understand how much uncompensated care they were providing. Gruber’s analysis revealed that most physicians received higher compensation from uninsured patients who paid directly when compared to patients on Medicaid. Medicaid fee-for-service rates for physicians are notoriously low, even lower than that for Medicare. Add to this the lengthy delays physicians experience in receiving Medicaid payments from the government, it is no wonder so many physicians are unwilling to accept new Medicaid patients. As a result, many on Medicaid end up being treated later in the care cycle when health outcomes are sub-optimal.

The States Can Spend Their Medicaid Dollars More Wisely, But That Will Require Innovation.

State participation in the Medicaid program includes regulatory obligations that many governors and health experts complain have hamstringed innovations in cost-effective service delivery. By block granting Medicaid funds to individual states, each state can experiment with their unique ideas for health-care delivery or for financing health insurance. For example, some states might offer tax credits or direct subsidy payments that enable individuals to purchase health insurance or health-care services on the open market. Other states might choose to invest in public health clinics as a vehicle to deliver basic health-care services to the uninsured. One size does not fit all in many things, including health care.

New Jersey Democrats Have Been Ignoring a Proposal Worthy of Being Piloted Elsewhere.

In the State of New Jersey, Senate bill 239 (NJ-S239) introduced the “Volunteer Medical Professional Health Care Act.” NJ-S239 was the brainchild of Dr. Alieta Eck, a physician in private practice in Piscataway, New Jersey. In addition to her private practice, Dr. Eck is also the founder of the Zarephath Health Center, a free health clinic for the poor and uninsured. Dr. Eck has seen first-hand the need to expand health-care services for the poor, particularly for those who rely on Medicaid and cannot find a participating doctor. She also understands the need to deliver more quality care to uninsured patients within New Jersey’s limited Medicaid budget. That is where NJ-S239 comes in.

NJ-S239 would put in place a state administered program to replace traditional Medicaid that changes how charity care is delivered. This legislation would offer physicians a win-win arrangement by providing them with limited civil immunity for tort claims in exchange for a commitment to volunteer in free clinics. In return for this commitment, the State of New Jersey would indemnify these physicians from most malpractice claims. Should a participating physician become subject to a claim of malpractice (i.e., absent an act of omission, gross negligence or misconduct), the State of New Jersey would be responsible to defend the physician in court. The benefit to physicians in this arrangement is a significant reduction in their malpractice insurance costs.

Sounds Great… But Will Doctors Contribute Their Time to Charity Care?

A charity care program such as that proposed by Dr. Eck relies on the contributions of health-care suppliers and volunteers to be effective. According to Dr. Eck, obtaining most of the resources required to run the Zarephath Clinic has not been an issue.

“Here at Zarephath we have no problem in getting volunteer nurses or administrators to support our operations. We receive generous donations of pharmaceuticals and medical supplies from drug and health-care manufacturers. What we really need to scale our operations is physician participation as volunteers. I believe that NJ-S239 gives them the right incentive to participate in charity care as it will compensate them with reduced costs for professional liability coverage. That is a win-win in my book and will allow New Jersey to offer an example to the rest of the nation on how realistic and cost-effective charity care can be.” —Dr. Alieta Eck, Zarephath Health Center, Somerset, New Jersey

According to Dr. Eck, Zeraphath’s cost to treat an uninsured patient is only $13 per visit, far less than traditional Medicaid. By scaling these economics to more clinics, New Jersey (and other states) could literally be saving billions on publicly funded health care for the poor.

Democrats Will Always Prefer Federal Government Control of Health Care Over State-Based Solutions.

All reasonable Americans should agree that there are some individuals in our society who, due to no fault of their own, need government support. However, since the early days of their movement, progressive Democrats obsession with economic equality has been the motivating factor in their long-held desire for a federal takeover of our health-care system. Medicare, Medicaid and Obamacare were only stepping-stones toward this objective. However, much of what is wrong with America’s health-care system today cannot be fixed by the federal government. That is because the root cause of most problems within the system are related to market disruptions that were created by the federal government. Progressives will never acknowledge this because they believe government is always smarter than private markets. If it were that simple, you would think that progressive elites in the Obama Administration would have demonstrated their wisdom by fixing a broken single-payer system at the Veteran’s Administration first. Since they did not, let’s encourage the States to take the lead by fixing Medicaid so that doctors will choose to participate in the program instead of avoiding it. Let’s also elect forward thinking representatives in Washington that will get out of the way and let the states do what they do best: innovate.

Learn More About How to Truly Reform America’s Healthcare System.

If you want to learn more about how America’s health-care system can be reformed, there is something that you can do. Get a copy of Conquering the Political Divide – How the Constitution Can Heal Our Polarized Nation. This book provides the grounding we all need in basic civics and economics, and is fully of valuable ideas for constructive reform of our health-care system. Order your copy today by clicking here.

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Eric A. Beck
Free Nation Media LLC
Greenville, South Carolina


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