Yeah, “OPM” is a shibboleth of sorts — if you follow certain blogs you know this stands for Other People’s Money. But there’s a particular OPM-type of problem that the Medicaid expansion highlights: the fact that, when a state or municipality can do something funded by the federal government, either wholly or nearly so, it’s treated as free money.
We’re learning that the large majority of new healthcare enrollees are actually people who are either newly eligible for Medicaid or were previously unaware that they were eligible, both due to the increased income limits and the removal of limitations to women with dependent children that existed in many states. A recent article in the Washington Post tells the stories of people gaining a “health card” for the first time in rural Kentucky, and credits this to ObamaCare, when in fact these are people living in deep poverty who now qualify for Medicaid.
What the eligibility for Medicaid had been in this state, the article doesn’t say. But its neighbor, Tennessee, experimented long before ObamaCare with TennCare, an attempt to simultaneously introduce managed care to Tennessee Medicaid and use the (hoped-for) savings to expand eligibility to broader categories of people who previously had been uninsured. According to Wikipedia, they soon learned that this was a very costly endeavor, and closed enrollment.
What’s different now? Why did Kentucky not expand Medicaid in the past? What’s the magic of expanding Medicaid at this point in time? Simply the fact that, as far as states are concerned, it’s free money.
But the question of who should have wholly-state paid medical care isn’t inextricably linked to “ObamaCare” and it’s system of regulations and subsidies for private healthcare plans. And it’s a complex issue, due to the low reimbursements and the risk that the system crashes if there are no new doctors to accept the low reimbursements for the new patients. Yet, at the same time, the restriction in many states of Medicaid to single moms and children, and the low income thresholds that served as a peverse disincentive to getting off welfare, were a real problem in the past, and presumably still are in non-expanding states.
I once read the Lurie Children’s Hospital annual report to find out, out of all the money they raise with their agressive fundraising, how they spend it. Their definition of charity care? Not providing special services free, or at reduced cost, to its patients — but the mere fact that large numbers of its patients are on Medicaid, with reimbursements well below their treatment cost.
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