Paying for health care

"Each year, 1 in every 20 Americans racks up just as much in medical bills as another 19 combined. This critical five percent of the U.S. population is key to solving the nation's health care spending crisis."

Good series at The Atlantic. Timely, in light of the week's (non) developments in the U.S. Senate.

For now I'll re-post my ugly little lifetime UTIL graphic.

How to give health-care "super-users" better service at lower costs: @zimmerman082 & @kweintraub report https://t.co/HpIaDGpmbg

— Bobby Gladd (@BobbyGvegas) June 29, 2017

The core question remains: how do we rationally, effectively, and equitably pay for health care. By differentially denying some care -- rationing? Using what (morally justifiable) economic criteria?

Given that Medicaid is squarely in the GOP funding reduction crosshairs in particular, it's useful to take a historical look at it.

2: Legislating Medicaid

When passed, as part of the Social Security Amendments of 1965 (P.L. 89-97), the Medical Assistance program—more commonly known as Medicaid—was not high-profile legislation. Unlike Medicare, there was no strong lobby pushing for its enactment. Its inclusion as one slab of the “three-layer” cake was almost fortuitous. A legislative draftsman said that he doubted that more than a half day was devoted to consideration of its provisions. Nor did it occasion much discussion in committee or floor debate. 

As legislation, Medicaid was often characterized as an “afterthought”—a casual and belated inclusion once the main business of Medicare was settled. Yet, within a few months after its initial implementation, the program was being described as a “sleeping giant” because of its phenomenal capacity for growth. Casual afterthoughts can often have major unforeseen consequences, and these two views of Medicaid may seem in conflict. But each reflects reflects a truth about the program. Though Medicaid came late in the legislative process, after other major structural decisions had been made, for Wilbur Mills—chairman of the House Ways and Means Committee and the most important legislative sponsor—the Medical Assistance Program was a significant benefit for the poor and structurally important as part of his overall design for health benefits in the Social Security Amendments of 1965. 

Medicaid was more than an “afterthought” for him. And for Wilbur Cohen—the most active and influential member of the administration—Medicaid was the culmination and ratification of a project begun almost twenty years earlier: to create a health benefit for the poor by incremental expansion, using the Social Security Act as a legislative vehicle. Medicaid was also more than an afterthought for some of the most knowledgeable and powerful legislative figures of that time. Moreover, when regarded from a longer perspective, as a program intended to survive and grow, the Medicaid legislation had about it considerably more design than generally supposed. Much of this design developed over time and was crafted with external circumstance and political environment especially in mind and shows considerable “forethought,” which helps explain Medicaid’s staying power and robust capacity for growth.

When Medicare and Medicaid were enacted into law, in the spring and summer of 1965, the political environment was unusually favorable and, important to add, quite unlike the harsh conditions under which the Medicaid program later survived and grew. Following the election of November 1964, the Democrats controlled both the House and Senate, with a super-majority in the House. Lyndon Johnson had won a landslide victory with a strong mandate to complete the unfinished work of the slain president, John Kennedy. For Democrats, this was the largest window of opportunity since the New Deal administration of 1932. In these circumstances, it was no great feat to include Medicaid as part of the “three-layer cake.” But that perspective loses sight of the extent to which Medicaid was already in being before it was enacted and specially adapted to survive in a hostile environment.

Smith, David G. (2015-06-29T23:58:59). Medicaid Politics and Policy: Second Edition (Kindle Locations 634-660). Transaction Publishers. Kindle Edition.

In round numbers, both the House and Senate "Repeal and Replace" bills envision cutting Medicaid funding by about $800 billion across ten years. Stay tuned.

Just a bit more history:

The postwar years were a time in which private, especially employer-sponsored, health insurance grew rapidly (supra, 12). This development also diverted attention from the plight of the poor and medically needy. Many of those with employer-sponsored insurance saw little need to fight hard for national health insurance or make common cause with the uninsured poor, since they and their families were adequately covered. Moreover, the elderly—who were notoriously difficult to insure and also sympathetically perceived—had plenty of champions and no need to ally themselves with a stigmatized group that had little to contribute.

During this era, “welfare medicine” was marginalized, rather like a poor relation that is sometimes “taken in” but never fully included and has to survive on leftovers. The cause had champions, but they were not effectively heard in a political system that favored entrenched and well-organized interests.

Kerr-Mill
Medical Assistance for the Aging, more popularly known as Kerr-Mill, was enacted in 1960 as part of the Social Security Amendments of that year. It is of historic importance because it became the template for Medicaid in 1965. The developments that led to Kerr-Mills also provide an instructive example of incrementalism in health policy, revealing both the potential of categorical incrementalism as well as some of its noxious properties.

For health and social policy, incrementalism was much in fashion in the 1950s. Efforts at comprehensive restructuring failed or were unpopular, in part, because of a return to “normalcy” after the New Deal and the war years. The Cold War and McCarthyism deepened the conservative mood and encroached upon the domestic agenda. It was also a time of divided government, a president with a minimalist domestic agenda, and of legislative committee “baronies” controlled by southern Democrats. Under the circumstances, incrementalism in domestic policy made sense. And creatively employed, it could be a powerful engine for change.

Another element in accounting for the latent power of incrementalism was the nature of the Social Security Act and its strategic position with respect to social legislation. In 1960, the act had eight substantive titles that covered most of federal health and welfare policy, except for the Public Health Service and the Food and Drug Administration. Because it was largely an aggregate of different titles, it lent itself readily to tinkering with individual programs, adding a paragraph, a subtitle, or even a whole new title. Much of its purpose was to get timely payments to individual beneficiaries, so it had a periodicity and a “must pass” element that invited its use as a vehicle for related amendments. The Social Security Act fell under the jurisdiction of the House Ways and Means Committee, which virtually assured its passage. Such bills, when passed by Congress, were almost “veto proof,” since no president wanted the onus of holding up twenty million Social Security checks. [ibid, Kindle Locations 745-772]

 An interesting political history, to be sure. And, political support for social welfare programs for the poor has never been lower than I can recall across my 71 years.
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"We've got to do something to reinject free market forces into this environment. And look if we can't get this done, I have made clear if we can bring free market forces to bear, we can bring down cost for middle Americans." - Utah GOP Senator Mike Lee, Face the Nation, July 2nd

Yeah, the totemic, wholly curative "free market." Well, how can there be a profitable "market" aimed at those with no discretionary resources (the poor)? What good is a HSA if you've no funds of your own to put in it? What is the utility of any "subsidies" if the cost of health care goods and services nonetheless remain largely out of reach? Recall my prior post Rationing by 'Price'?

I repost a graphic I did earlier.

My personal sociopolitical ideological axiom is that markets properly exist to serve humanity, not the other way around.
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More to come...