Crux of Medicaid showdown is how to fight poverty

January 6, 2014
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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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  • Our governor...
    ...is an idiot, and a phony 'christian'/ compassionate conservative who hates poor working people...that is all
  • My observations
    When liberals like Fred post comments like above, it done to inflame not be constructive. Yes, 11% is to high but the safety net is now a hammock. Gov Pence is trying & will keep on trying when we have a minority Progressive group in charge.
    • Response to Dick
      Dick, I wish I shored your confidence in Governor Pence, but I don't. Conservatives don't believe that the government should play a role in health care. They say this should be handled by the private sector. Poor people can't hope that the private sector will ever adequately meet their health care needs. Further, with regard to Medicare, the private sector is getting richer through Medicare Advantage -- a program supported by Congressional Republicans. MA costs taxpayers about 6 BILLION more than regular Medicare. If all the people on MA were, instead, on regular Medicare, taxpayers would save 6 BILLION dollars.
    • Republican Pimp
      Dick you read/sound a lot like, this guy. http://www.indianaforefront.com/blessed-are-the-poor-for-they-get-lots-of-free-stuff/
    • we're bankrupt
      We're bankrupt and entitlements which is half our spending is exploding. The War on Poverty is $1 TRILLION per year for 49 million people. Do the math: The "poor" in this country live better than 2/3 of western society. Read Heritage Foundation report on poverty. We need to take care of those who can't help themselves and force the rest to work or get subsidized by family and charity.
    • poverty facts
      Here is link to facts about American poverty from the Heritage Foundation - http://www.heritage.org/research/reports/2011/07/what-is-poverty
    • Solutions Are Not Simple
      Interesting comments. Here are a few more (1)Medicaid provides health care to the poor and from this basic standpoint, it is successful. (2) If the Governor wants to make an ideological argument for personal responsibility using the 3 criteria he cites, lets build that into our educational system and reinforce these criteria at every grade level starting in about the 6th or 7th grade; however, lets not pull the safety net out from under those who need help now. (3) Economics were different when the war on poverty began - the country is no longer experiencing a constant growth rate and, as Indiana statistics show, income growth is negative rather than positive when inflation is factored in. In other words, the risks of poverty are greater now than 50 years ago. (4) Yes, Medicaid does have some history of waste, fraud and abuse but most large programs are subject to this situation as providers take advantage of the rules, loopholes, and ignorance of the participants. I am not convinced that it has failed to keep pace with private market innovations that have created efficiencies, controlled costs, and improved quality; the private health care system is rife with examples of inefficiencies and poor outcomes (see the March 4, 2013 issue of Time magazine for many examples). Medicaid might not adequately reimburse providers in all cases but neither does the Healthy Indiana Plan. (5) The Governor continues to trade off good policy for ideology and I suspect his meeting with Secretary Sebelius is more about his politics than getting health care to the thousands of uninsured throughout Indiana.
    • Comment to Dick
      Dick - You criticize Fred for his negative comment about the Governor and then end your comment by referring to a minority Progressive group being in charge. I have to assume you are referring to the President and his administration rather than to the far right-wing faction of the House Republicans. Conclusions and/or assertions are more convincing when they are based on facts. So, as a reminder, the President was elected by a majority of voters rather than a minority. In addition, the Democrats running for election in the House received more collective votes than the Republicans but were aced out due to gerrymandering. BTW, I am not a Democrat or Republican; I prefer to think of myself as a moderate Independent.
    • Who benefits?
      Medicaid and Medicare are, like the student loan programs, really a way of transferring wealth from taxpayers to the recipients: the health care industry [hospitals, drug companies, doctors, medical device companies, etc / educational institutions]. The problem in each case is the lack of connection {market] with assertainable value. Basically freed from the market, the selling price goes through the roof, or at least to the limits set by the payor, the government. The decisions are political not rational. The patients/students are just intermediaries.
      • Wealth?
        To Robert Leirer: you say that Medicaid and Medicare are ways of transferring "wealth" from patients to hospitals/doctors etc. Really? Wealth? The reimbursements are so low with these programs that many docs won't accept any patients that have Medicaid because it doesn't even pay the overhead for the office and staff. Your comment doesn't make sense.
        • gojeepdog
          I am not an economist, but I think what I am about to say is consistent with free market economics: The settling price is the price a willing buyer and seller agree to. If Medicaid were paying too little, doctors would not agree to the payment they receive. If the payment was less than their cost, they would go out of business. Certainly, some doctors do not accept Medicaid. But many do...and they are not going broke. Also, concerning Medicare, the great majority of doctors do treat Medicaid patients. Some don't, most do. They aren't losing money. I know you believe what you are saying, but, factually, I think what you are saying is an urban myth. It defies reason.
          • Alan
            Alan-here's the reasoning. If a doctor is employed then the payor mix is largely irrelevant as he/she is salaried. If a physician is independent or in an independent group, then I can promise you that he/she would not be able to sustain the practice if all the patients were Medicaid unless that physician is content to make less than 100K after 11 plus years of post graduate education. I'm not referring to Medicare as much because their payments are slightly better and patients can't help that they have Medicare once they are age appropriate. It's the Medicaid situation where most docs aren't too eager to have too large of a percentage of their practice composed of Medicaid patients. Same perspective is applicable to hospitals. The only reason docs accept some Medicaid is that enough commercial insurance can offset the loss that Medicaid imposes to their practice. Obamacare's exchange plans are slightly better than Medicaid so it's not the windfall for docs/hospitals as Obama would have you think. Also, have you tried negotiating with the government on Medicaid's rates? Dealing with a powerhouse like Anthem is hard enough but multiply that by a large X factor for the government!
            • Facts Lacking
              The sad part about these "political" discussions is that they lack the facts that might put them into some reasonable context. When ACA was passed, there was an allowance for Medicaid rates to be increased to be on par with Medicare payments to doctors to correct the disparity that is mentioned above. There was also a plan to expand Medicaid to pay for more people and close the gap between uninsured and the insured. This helps those who work but can't afford health insurance (because it's so expensive). and those who are in unstable jobs and cannot get consistent coverage. It could make for a more mobile labor force in the U.S. like in other developed nations. If people would stop arguing over ideology, maybe some of these key points would get reported. Unfortunately, the politicians work very hard at personal attacks and on posing ideological questions so that the practical wisdom of having the population insured instead of just "showing up" at the Emergency Room is missed by the news media. Our governor is still in favor of people just "showing up" and asking for charity from what he is quoted as saying lately.

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