We Don’t Call People on Welfare “Employed”; So Why Do We Call People on Medicaid “Insured”?

Post-ObamaCare, 18 million of the newly “insured” will actually be on Medicaid, according to the Chief Actuary of the Centers for Medicare & Medicaid Services, who will suffer from limited access to care. And this blog has previously discussed research indicating that Medicaid dependents have worse access to quality care than the privately insured. This is not surprising: Medicaid is a welfare program, and it’s incorrect to categorize Medicaid recipients as “insured,” which is what universally happens in the public dialogue over health reform.

The California media has noted — with alarm — results from the UCLA Center for Health Policy Research’s California Health Insurance Survey. According to the March 16 Los Angeles Times, “nearly 1 in 4 Californians under age 65 had no health insurance last year.”

So how can 58 percent of Americans want the new federal health-care take-over repealed, according to a recent Rasmussen poll? If one quarter of us were homeless, for example, support for reform — any reform — would surely be close to universal.

Examining the data for homelessness helps clarify why we’re not in the panic about health care. Last month, the National Alliance to End Homelessness reported that 671, 859 people experienced homelessness any given night in 2007. So, how many people were homeless that year? It depends on the average spell of homelessness. If each person had been homeless for the whole year, then 671,859 people were homeless in 2007. However, if each person were homeless for only one night, then the total number of homeless people in 2007 was 245 million: about four fifths of the population! The truth is somewhere in between. Furthermore, the homeless advocates divide the homeless into “chronically” and “non-chronically” homeless.

No such luck with those who survey the Golden State’s uninsured, which explains why the sound bite proclaiming that one quarter of Californians were uninsured is unhelpful. The UCLA scholars’ estimate of 8.2 million uninsured were “uninsured all or part of” 2009. A 2003 report by the Congressional Budget Office makes it clear that there is a rapid “cycling” of people through health insurance. For example, if we look only at people who were uninsured for the month of March, 1998, according to the Current Population Survey, 8 percent were uninsured for four months or less, 14 percent were uninsured for five to 12 months, and 78 percent were uninsured for more than 12 months. However, if you look at people uninsured for some time during the whole 12 months of July 1996 through June 1997, 45 percent were uninsured for four months or less.

The current recession is undoubtedly causing people to lose health coverage. However, whether these spells of uninsurance will be longer or shorter than the historical average remains to be seen. But it’s even worse that health-policy scholars insist on categorizing those on state welfare programs, such as Medicaid, as “insured,” rather than uninsured. This results in a bias towards more government dependency.

Unemployed Californians are eligible for CalWORKs assistance as cash, but we’d never categorize people who receive these welfare payments as “employed.” If we did, we’d be tempted to reduce unemployment by increasing welfare, rather than increasing jobs! Similarly, homeless advocates categorize all people without homes as “homeless.” However, most of these people are “sheltered.” We’d never say that homeless people in a temporary shelter are no longer homeless!

Categorizing people who are dependent on Medicaid as “insured,” hides the truly destructive consequences of these programs to families’ self-reliance. A perfect example is found in the same UCLA report, which suggests that “the kids are alright” because only 13 percent of children were “uninsured” for all or part of 2009.

But this disguises the fact that the share of California kids with private health insurance dropped from 58 percent in 2001 to 51 percent in 2009, while the proportion on Medi-Cal or Healthy Families climbed by almost the same amount up to 32 percent. The percentage uninsured barely budged. Instead, the growth of government merely crowded out privately chosen health insurance.

Even worse, most of this occurred during good economic times! From 2001 through 2007, California’s unemployment rate dropped from 6.4 percent to 5.8 percent. Nevertheless, the share of kids dependent on government welfare for medical services increased from 24 percent to 29 percent.

Defining and measuring the “uninsured” is critical to designing good health policy. Unfortunately, the way it’s done in the health-policy community leads to relentless expansion of government, instead of more individual control of health dollars.

Comments (6)

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  1. Tom H. says:

    Good point, John. They are insured in name only.

  2. Ken says:

    Of the 14 million people who are going to lose their employer plan, apparently 2 million of them will be forced into medicaid.

  3. Virginia says:

    I talked to a nurse that’s a friend of mine who said the wait time for processing Medicaid applications has gone from about 30 days to over 120 now.

    It’s interesting to make the designation between Medicaid as insurance and Medicaid as welfare. I have never heard it categorized as such. If you think about it that way, the gap between Medicare and Medicaid reimbursement makes more sense. But, functionally, it still seems pretty silly to create two classes of people who may apply for government funding.

  4. John R. Graham says:

    Medicare is probably more harmful to limited government, because it is part of Social Security. When FDR brought in Social Security, he struggled with Democrats who simply wanted an old-age pension paid out of general tax revenues. FDR explained that if the government levied a specific SS payroll tax (and, later, Medicare tax) people would fool themselves into thinking that they had pre-paid into a fund, rather than a ponzi scheme.

    Interestingly, when SS was sued as unconstitutional, FDR’s lawyers successfully defended it by arguing to the court that the payroll tax was a general exercise of Congress’ taxing power, not a mandatory program.

    That is, Congress can take the SS payroll-tax revenues and do whatever it wants with the money: It’s not a contractual commitment to fund a pension, like a private plan is. Needless to say, the argument they made to the Supreme Court was not the one they had used to sell SS to the people.

    Politically, FDR (and LBJ) were right: I have never spoken to an audience of seniors where they haven’t insisted that they have “paid into” SS and Medicare, which justifies the entitlement. It makes reform very difficult.

  5. Larry C. says:

    I think the way that health care is rationed in Medicaid is the way that health care will be rationed generally under Obama Care.

  6. Don Levit says:

    Your comments about Social Security amd Medicare are right on.
    I have accumulated a lot of good third party material,such as from Social Security, Treasury, GAO, etc. to verify your statements.

    Here are a few:
    President Rooszevelt’s message to Congress
    Funds for paying insurance benefits should not come from general taxation. Rather, they should be self-suatining.

    In the deliberations before Social Security was passed, concern was expressed regarding maintaining the reserves in the trust fund to be spent for Social Security beneficiaries:
    From the Statement of Noel Sargent, representing the National Association of Manufacturers:
    “Serious consideration must be given to the fact that creation of such a huge market for Government bonds establishes an artificial situation, an artificial base for Government credit. It thus encourages further Government borrowing and opens practically unlimited possibilities of reckless public financing, since there would be enormous pressure from without, and perhaps from within, upon Congress to authorize accumulated reserves.
    With billions of dollars apparently in the Treasury how great will the pressure be for vast Government expenditures of all kinds from these funds?
    If such a distribution or spending program should once be started it would grow like a snowball and would lead to practically uncontrolled Government spending and impaired Government credit.”
    Go to: http://www.ssa.gov/history/pdf/s35sargent.pdf.
    Look on page 953.
    Don Levit