- The Washington Times - Saturday, January 28, 2006

Medicaid, the government health-care plan for low-income people, has been targeted by congressional mediators as a prime source for savings in a bloated federal budget.

Medicaid’s costs have increased a staggering 54 percent in the past five years. This has been deemed “unsustainable.” Jointly financed by the federal and state governments, the program now accounts for an average 25 percent of state budgets, threatening many with insolvency.

A lowering of Medicaid costs by $6.9 billion is proposed over the next five years, which will decrease benefits and raise out-of-pocket expenses for the 47 million Americans covered by Medicaid. The nonpartisan Congressional Budget Office predicts an appreciable number of Medicaid recipients, finding the additional costs unaffordable, will join the ranks of the medically uninsured. The adverse morbidity and mortality statistics of the uninsured are well documented.

Medicaid’s problems were far from anticipated in 1965 when passed into law under the jurisdiction of the former federal Department of Health, Education and Welfare (HEW). At the time, I was a health care consultant to HEW Commissioner Dr. Ellen Winston and remember well the department’s euphoria over Medicaid’s prospects. All the public charity hospitals were to be phased out within 10 years, and “second-class care” was to be eliminated as Medicaid recipients were shunted into the private care “mainstream.”

But within three years, a federal commission was investigating gross fraud and an explosion of Medicaid costs. The program continued downhill as doctors’ fees were slashed, benefits cut and only about 50 percent of the poverty class and the working class near poverty remained in the program.

Few are happy with Medicaid today. Patients are unhappy with eligibility red tape and the declining number of doctors willing to treat them. Doctors are unhappy with the mountains of paper work and unrealistically low fees. Most hospitals are unhappy because Medicaid’s reimbursement doesn’t cover the cost of patient care so they only remain afloat by shifting costs to private patient insurance plans. But unhappiest of all are government agencies struggling to control costs that have escalated far beyond their original projections. Meanwhile, the public hospitals are alive but not well.

Medicaid is simply another example of medical socioeconomics not keeping pace with brilliant advances of medical science and technology. After 40 years, we must reluctantly conclude Medicaid has been a well-intentioned program that has fallen short of expectations and that further Band-Aid efforts to resuscitate the program should be abandoned.

The great majority of Americans, however, believe health care should be a fundamental right and a public rather than a private good. A single standard of health care, regardless of ability to pay, is in concert with the beliefs of most Europeans and Canadians. What, then, should replace Medicaid?

The easiest answer is to include health care for the medically indigent in the badly needed reform of our “broken health-care system,” which has become a crisis.

Our outmoded, employer-based, privately financed, multipayer health-care system — a holdover from World War II wage-and-price controls — is an anachronism in the 21st century. The world’s richest and most powerful nation is unique in not sponsoring government-controlled Universal Health Insurance (UHI) other industrialized nations have enjoyed for decades.

Unlike Medicaid, Medicare — UHI for the elderly — has been a resounding success. Medicare, though also targeted by Congress for budget cuts by increasing patient-out-of pocket payments, is indeed widely recognized as the most important advance of the last century in our health-care socioeconomics. Medicare for our entire population is probably the most likely answer to Medicaid’s “meltdown.”

I have previously advocated on these pages a change to the Canadian, single-payer health-care plan funded by national health insurance. The need to find a substitute for Medicaid provides an opportune time to hasten this change.

Briefly, Canada’s health-care system provides one standard of care for its entire population under a plan funded by tax dollars, and there are no additional expenses at the time of treatment. Canada’s medical results equal ours at a huge savings.

Perhaps the superiority of Canada’s health-care system was best expressed by a Harris Interactive Poll among the leading industrial societies that evaluated patient satisfaction with their system: Canada ranked first and the U.S. last. Moreover, 50 percent of Americans favor the Canadian health-care system and only 8 percent of Canadians prefer ours. Significantly, The new Conservative government in Canada did not advocate major changes in the UHI program.

Of interest is a comparison of prescription drug prices in the U.S. and Canada. Our new Medicare Prescription Drug legislation, with some 40 plans to choose from, is a mishmash of confusion and a rich source of material for cartoonists and late-night TV comedians.

The attempt to constrain skyrocketing drug prices was hamstrung from the beginning by President Bush’s insistence there be no price negotiations with pharmaceutical companies. Thus, our Medicare population, 41 million strong, has been denied the advantage of bulk-buying economies of scale. Imagine the uproar if Hertz and Avis were, by law, denied discounted prices on autos they purchased in huge lots.

Since 1987, Drug prices in Canada have been regulated by the Patented Medicine Price Review Board, a quasijudicial body that negotiates prices with the drug industry. Prices are held in check because they are geared to the Consumer Price Index. The drug houses know the rules; only four times in the last 18 years has legal action been taken to force drug prices lower.

The future for national health insurance looks bleak. The issue has never been on President Bush’s agenda. Indeed, during his governorship, 24 percent of Texans were medically uninsured — the highest of the 50 states. During his presidency, the uninsured have increased by 4 million and continue rising 100,000 monthly.

A major reform of our wasteful health-care system will help put the brakes on an inexorably rising national debt that will eventually fall on our children and grandchildren.

It would be well to recall an admonition from George Washington’s 1796 Farewell address: “by vigorous exertion to discharge the debt” — not ungenerously throwing upon posterity the burden which we ourselves ought to bear.

Alex Gerber, M.D., clinical professor of surgery, emeritus at the University of Southern California, is a former health-care consultant to the White House and the U.S. Department of Health and Human Services.

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