“Free” Medicaid, Sign-ups, and the Work Requirement
Scene 1: Young, poor family in my office with their 3-month old. I am a pediatric cardiologist, and I tell them that their child needs heart surgery, and soon. Since they qualify for Medicaid and it will cost them nothing, they should sign up as soon as possible. I schedule admission to the hospital for the following week.
Scene 2 (the following week): All preparations are in place for the baby: operating room time, ICU bed, nursing staff, instruments, and so on. The parents arrive with their baby. Because they have not signed up for Medicaid, the hospital will not be paid. We go ahead with the procedure. The baby does medically well, but the hospital does poorly in the pocketbook.
Every doctor who cares for Medicaid patients experiences some variation of the story above, probably on a daily basis. Even though Medicaid is free to the recipient, people do not sign up. In fact, the recent report by the nonpartisan Congressional Budget Office (CBO) on the Republican Party’s proposed health care plan—the American Health Care Act, or AHCA—estimates that five million people eligible for “free” Medicaid will not sign up without being forced to do so by the Obamacare individual mandate, renamed by the Supreme Court in NFIB v. Sebelius as an individual penalty tax.
The AHCA intends to eliminate the individual penalty tax. Apparently, the CBO believes that the “stick” of the individual mandate is a effective mechanism for pushing people toward the “carrot” of health care coverage.
Ignore for the moment the questionable accuracy of all CBO predictions. Why do people behave this way? Why do they reject a free gift of medical insurance coverage supplied by the government?
It is highly doubtful that they do so because they studied the University of Virginia report that showed Medicaid-insured patients did worse after surgery than those with no insurance at all.
Millions of potential Medicaid recipients look this gift horse in the mouth and say no, thanks. Why is that? The most common reason is confusion and hassle: signing up for Medicaid is quite complex, time-consuming, and highly intrusive. Eligibility standards and enrollment processes changes across state lines, and Washington is constantly tweaking both. These errors and inconsistencies often result in the omission of qualified recipients, many of whom drop out of the health care marketplace altogether. Some eligible-and-enrolled individuals are actually thrown off the rolls by states trying to cut costs.
The main reason why people don’t sign up is a perceived lack of value. From earliest memory, people are implicitly taught that money equals value. The CEO gets paid more than the janitor because the CEO is more valuable. The same is true of a professional basketball player versus a first grade teacher. A Mercedes-Benz is considered more valuable than a Honda because it costs more.
Money equals value. Presumably, the opposite would be equally true: What is free has little to no value. Why sign up for something free like Medicaid if it is worthless?
Money is not the only way to pay for things and thus not the only way to impart value. Charity workers two hundred years ago learned this: If a person seeking charity is willing to give time or effort, that person will see the charity—free food and/or shelter—as valuable. In the 19th century in America, a man seeking a free meal who was willing to chop wood (thereby accepting personal responsibility) would end up with a warm, full belly. This was called the work requirement. Those who refused to work stayed hungry.
Work requirement has become a catchall phrase meaning a charitable exchange—in return for food, shelter, or health care, recipients would give of themselves. It was not free—you paid for it with something of yours. Under the Obama administration, work requirements in Medicaid were disallowed. Hopefully, under the new administration, this will change.
Work requirements can take many forms. Kentucky’s still-pending 2016 Sect. 1115 Medicaid waiver emphasizes volunteer activities for Medicaid recipients. Indiana wants graduated (scaled upward) copayments. Texas would like to see proof of personal responsibility through Medicaid cost sharing, among other forms of work requirement.
Montana Gov. Ed Buttrey wants to require Medicaid recipients to get job training. This is in line with the original intent of Medicaid, a program designed in 1965 to support those who were “unable.” In Montana, they want to turn the unable into the able, who then no longer need Medicaid.
As long as Medicaid is a free entitlement, many people will have no commitment, will not be personally invested, will see no value in the program, and won’t sign up. A good solution is some form of work requirement.
Deane Waldman, MD MBA, is Emeritus Professor of Pediatrics, Pathology and Decision Science, and Director of the Center for Health Care Policy at the Texas Public Policy Foundation as well as the author of The Cancer in the American Healthcare System. He can be reached at email@example.com.