Medicaid: Not Just for the Poor Anymore

In 1965, Medicaid was conceived as a program to provide acute care for people who had no other resources. Reformers in the 1990s who wanted to expand it to cover everyone under 65 were successful in passing one expansion after another. As a result, the program is no longer limited to providing acute care to people in poverty.

Given the rising incomes of people covered under the program, Congress might consider giving states the flexibility to create their own copayment and deductible requirements. Congress first allowed Medicaid copayments in 1982. Unless a state Medicaid program operates under a waiver, the maximum deductible must be “nominal” in amount. Nominal is currently interpreted to be limited to a deductible of $2.00 per month per family, with copayments for services that range from $1.00 to $3.00. In short, the pricing structure of Medicaid is so out of whack that Medicaid clients find that it costs about as much to check into an emergency department as it does to buy lunch off the McDonald’s Dollar Menu.

Medicaid cost-sharing is even less than meets the eye when one considers that it may not be applied to emergency services for people with serious conditions, family planning supplies, services for children, services for pregnant women, or services to people in hospitals or institutionalized long-term care.

(Thanks to Michael Bond for suggesting the graph.)

Comments (8)

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  1. Bruce says:

    Of course it’s not just for the poor. This is how we are going to get national health insurance.

  2. Joe says:

    Even if subsidized, larger copays would affect Medicaid beneficiaries’ behavior, assuming they were allowed to use the funds for other things. But there are no significant copays, so there are no incentives.

  3. Ken says:

    Once Obama Care is fully phased in, I expect that half the nonelderly population will end up in Medicaid.

  4. Jeff says:

    I agree with Bruce. The plan is to put everybody in Medicaid.

  5. Vicki says:

    Jeff, I really hope you are wrong.

  6. Linda, I think your graph is great, but would ask you to define “people in poverty” please. (I’m also pretty sure that the legend should read “millions” not “thousands” of people.)

    Also, do you have an explanation for the perfect correlation in the late 1990s? Did it have something to do with welfare reform? Representing the graph as a percentage of total population would be interesting, too.

    I’d also like to see how many of these folks are currently in default on their mortgages!

  7. Devon Herrick says:

    As Medicaid rolls expand access to physician care will fall. Medicaid reimbursements are so low that many doctors limit the number of Medicaid enrollees they treat. As more people enroll in Medicaid, the shortage of willing physicians will undoubtedly climb. Also, as the median income of Medicaid enrollees rises, physicians may not consider it their charitable duty to treat people who are not truly poor for the low fees Medicaid pays. There is a very real chance that the physician market will segment into Medicaid Mills where patients are herded through like cattle through a corral; while all other doctors treat no Medicaid patients.

  8. Linda Gorman says:

    John–You are correct about the mistake in the units. Thanks for the correction. Y-axis should be 0 to 70 million.

    People in poverty as defined by government via the Census via the CPS. Based on the Orshansky work in 1963 and since updated using CPI.