Why Expanding Health Coverage Will Not Necessarily Help the Poor in America

Since the Supreme Court’s ruling on the constitutionality of the 2010 health reform law, much has been made over the implications for the requirement that states expand their Medicaid rolls up to 138% of the federal poverty level (FPL).  

The court’s majority determined that the federal government could not withhold all federal matching funding should states refrain from doing so. Missing in this, however, is a discussion over exactly what we are trying to accomplish in attempting to usher more people into government-subsidized care. The data on this issue is far from convincing, and should lead reasonable people to believe that these monies could be better spent -- that is, if improving health outcomes for the poor is truly our goal.

At this point, six states have indicated that they will not expand Medicaid programs to the level specified in the law. This has left many policy experts scratching their heads in bemusement. If the federal government were willing to pay more than 90% of the costs of the expansion, why would states deny their citizens this “free lunch?”

The answer is that when something appears too good to be true, it generally is. We have a virtual obsession in this country with the premise that health insurance = health care = better health.  Unfortunately, this supposition is almost never born out in reality. Given that more than half of the 2010 law’s coverage expansion is achieved by expanding the Medicaid program, it is important to remember that, in many cases, being enrolled in Medicaid can be worse than having no insurance at all.

This illusion is foremost propagated by the belief that a “comprehensive” and uniform benefit commitment for the poor is achievable, or even desirable. With Medicaid spending now consuming the lion’s share of the majority of state budgets, most have relied on blanket cuts to providers in an attempt to maintain the pretense of affordability. In many cases, this has led to a situation where Medicaid beneficiaries cannot find a doctor willing to see them. In fact, the data is not at all conclusive that there is a substantial health benefit to enrolling people in Medicaid, and much of what we know suggests an inverse relationship.

For example, a 2010 study on major surgical procedures showed that being on Medicaid is associated with the longest length of stay, the most total hospital costs, and the highest risk of death when compared to insured and uninsured patients. Medicaid patients were found to be twice as likely to die in the hospital, and those lacking any insurance at all were found to be 25% less likely than Medicaid patients to experience an in-hospital death.

Adding to this, a 2011 study in the American Journal of Cardiology found that Medicaid patients were more than twice as likely to have a major subsequent heart attack after angioplasty than patients who didn’t have any insurance at all.

The anthropomorphic manifestation of this data is of course the famous story of Demonte Driver.  This was a 12-year-old boy on Medicaid who, after complaining of a toothache, could not find a doctor willing to accept him. He was forced to wait months for various appointments, during which time the infection spread to his brain and he tragically passed away. This was a young man who died, not because he didn’t have insurance, but because he had government insurance.

We often think that just because a policy targets the poor that we are somehow doing them a service. The truth is that the correlation between government-provided health insurance and actual health outcomes is remarkably unclear. The Social Determinants of Health Model, for example, suggests that 80%-90% of health and well being is driven by factors extrinsic to health services, such as income, education, race, social support systems, genetics, personal choice, and environmental conditions. Health services, by contrast, only make up the remaining 10% to 20%. 

None of this is to suggest that expanded coverage isn’t necessarily a worthwhile policy, only that there are likely better alternatives for that money from a cost-benefit analysis standpoint, if improving the health of the poor is truly our goal. Further, it appears imperative that any coverage expansion must be of the right kind, and that thought must be given to this principle before people are ushered en masse into a system that may be doing more harm than good.  

Proponents of the 2010 law suggest that its being upheld was a “matter of life and death.” Stories like that of Demonte Driver suggest that they may not know how right they are.