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Health Care & Life Sciences / Life Science & Biotech

Crux of Medicaid showdown is how to fight poverty

January 6, 2014

I’d love to be in the room for this one.

When Gov. Mike Pence tries next month to negotiate a Medicaid expansion deal in a face-to-face meeting with Kathleen Sebelius, President Obama’s health and human services secretary, it will be a clash of the conservative and liberal approaches to fighting poverty.

That clash is at least 50 years old, since President Lyndon Johnson launched the War on Poverty with this speech on Jan. 8, 1964.

“Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it,” Johnson stated in his call for a myriad of anti-poverty programs, not least of them the Medicaid health insurance program for the poor.

For the past 50 years, liberals and conservatives have been fighting over two things: 1) the true causes of poverty and 2) the best tactics to fight poverty.

On causes, conservatives like Pence highlight personal choices, such as finishing high school, getting a job, and waiting till marriage to have children. Pence, in a December speech, noted research that has found the poverty rate among Americans that do those three things is just 2 percent. (For perhaps one of the quickest and most vivid summaries of the research behind this position, see this 2012 New York Times story.)

“If any person in our society does these three things in this order, they have an almost infinitesimal chance of being poor,” Pence said.

That’s why Pence will only expand eligibility for Medicaid via the Healthy Indiana Plan, which requires its participants to contribute at least 2 percent of their income toward health benefits. That provision requires participants to have incomes, i.e., to have a job.

Liberals point more to societal circumstances that are often beyond any individual’s control—an unstable family, a crime-ridden neighborhood, a poor school, a job lost in a recession, a major illness. No one wants to be poor, liberals reason, but they need a net that catches them when bad circumstances strike—as they can to anyone.

“This is not an isolated situation. More than half of Americans at some point in their lives will experience poverty,” Obama said in a December speech on poverty and the economy. He added that “social programs benefit us all, because we don’t know when we might have a run of bad luck. We don’t know when we might lose a job.”

That’s why Obama, in his Affordable Care Act, called for all states to offer Medicaid benefits to all adults with incomes up to 138 percent of the federal poverty line.

On tactics, conservatives like Pence regard Johnson’s War on Poverty as generally a failure. The official poverty rate in 1964 was 19 percent, and had been falling steadily since the end of World War 2. It dropped to 12 percent by 1969, in large part because of programs like Medicare and Medicaid.

But then the progress stopped. In the past 45 years, the poverty rate has bounced between 11 and 15 percent.

Some conservatives say poverty rates have remained stagnant because the anti-poverty programs do not give their recipients the opportunity to earn success. And earned success is the surest path to self-reported happiness, according to research by Arthur Brooks, the president of the conservative think tank American Enterprise Institute.

Pence referred to Brooks’ “earned success” research in his December speech.

Obama, on the other hand, thinks the War on Poverty has been generally successful, even though it hasn’t been flawless. He cited a recent study, using an altered definition of poverty, which found that poverty has been reduced by about 40 percent since the start of the War on Poverty.

“We’ve also got to strengthen our safety net for a new age, so it doesn’t just protect people who hit a run of bad luck, but also propels them out of poverty,” Obama said. He added, “The point is these programs are not typically hammocks for people to just lie back and relax. These programs are almost always temporary means for hardworking people to stay afloat while they try to find a new job or go into school to retrain themselves for the jobs that are out there, or sometimes just to cope with a bout of bad luck.”

As for Medicaid specifically, Pence views it as a failure, pure and simple. The conservative case against Medicaid is this: Its poor payment rates for doctors give Medicaid beneficiaries inadequate access to proper health care, meaning they still let illnesses progress too far before getting the help they need.

“Medicaid is broken,” Pence wrote to Sebelius in February 2013. “It has a well-documented history of substantial waste, fraud and abuse. It has failed to keep pace with private market innovations that have created efficiencies, controlled costs, and improved quality. It has done little to improve health outcomes and does not adequately reimburse providers.”

Obama certainly acknowledges that some anti-poverty programs have been poorly designed and executed in the past. But he doesn’t list Medicaid as one of them. In fact, Obama calls the expansion of insurance coverage enacted by his Affordable Care Act as nothing short of life-saving.

“That’s why we fought for the Affordable Care Act,” Obama said, “because 14,000 Americans lost their health insurance every single day, and even more died each year because they didn’t have health insurance at all.”

Obama and Sebelius have been willing to work with states that don’t want to expand traditional Medicaid. But they have drawn a line at requiring people under the poverty line pay for those benefits.

Obama invoked Martin Luther King, who said, “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

But Pence thinks working and contributing to their own success is exactly what those in poverty need most.

So these are the stakes when Pence and Sebelius meet. Who knows which vision will prevail?

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