Here’s
one about a gift that keeps on taking. Last month Citizens for Justice released
a study of federal tax cuts and their effects over the next six years. New
York, says the group, stands to gain $78.2 billion over that period from the
cuts, more than $4,000 per capita. But because the cuts force massive public
borrowing, says the group, there’ll be hell to pay later: $259.6 billion in
added debt over the period — a net loss to New Yorkers of $181.4 billion, or almost $9,500 per person.
           Nor is the tax system the only place
where “giving back” something actually picks more from people’s
pockets.
           Look at Medicaid — the
federal-state-local program that provides medical care to poor people.
Everywhere you’ll hear that the program is a huge financial burden, with the
implication that it must be cut, or else.
           A new report, Medicaid: Good Medicine for State Economies, from the
Washington-based group Families USA challenges the clichés. The program is not
a drain on government and the economy, says the report; it’s a vital
contributor to both. In fact, says the report, the program plays “a unique
role” in “stimulating state business activity and state
economies.”
           The key here is the federal matching
contribution. “Every dollar a state spends on Medicaid pulls new federal
dollars into the state — dollars that would not otherwise flow [there],”
says the report. “These new dollars pass from one person to another in
successive rounds of spending,” says the report: Health care workers buy
new cars, auto salespeople buy new appliances, refrigerator salespeople buy
more groceries, and so forth.
           Using a “business
multiplier” factor of 2.1, the report says New Yorkers’ $16.1 billion
share of Medicaid spending (as of 2001) translates into almost $34 billion in
“new business activity.” That amount means 300,000 “new jobs
created,” with $11 billion in total new wages.
           Conversely, says the report, each
cut of $1 million in Medicaid spending will cost New York State more than $2
million in “business activity lost.”
Before
assessing the claims and counterclaims, you first must consider what Medicaid is
and does, where it came from, and how politics comes into play.
           First, Medicaid has a chronic identity
crisis: It’s often confused with Medicare, the federal health-insurance program
for people aged 65 and over. (The confusion flows partly from the fact that
Medicaid has become a key funder of long-term nursing-home care. This has
spurred debate about middle-class families that supposedly “hide”
their wealth so their elders can qualify as poor people and garner benefits.
The phenomenon calls attention to the lack of a national program for affordable
long-term care.)
           What does Medicaid cover? Plenty. First
there are federally-mandated services: hospital care, prenatal care,
physicians’ services, vaccines, lab services, x-rays, nursing home care for
people 21 and over, and more. Then come the “optional” services:
prescription drug coverage, prosthetics, physical therapy, and more. The
beneficiaries include the poor, seniors, the disabled — practically anyone.
           Medicaid and Medicare, key items on
the “Great Society” agenda, were enacted in the mid-1960s. But their
history goes back much further.
           A timeline from the Social Security
Administration hits the high points: In 1937, a federal Technical Committee on
Medical Care was born; a summary “National Health Program” appeared
the next year. Then in 1939, Senator Robert Wagner introduced a bill mandating
compulsory employer-based health insurance; the bill died in committee. In
1944, President Franklin Roosevelt spoke of an “economic bill of
rights,” including “the right to good medical care.” The next
year, President Harry Truman called for “a comprehensive, prepaid medical
insurance plan for all people through the Social Security system.” The
plan “would have covered doctors, hospital, nursing, laboratory and dental
services [and] provided benefits financed from Federal Revenues for needy people.”
Things lurched along through the late 1950s and early 1960s — but Medicare
and Medicaid finally were born.
           The history and public commitment
show that Medicaid is not to be trifled with. Yet big changes are on the prowl.
The Bush administration and a coalition of some state governors, for example,
have floated separate but similar plans to convert the funding system to de
facto block grants. The plans would basically allow states more latitude in
allocating optional services (some of which are medically necessary), in return for accepting caps on federal
outlays.
           Conservative moneyed interests have
been weighing in, too — like the Business Council of New York State. Three
years ago, the Council’s research arm, the Public Policy Institute, noted New
York’s Medicaid expenditures are “nearly twice the national average”
and thus are “strangling the taxpayers.” The Institute implied the
state covers too many people and procedures and funnels too much money to
“big health-care institutions with well-financed unions.”
           Local leaders echo these sentiments.
“Every single penny of sales tax our residents pay to Monroe County is
used to pay for Medicaid,” complained County Executive Jack Doyle this
month. (The county now spends around $115 million annually on Medicaid.) Doyle
glossed this as a “crisis that threatens the very future of not just our
county, but our entire state.”
           In recent months, the Rump Group, a
commission of local business leaders and a few college presidents, has spoken
in softer but no less urgent tones. “Medicaid [and other] costs, along
with limited revenue options, are likely to put ongoing fiscal pressures on the
county,” said the group in its report, Cooperate,
Collaborate, Consolidate. In another report, Apathy Is Not an Option, the group cited Medicaid as “a major
challenge” that should be subjected to “innovative approaches.”
That might mean cuts, of course.
How do
Medicaid’s friends
respond?
           First, they emphasize the program is
essential for public health. It “reaches people of all ages and from all
economic classes” with “primary and preventive services” that
these people otherwise would go without, says the Families USA report.
           But what does this mean on a
personal level?
           Joanne Scanlon, a regional manager
with Planned Parenthood of the Rochester/Syracuse Region, is in a good position
to shed some light here. First, she works for a direct provider. Second, she
takes part in the New York State Medicaid Defense Group, a coalition of 80-plus
organizations that believes “Medicaid matters to all New Yorkers and that
dramatic cuts and restructuring proposals at the state and federal levels will
adversely affect us all.” (The group’s member organizations include
Citizen Action, Gay Men’s Health Crisis, the Hispanic Senior Action Council,
the Legal Aid Society, and the Visiting Nurse Service.)
           Scanlon points to a representative
case, one involving Planned Parenthood’s Medicaid Family Planning Services, a
set of reproductive health programs open to women and men enrolled in Medicaid
or Medicaid Managed Care.
           “I’ve got a patient, a young
woman who graduated from college, had no health insurance, and went three years
without a GYN exam,” says Scanlon. The young woman finally got the exam
after qualifying for Medicaid, says Scanlon: “She had an abnormal pap
[test], but with further testing it came up OK.” If the situation had gone
on another three or four years, says Scanlon, anything might have happened.
           “Cuts in Medicaid,” says
Scanlon, summing up, “would push more people into emergency rooms.”
           Pushing people toward the emergency
room obviously means higher costs. But again, the costs of not getting Medicaid
dollars can be high, as well.
           Kathleen Stoll, director of health
policy for Families USA and author of the Good
Medicine report, considers the picture here. “For a community like
Rochester, I would assume that you have an extensive health care
infrastructure, so it [Medicaid cuts] will have an impact,” she says. (The
report notes a very political type of multiplier effect at work, too: “In
2002,” it says, “45 states took actions to limit their Medicaid
spending.”)
           “All of that [money] will stay
pretty close to home in Rochester,” says Stoll. If Rochester doesn’t
leverage those federal dollars, she says, the area will lose “job stimulus
and economic stimulus.”
           That’s something to ponder in a
locality whose medical centers, universities, and research facilities are
touted as key economic engines — even keys to the future.
This article appears in Oct 8-14, 2003.
