Medicaid

The Illusory Savings From Cutting Medicaid

Congressional Republicans promise to achieve greater frugality in Medicaid without inflicting more hardship. It's not gonna happen.

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Trump talking health care during the annual Congressional Picnic at the White House
SHAWN THEW/EPA/Newscom

When economists talk in their sleep, they say, "There is no such thing as a free lunch." This axiom is drilled into them from day one of their undergraduate education and never leaves their minds. Any economist who tried to deny it would find herself suddenly choking in pain and unable to speak.

What it means is that if the government does something that costs money, some human somewhere will bear the expense. "Free" public schools, "free" parks, and "free" roads all have to be paid for by the citizenry. Collectively, we can't get something for nothing.

This useful insight has long been offered as an objection to costly government programs. But it applies as well to measures that extract savings from costly government programs.

In their replacement of Obamacare, congressional Republicans promise to achieve greater frugality in Medicaid, which helps low-income Americans, without inflicting more hardship. The melancholy truth: Not gonna happen.

Last year, total spending for Medicaid amounted to $533 billion. Nearly two-thirds of the funds come from the federal government, and the rest comes from the states. Some 69 million people are covered by it, up from 54 million in 2012.

The expansion was intentional. Under the Affordable Care Act (ACA), Washington signed on to cover 100 percent of the cost of expanded coverage at the outset, with its share falling to 90 percent from 2020 on.

The health care plan offered by Senate Republicans, like the one passed by the House, would reverse the trend by giving states a certain amount per Medicaid recipient or a block grant for a fixed amount. Either way, the federal contribution would steadily shrink compared with what it would do under the ACA.

Under the House plan, the federal savings would amount to $880 billion over a decade. The Senate bill is supposed to wring out even more. Supporters say Medicaid enrollees would be better off because states would be free to redesign their programs to make them more efficient and responsive to beneficiaries.

But remember that fundamental economic proposition. Just as you can't get something for nothing, you generally can't get more for less.

The House changes, according to the nonpartisan Congressional Budget Office, would reduce the number of people on Medicaid by 14 million by 2026. Many people who now have coverage would lose it, and many who would have become eligible would be turned away.

States could always protect the vulnerable by boosting their contribution to make up for the lost federal funds. But that would mean requiring their taxpayers to foot the bill.

Republicans say the changes would be positive because Medicaid coverage is often useless. House Speaker Paul Ryan claims that "more and more doctors just won't take Medicaid."

In fact, 69 percent of physicians currently accept new Medicaid patients, and the percentage has been stable for decades. It's lower than for privately insured patients, because Medicaid provides doctors with lower reimbursements, but budget cuts would probably exacerbate that malady.

Some recipients would get cut off under the GOP plans, and some would get less coverage. That—surprise!—would leave them worse off, because comprehensive health insurance is a good thing to have. Medicaid coverage, reports the Kaiser Family Foundation, is proven to ensure "earlier detection of health and developmental problems in children, earlier diagnosis of cancer, diabetes, and other chronic conditions in adults, and earlier detection of mental illness in people of all ages."

Cutting back Medicaid coverage would save taxpayers some cash, but only by taking it from others. The reduction would raise costs for low-income people and most likely degrade their health.

It would also increase the financial load on hospitals, which treat a lot of people who have no coverage. A study by scholars at Northwestern University and Columbia University figured that each new uninsured person costs nearby hospitals an average of $900 a year.

Less Medicaid coverage would strain the finances of struggling hospitals, particularly small ones in rural areas, and put some out of business—to the detriment of all patients, not just those on Medicaid. When one closes, the uninsured migrate to other hospitals, putting more stresses on them.

Economists know there's no such thing as a free lunch, a free medicine, or a free X-ray. There is, however, such a thing as a false economy.

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  1. That argument was so economically stupid, it had to be a Chapman. And it was.

    1. It would be nice if they would just do the sensible thing and get rid of him so I can justify a donation. I don’t come here to get a poorly xeroxed copy of a junior high newspaper trying to be mother jones. It is kind of disgusting reason would print this.

      1. Dude, respectfully, have you been living in a cave for the last nine or ten years? Chapman completely speaks on behalf of Welch, Gillespie, and the entire cabal of fakers who hijacked Reason.

    2. Not merely stupid, but dishonest.

      “… without inflicting more hardship….”

  2. This article’s logic and “facts” are even more twisted than what it tries to describe.
    First, there is no free lunch. But, God never told anyone to be stupid. I can buy Ritz crackers at Walmart for $2.50 while the City Market across the street charges $4.99 for the exact same box of Ritz. In this example the City Market is the current Medicaid price, while Walmart is the lowest available price for the EXACT same product. Is going to Walmart a “free lunch”? No one in their right mind (maybe left mind) would say so. The difference in price is due to better management, better negotiations of price and volume. The same can be obtained by a well run medical care program. Currently there is little incentive for the any Government to run anything well or least expensive. Too many hogs at the trough, too many special interests, too many Steve Chapmans crying crocodile tears for the “children” or other free crap special interests.No one is crying for me the taxpayer who must foot the bill for all the waste and corruption. Not to mentions that Health Care is NOT a right I am forced to pay for everyone. Unfortunately, Chapman is right about one thing. The Repub plan is at least as bad as the Dumo plan, just not for the reasons he pointed out. Both parites are going to bankrupt the republic, it’s just a matter of time.
    There were so many other straw men in this article I am beginning to think Chapman wrote it on April 1.
    Grumpy

    1. Where, in this misanthropic jabber, have you advocated a free market in medicine?

  3. Medicaid ***COULD*** get cost-cut w/o hurting anyone, by deregulating… Taking most or all meds off of the “needs a prescription list”, allowing people to see un-licensed doctors (or veterinarians) for their health care, if they want to, etc. Slashing the living snot out of the FDA budget would help, too!

    Well, when I say ” w/o hurting anyone”, though, I didn’t include licensed doctors, the AMA, FDA parasites, regulators, and other hangers-on & rent-seekers. THEY are the reason why we never discuss cutting costs by cutting Government Almighty and its minions!

    1. +1,000

  4. “There’s no such thing as a free lunch”? I call BS on that one! OK, I acknowledge that the saying is trying to transmit a useful idea, but, let’s recalibrate?

    ‘1) The free market is a “free lunch” compared to socialism? Just compare North Korea v/s Singapore.

    ‘2) Peace is a “free lunch” compared to war. Compare living in NAZI Germany in 1944 v/s living in Switzerland.

    ‘3) Voluntary, un-coerced association in general, is a “free lunch” compared to having endless armies of do-gooders backed up by endless armies of armed thugs. See point #1.

    NOW can we talk about improving medical care WITHOUT growing Government Almighty? Maybe even by SHRINKING Government Almighty? The Rethuglicans and Demoblicans sure aren’t filling this niche; Maybe Libertarians could!

    1. ‘4) Technological advancements are a “free lunch” compared to the lack of it. Yet, in the face of medicines (or tools or types of surgeries) used overseas, safely and effectively, for decades, the FDA ***STILL*** says we must spend $millions here, to prove them safe and effective HERE, before we can be allowed to use them here! Do the laws of physics, biology, and chemistry change, when we cross national boundaries? Or are we looking at greedy FDA parasitism, plain and simple?

      1. But….THALIDOMIDE!

  5. When economists talk in their sleep, they say, “There is no such thing as a free lunch.” This axiom is drilled into them from day one of their undergraduate education and never leaves their minds. Any economist who tried to deny it would find herself suddenly choking in pain and unable to speak.

    Wait, is Krugman still an economist or is he not?

    1. Krugman is an economist the same way that an arsonist is a fireman!

    2. Krugman clearly has transcended beyond economics.

  6. If the Republicans offered even a hint of free market medical reform the pain might be mitigated. But the GOP has no more affinity for economic liberty than do the Democrats, so our choices are among various sorts of socialism (or fascism, if you prefer). You don’t hear many libertarians demanding the end of medical licensure and prescription drug laws, either.

    1. “You don’t hear many libertarians demanding the end of medical licensure and prescription drug laws, either.”

      Count me among these exotic beasts!!! Step number one is to make it optional… Just lemme “opt out” of the coercive system!

      1. I have nothing against medical licensure, any more than I oppose plumber licensure.

        What I object to is being restricted to obtaining goods and services from those so licensed.

    2. Walmart might be able to brag convincingly that “you get two boxes of Ritz for the price of one at our competitors” but who would ever believe a pitch, especially from the GOP, that they can cover double the number of medical visits, etc. for what the Dems’ medicare plan does?

      1. but who would ever believe a pitch, especially from the GOP, that they can cover double the number of medical visits, etc. for what the Dems’ medicare plan does?

        No, but I certainly believe the pitch that if people have to pay for the healthcare they consume out of their own pocket instead of “socializing” the cost, they’ll try to be healthier and spend a lot less.

    3. You don’t hear many libertarians demanding the end of medical licensure and prescription drug laws, either.

      Excuse me, but I advocate for oxycodone vending machines in front of Target.

      1. “Excuse me, but I advocate for oxycodone vending machines in front of Target.”

        Yeah Dude, I agree!

        This idea that, because a few of us abuse the stuff and cause driving accidents (and deaths and overdoses and sadness for loved ones), the rest of us should live in pain and deprivation, is WAAAY bogus!

        My favorite comparison is, “Most mammals don’t control their bowels, and they shit in public, anywhere they please, spreading disease and filth! Therefor, from now on, ALL mammals (including YOU!!!), MUST wear diapers when out in public!” … Excuse me, I an NOT like some other mammals, and I am NOT like irresponsible over-dosers!!!

      2. Except they would not be available to those boycotting Target.

    4. “You don’t hear many libertarians demanding the end of medical licensure and prescription drug laws, either.”

      This is only a true statement if you are either

      A. Deaf
      B. Never within earshot of a libertarian.

      It would be difficult to find someone who declares themselves a libertarian who doesn’t demand those things.

      1. Ooops.
        Beat me to it.

      2. It’s more like, we’re so sick of saying it & nobody responding that we hardly ever do any more. We can just say we’re libertarians, & everyone else thereby knows we have that opinion about licensure of goods & services, & therefore pays no att’n.

        1. So instead we promote things like letting some differently-licensed professionals practice each other’s art (resulting for example in that nurse-midwives are now allowed to deliver babies instead of their having to be MDs, even if lay midwives aren’t allowed) in the hope that people who don’t know us will take what we promote seriously, & hope they don’t think, “This person’s just saying that because s/he’s a libertarian,” & dismiss it. So, for another example, allow pharmacists to fill prescriptions written by a broader class of professionals; not as good as allowing nonsprescription dispensing of those drugs, but it’s still an increase in freedom that has a chance of being adopted, & therefore can serve as a real-life model for further deregul’n.

    5. “You don’t hear many libertarians demanding the end of medical licensure and prescription drug laws, either.”

      Either you are new here or can’t read.

    6. “If the Republicans offered even a hint of free market medical reform the pain might be mitigated. But the GOP has no more affinity for economic liberty than do the Democrats, so our choices are among various sorts of socialism (or fascism, if you prefer).”

      I don’t understand why someone would write this in a thread about how the Republicans are trying to cut Medicaid.

      “Under the House plan, the federal savings would amount to $880 billion over a decade. The Senate bill is supposed to wring out even more . . . . The House changes, according to the nonpartisan Congressional Budget Office, would reduce the number of people on Medicaid by 14 million by 2026.

      I’d understand your sentiments if we were talking about some other topic. This article is about the Republicans cutting eligibility for Medicaid. Do you oppose them doing this because the Republicans aren’t really about . . . whatever?

      Cutting eligibility for a socialist program should be applauded. We shouldn’t criticize the Republicans for fighting to cut the eligibility of a socialist program. I wish they’d do other things, too–in addition to this. I’m not against doing good things because doing them doesn’t also include doing other good things.

    7. You don’t hear many libertarians demanding the end of medical licensure and prescription drug laws, either.

      You might think that…

      …if you never actually read a single article @ Reason

      the opposite is true; its a constant theme.

      the standard-critiques were recently rehashed last December, when reviewing possible FDA picks =

      “We should reform [the] FDA so there is approving drugs after their sponsors have demonstrated safety?and let people start using them, at their own risk,” O’Neill said in a 2014 speech…. “Let’s prove efficacy after they’ve been legalized.”

      Those “insane” ideas that relate to the FDA may seem familiar to readers of Reason as they have been defended at length and intelligently here by our science correspondent Ronald Bailey, at most detail in this 2012 article.

      Here’s a good, lengthy piece (“How Govt Killed the Medical Profession“) from a physician on the standard libertarian complaints about both doctor-licensing and FDA pharma barriers.

      and shikha dalmia (not a much-liked writer, but still) wrote a decent piece on libertarian objections to the AMA here

    8. Maybe YOU don’t hear them, but I do, and say so myself. Coercive government may not be the root of all evil, but it sure is the enabler of a lot of it.

    9. “You don’t hear many libertarians demanding the end of medical licensure and prescription drug laws, either.”

      Yes you do.

      Government medical licenses reduce the entry of doctors and nurses by increasing the cost to become one. Eliminate medical licenses and the allow private companies to offer the same for those that need the security. You’ll get cheaper, better, and more doctors.

      Prescription drug laws have the same affect. It increases the cost of drugs by requiring a doctors visit when it’s often unnecessary.

      Both should be eliminated for better medical care.

    10. I guess you never read one of my many comments on this subject.

  7. I am actually shocked at how low the average monthly cost is… $644. Keep in mind that Medicaid ends up with some of the sickest, most expensive, people. Pre ACA I was paying just over $400/mo in the north east for a (relatively) shitty hmo plan through a corporate shell. I’m sure there is fraud that should be dealt with and it can probably be made more efficient, but it doesn’t seem to be all that far off from the current private market either.

    1. “I am actually shocked at how low the average monthly cost is… $644.”

      If you look at some of my other comments in this thread, you’ll see that Medicaid doesn’t actually cover costs.

      That’s how much Medicaid reimburses providers for treating Medicaid patients.

      Medicaid only reimburses providers for a fraction of the cost–leaving providers to gouge private insurance companies for approximately 150% of actual costs (circa 2015).

      $644 might be what the government is paying. $800 might be the actual costs. $1,200 might be what they get from an insurance company.

      P.S. In addition, yeah, Medicaid is paying for more costs–for instance the fertility rate among Medicaid patients is higher than the general population. Having babies is expensive, and moral hazard is a real thing.

      1. Having babies is a young people’s game, and young people tend to be poorer.

        1. It’s also a poor people’s game.

          One of the two main reasons women start to have fewer children (cross culturally and throughout history) is when they have opportunities to contribute to household income by working outside the home.

          Medicaid is an entitlement for poor people–a disproportionate number of whom are women who do not work outside the home.

          Women who do not work outside the home simply tend to have more children than those who do, and, again, that isn’t just in the United States. Over the course of a few generations, the fertility rate in places like Ireland and Italy (where people avoid birth control for religious reasons) dropped from more than six per female to less than two per female today–after women started entering the workforce in the ’60s and ’70s.

          Show me a place where women don’t work outside the home, and I’ll show you a place with a relatively high fertility rate. Protecting poor women from the medical expenses of child bearing certainly doesn’t discourage having children any.

    2. I am actually shocked at how low the average monthly cost is… $644.

      I’m not sure where you get that number from. Medicare/Medicaid spends an average of upwards of $1000/covered member.

      Maybe you’re just looking at the federal portion of the spending.

  8. “Cutting back Medicaid coverage would save taxpayers some cash, but only by taking it from others.”

    And statements like this is why this place is now a ghost town.

    1. Indeed.

      ‘Some recipients would get cut off under the GOP plans, and some would get less coverage. That?surprise!?would leave them worse off, because comprehensive health insurance is a good thing to have.’

      Yes, comprehensive health insurance IS a good thing to have.

      However, when it comes at the expense of putting a gun to another person’s head in order to pay for the premise, any and all pretense of advocating on its behalf in the name of compassion rings a bit hollow.

      ‘In their replacement of Obamacare, congressional Republicans promise to achieve greater frugality in Medicaid, which helps low-income Americans, without inflicting more hardship. The melancholy truth: Not gonna happen.’

      That’s so far removed from the point(from a libertarian perspective), that one wonders what the fuck business Chapman has even being here.

      Oh, Reason. Once again, you display your tepid, lukewarm commitment to individual rights by publishing another article by an unapologetic statist.

      While I agree that the Republicans’ plan is deeply flawed, and if I was in Congress I wouldn’t vote for it even if you offered up Jessica Alba’s oiled up ass as reward, Chapman never touches upon how flawed and unsustainable the program is in regards to long term federal budgeting.

      But hey, to Hell with your grandchildren. There’s shortsighted social signalling to be done.

      For fuck’s sake, Reason. STATE HARDER!!!

      1. Well said,

      2. “Oh, Reason. Once again, you display your tepid, lukewarm commitment to individual rights by publishing another article by an unapologetic statist.”

        That statement gets my vote for the updated Reason masthead.

  9. “The House changes, according to the nonpartisan Congressional Budget Office, would reduce the number of people on Medicaid by 14 million by 2026.”

    The AHCA moves these people to private insurance by way of subsidies, and moving people from Medicaid to private insurance through subsidies is exactly like moving students from public schools to private schools with vouchers.

    Seeing someone defend Medicaid on a libertarian website is absurd. It’s a socialist program financed with coercion to the extreme detriment of market solutions for healthcare. Medicaid is indefensible from a libertarian standpoint, and cutting eligibility–something I don’t believe has ever happened before–will be an historic victory for libertarianism

    Maybe best of all, the AHCA shows us the way to get rid of Medicaid entirely.

    I repeat: Moving people from Medicaid to private insurance through subsidies is exactly like moving children from public schools to private schools with vouchers. The more we do this, the better the healthcare market will function, and as all real libertarians know, market solutions are the only real solutions–not socialist programs like Medicaid.

    1. But the trouble is all you’ll hear about is “The mean Republicans will be killing people because 14 million people will lose Medicaid coverage,” just like “the GOP puts in a Secretary of Labor who wants to let your kids go uneducated.”
      He who controls the narrative wins the battle. The “Tea Party,” who might provide a contrasting image in town halls and in front of congress critter’s offices seems to have disappeared, and the Libertarian Party sure hasn’t taken up any of the slack.

      1. Education,not Labor/

      2. “He who controls the narrative wins the battle”

        The battle is right before us.

        It’s over one or two votes in the Senate.

        We’ve already won half the battle–since cutting Medicaid already passed in the House.

        That’s the battle. You win the battle by scoring runs. The AHCA isn’t a home run, but it’s a lead off double.

        Nobody ever lost a game or a battle because of a lead off double.

        1. You’ve never watched a Phillies game?

          1. You can’t lose because of a lead off double.

            It can’t happen.

            The government will never be so flush with cash that it decides to cut spending, and a baseball team can’t lose because of a lead off double.

    2. Seeing someone defend Medicaid on a libertarian website is absurd.

      Yet you defend Medicare.

      If the GOP had balls they would get rid of both.

      1. I’ve never defended Medicare, you lying sack of shit.

        1. You defend whatever spittle comes out of Trump’s weird little mouth, don’t you?

          1. Don’t you have anything to say in defense of Medicaid?

            P.S. Shrike was lying.

  10. The question is about who pays for the lunch.

    If the cost of medicaid is borne primarily by the federal government, it means that taxpayers in the populous states like New York, California, and Texas pay for the medical care for people in the less populous states.

    If the cost of medicaid is borne primarily by the state governments, it means the less populous states have to cover their own costs.

    Which option is best depends entirely on one’s point-of-view. There are valid arguments for and against both strategies.

    1. Only if your priors are kind of screwed up.

      To have a ‘valid argument for’ either of those you would

      a) Have to believe the state covers costs – they don’t. Taxpayers do.

      b) That its OK to coerce people to cover those costs

      c) That either that coercion is fine if it encompasses the whole country or its fine if its limited on a state by state basis.

      d) If you choose the former you’re still stuck with explaining why people living in LA are on the hook for medical costs of people in Alabama – but not in Liberia.

      e) And you assume that when someone buys something for a second party using funds taken from a third party that that someone will ever bother to try to contain costs or give a shit about quality.

  11. “But remember that fundamental economic proposition. Just as you can’t get something for nothing, you generally can’t get more for less.”

    We actually do get more from less government, and that’s what we’re talking about. There are a number of reasons why we get more from less Medicaid.

    “Last year, total spending for Medicaid amounted to $533 billion. Nearly two-thirds of the funds come from the federal government, and the rest comes from the states.”

    One of the reasons we get more from less government is because that $533 billion every year doesn’t come from the federal government or the states. It comes out of taxpayers’ pockets, their future paychecks, and the profits of the companies they work for.

    Was Reason.com bought out by Salon last night?

    “Under the House plan, the federal savings would amount to $880 billion over a decade.”

    Oh, noes! What will people do with all that consumer discretionary income? What will businesses do with all those profits?

    1. It’s not like they’ll pay less taxes. The federal government will just spend $880 billion on something else.

      1. I shouldn’t support the government spending $880 billion less because they’ll just spend it on something else anyway?

        There will be less pressure to keep taxes where they are or raise them in the future if we spend $880 billion less than expected over the next 10 years.

        We’ve had tax cuts before. We’ll have tax cuts again. Tax cuts are the solution to spending, and the point of not spending money is so that the government will stop taking it away through taxes.

        This really will make the government smaller than it would be. Meanwhile, if and when they try to spend that money on something else, I can oppose that, too.

  12. Anyone else remember when Reason was a libertarian website? #FireChapman

    1. Yeah, but it’s getter to be such a long time now it’s becoming harder and harder to remember.

  13. “Cutting back Medicaid coverage would save taxpayers some cash, but only by taking it from others. The reduction would raise costs for low-income people and most likely degrade their health.”

    Another interesting idea completely destroyed by facts.

    Exhibit A: 16 hospitals in New York City have been forced to close in recent years because Medicaid only pays for a fraction of the cost of care.

    “For . . . patients in financially strapped neighborhoods, the biggest problem with the hospital closures has been the lack of access both to an emergency room and to primary and specialist care. Because Medicaid does not fully reimburse for specialty care, those doctors who are specialists tend to congregate in Downtown Brooklyn and wealthier neighborhoods, and are reluctant to take on Medicaid patients. As more and more patients have lost access to specialists, their underlying health problems have gone from serious to life threatening, putting greater strains on the remaining hospitals to care for them.

    http://tinyurl.com/medhjus

    Crib Notes:

    —Medicaid only reimburses providers for a fraction of the cost of care.

    —Providers make up for the shortfall by gouging private pay patients and insurers.

    —Providers that serve poor populations in poor neighborhoods that don’t feature enough private pay patients to gouge simply disappear.

  14. The fundamental problem Chapman doesn’t even begin to understand is

    A) Medicaid only reimburses providers for a fraction of the cost of care.

    B) Providers make up for the shortfall by gouging private pay patients and insurers.

    C) Rolling back Medicaid eligibility lowers the amount of providers need to gouge insurance companies to make up the shortfall.

    But don’t take my word for it!

    “Mayo reported a sharp increase in the amount of unreimbursed costs related to Medicaid patients, from $321 million in 2012 to $548 million in 2016. The figures include its campuses in Arizona and Florida. Mayo nonetheless remained profitable in 2016, with income of $475 million.”

    “Mayo to give preference to privately insured patients over Medicaid patients”

    http://tinyurl.com/kekwamp

    Notice what they’re saying. They lost $548 million treating Medicaid patients in 2016, but they made up for it by gouging privately insured patients–just like all the other hospitals do.

    1. The difference between the Mayo Clinic and a typical community hospital is that the Mayo Clinic attracts wealthy cash paying patients from all over the country and all over the world–so the Mayo Clinic can charge customers a huge premium to make up for the losses they suffer treating Medicaid patients.

      . . . or at least they could before ObamaCare came into effect in 2014. If you read the linked article, it’s all about how not even the Mayo Clinic–not even the Mayo Clinic!–can afford to take those losses on Medicaid anymore. . . . not since ObamaCare expanded Medicaid eligibility and increased their Medicaid patients population to unsustainable levels.

  15. . . . without inflicting more hardship.

    One thing the article does not explain – how is reducing Medicaid *inflicting* hardship? Its simply reducing a welfare payout. The hardship already exists (someone is poor), the existence of Medicaid (state *charity*) reduces the ‘felt’ magnitude of that hardship but removing it does not increase its actual magnitude.

    And Chapman – are you taking into account the hardships imposed on the people who are having their money forcibly taken to fund this (and other) programs? Maybe reducing Medicaid is a *net reduction* in hardship for society as a whole (since you seem to be taking a collectivist – vice individual liberty – stance here).

  16. Finally, take a look at this chart–especially you, Mr. Chapman!

    http://www.aha.org/research/re…..art4-6.pdf

    The reason private insurance costs so much is because providers gouge insurers to cover the losses they suffer treating Medicaid and Medicare patients.

    Per the chart, private insurers have been gouged close to 150% of the cost of treating insured patients in recent years to make up for the losses those providers suffer treating Medicare and Medicaid patients. But it should be noted that those are averages!

    If an average hospital has 60% Medicare and Medicaid patients, then they have to gouge private insurance for 150% of cost–but Medicaid patients and the poor aren’t evenly distributed around your city much less the country. In community hospitals in poor part of downtown Detroit, South Central Los Angeles, Newark, and Atlanta, they don’t have the national average percentage of Medicaid patients. Medicaid patients may make up 70% or more of their patient population–so the amount they have to gouge private pay patients to break even is much, much higher.

    And I’ve show in other comments, if they can’t find enough private pay patients to gouge–in those poor neighborhoods–they simply disappear.

  17. But it applies as well to measures that extract savings from costly government programs.

    Here you’re basically saying that once an entitlement program is in place we can never remove it because ‘there ain’t no such thing as a free lunch’ and it will impose costs ‘on society’?

    1. The idea that less government necessarily means bad things for taxpayers is patently absurd.

  18. States could always protect the vulnerable by boosting their contribution to make up for the lost federal funds. But that would mean requiring their taxpayers to foot the bill.

    That’s what its *always meant*. That’s how taxes work. Remember, there ain’t any such thing as a free lunch? The only thing that’s changed is who is footing the bill for who now.

    The difference is at least now the people within that state would be paying for each other rather than the people from some states paying for the people in other states.

  19. Cutting back Medicaid coverage would save taxpayers some cash, but only by taking it from others.

    You sure this article wasn’t meant for Salon? Because that’s just an idiotic statement.

    You’re saying that not taking (ie, taxing) from you is the equivalent of giving to you. In fact you’ve gone further and are saying that not taking from you is the same thing as taking from someone else.

    This whole article is collectivist garbage. Its not libertarian, its not even neo-liberal. Its straight up socialist.

  20. . . . and put some out of business

    What are we told? That if you can’t afford to pay a living wage you don’t deserve to be in business?

    Well, there you go.

  21. “…Medicaid coverage, reports the Kaiser Family Foundation, is proven to ensure “earlier detection of health and developmental problems in children, earlier diagnosis of cancer, diabetes, and other chronic conditions in adults, and earlier detection of mental illness in people of all ages.”…”

    Notice we have ‘detection’, not treatment or outcomes
    Of course when you go to see a doctor because you have an “owie” and it’s free, you might be found to have what they might call ‘developmental issues’. What this means as regards the economics of medical care is (hint, hint, nudge, nudge) left to your imagination.
    Anyone using this as part of an argument for additional government involvement in medical care is a disingenuous piece of shit.

    1. Incidentally, that Medicaid even pays for diagnostics like that is only because they were embarrassed into doing so by the HMOs.

      Breast cancer is an excellent example. Back in the ’80s the number crunchers at the HMOs realized that giving away free mammograms more than paid for itself because detecting breast cancer early is the key to avoiding costly treatments later.

      In Medicaid, at the time, you couldn’t run a diagnostic test unless there were specific reasons justifying that test. They wouldn’t pay for a test to screen for something simply because you wanted to test for it.

      The survival rates for things like breast cancer were so much higher at HMOs because of this that it embarrassed Medicaid into reform. At the time, they started saying that Medicaid was racist because it disproportionately served minorities, and breast cancer patients at HMOs had survival rates that were so much higher than Medicaid patients, it was ridiculous.

      That would have been a great time to cut Medicaid eligibility and transfer those patients to HMOs with subsidies like moving public school kids to private schools with vouchers, but noooOOOoooo. They had to make Medicaid more like HMOs.

  22. my state didn’t participate and did we get a thank you from the states that are free riding? nope, just whining for more.

    1. Some ACA Medicaid expansion highlights below:

      http://www.dhcs.ca.gov/dataand…..Afinal.pdf

      “In June 2014, nearly 2 million Medi-Cal eligibles were classified as non-citizens. Individuals classified as non-
      citizens represented 17.4% of Medi-Cal’s total enrollment. Between June 2013 and July 2014, Medi
      -Cal’s non-citizen population increased by over 31%, which mirrored Medi-Cal’s citizen population growth of 35% during
      this time frame. This dramatic increase in enrollment was initiated by the implementation of the Patient Protection and Affordable Care Act on January 1, 2014.”

  23. I can’t help but think, Reason, that if you had actually listened to your base and terminated non-libertarian hacks like Chapman’s contracts you wouldn’t be seeing your clicks and views in freefall.

    1. I’ve explained here how Chapman served a purpose on Cato’s “Byline” (Fairness Doctrine), but here & now he’s useless. We can get this sort of stuff anywhere if we want it, so putting his material here amounts to trolling by the hosts.

  24. ‘Any economist who tried to deny it would find herself suddenly choking in pain and unable to speak.’ – I’m sorry, to whom is ‘herself’ referring? The turd in Chapman’s pants?

  25. Fiscal prudence has been out of vogue with both parties for decades. We are on a slow boat to financial ruin and there is little either party can do to fix it. Claiming savings as a reason for cutting Medicaid is just nonsense and it would seem that most everybody knows it.

  26. Well, this may not apply to Medicaid, but the article overlooks (as my libertarian friends so often do) that some government spending saves more than it costs, prevents more expenses than it costs. Vaccination, abortion, safety-regulations and inspections of potentially hazard industries like nuclear power and meat-packing.

    1. I don’t remember the Gov’t paying for my vaccinations. I think it was mom and dad.

      And if a thousand people die in Phoenix waiting in line for VA care, we can just ignore it.

      Top administrators got 18 months of paid vacation- and nothing else happened.

      Now we got Los Angeles VA, where another hundred died.

      hazard industries like nuclear power and meat-packing.

      Perhaps they should regulate “organic” vegetables that lead to most e. coli illness.

      Tell me when will Gov’t get it right…

    2. Intelligent Mr Toad|6.25.17 @ 1:00PM|#
      “Well, this may not apply to Medicaid, but the article overlooks (as my libertarian friends so often do) that some government spending saves more than it costs, prevents more expenses than it costs. Vaccination, abortion, safety-regulations and inspections of potentially hazard industries like nuclear power and meat-packing.”

      First, a statist like you probably has no libertarian “friends”. Secondly, very few of those things are both provided by the government and actually save more than they cost.
      So, let’s just admit you pulled that pile out of your ass and note that you are a lefty liar, shall we?

    3. “that some government spending saves more than it costs”

      This is undoubtedly true in some areas.

      But if the spending saves more than it costs, then why does it have to be mandated by government? Wouldn’t private actors rationally choose to spend the money as an ounce of prevention, no coercion needed?

    4. Well, the government doesn’t pay for vaccinations or abortions and the meat packing ‘inspections’ are paper drills, not, you know, actual *inspections*.

      And in my experience, every safety regulation that is worth a damn is accompanied by 2 or more that aren’t and just force you to waste money and time.

      In the end though, if this spending ‘saves more than it costs’, then the government can make that case – and provide actual evidence – instead of relying on people saying that maybe, in some cases, sometimes, it does and so we should give them the benefit of the doubt *here*.

  27. All economic forecasts about government spending are inaccurate.
    The issue with the proposed legislation is that it does not repeal the nationalization of both the healthcare industry, and the healthcare insurance industry. Thus the fascists retain control of 18% of the USA economy.
    The second biggest non-considered, ad non-reported as a problem is employee paid health insurance. I would love to see reporting on the number of employees who would more productive in the economy in a different job, but cannot leave due to the insurance handcuffs.
    1. Repeal Obamacare and all of its rules and regulations
    2. Outlaw employer paid health insurance. If they insist,they can contribute to HSAs, but after tax.
    3. Require healthcare providers to charge everyone the same price, and to post those prices by September;
    which have to remain constant for the next calendar year. (yes, this means no discriminatory ‘networks’)
    4. Require health insurance companies to post their policy coverage and prices by November, and charge everyone the same for the same policy. These prices also must remain the same for the next calendar year.
    Now individuals can select the combination of providers and coverage that suit them, not the government or their employer. Men do not have to buy maternity coverage, women do not have to buy prostate coverage.
    After a few years to transition from the fascist system, the requirements on pricing by the year can be reduced, then eliminated.

    1. Require healthcare providers to charge everyone the same price.

      If they offer a $3 million max policy, should a 23 yr old and 56 yr old pay the same price?

      1. Healthcare providers aren’t insurance companies. They don’t sell ‘policies’.

        That’s why there are two sections–

        3. Require healthcare providers

        and

        4. Require health insurance companies

  28. Of course, people don’t stop going to the ER because they lack money or insurance, so the cost is socialized no matter how you organize the payments.

    The sick thing is libertarians imagine a “utopia” in which those who can’t afford healthcare simply lie down and die, as supply and demand would have it.

    1. Repeal EMTALA…

      Maybe we will finally have “bodies in the streets”,,,

      Cleaning up dead animals-That’s the job of our “County Engineers” in my state- I’m sure they could go from raccoons and deer to the occaisional humans that drop dead…

    2. “Of course, people don’t stop going to the ER because they lack money or insurance, so the cost is socialized no matter how you organize the payments.”

      Sounds like mission accomplished, yet, the bitching continues. Weird: we have socialized medicine, yet it’s not the most efficient system ever invented. How expected and predictable.

      I just think people should have as much of a personal stake in their own medical care and costs as possible, which rules single payer right out. I know it’s not as popular as Oprah-level thinking.

      That’s probably why I don’t get invited to all the bestest A-lister parties to be had in Tulsa, like all the other chattering democrats who live there.

    3. “Of course, people don’t stop going to the ER because they lack money or insurance, so the cost is socialized no matter how you organize the payments.”

      There are the stats of what percentage of hospital admissions are never recovered for failure to pay by people who can’t do so (“uncompensated care” in the chart linked below)

      1980: 5.1%

      2000: 6.0%

      2014: 5.3%

      http://www.aha.org/research/re…..art4-5.pdf

      2014 was the year ObamaCare opened the floodgates and let all those new people onto Medicaid. Uncompensated care is pretty much the same as it always was–even when Medicaid eligibility was much lower.

      In fact, the percent of national hospital costs born by Medicaid has almost double since 1980–but the percentage of unpaid hospital bills has actually grown by two-tenths of one percent over that time period.

      Again, Tony’s ideas are completely unhinged from anything like real world observations or facts.

    4. The uncompensated medical care rationale for socialized medicine is pretty weak. An unpaid hospital bill is just like any other unpaid bill. Does having an unpaid electricity bill mandate socialized electricity generation? Does having an unpaid car payment mandate socialized auto production? No and no.

      Of course one could argue that one may choose to go without a car, or even electricity, and still function reasonably well, and thus forego those costs, but one cannot forego medical care and its associated costs. Well, one cannot forego the cost of food either. Does that mean food production should be socialized? Of course not.

      The unpaid hospital bill is a pretty weak argument in favor of socialized health care, when you get right down to it.

    5. Yeah, or private charities could pay for it as they have throughout history.

      That utopia you described sounds pretty cool. Will there be a popcorn stand?

      The sickest thing about liberals is that you can’t see how seethingly cynical you all are.

  29. “Cutting back Medicaid coverage would save taxpayers some cash, but only by taking it from others. The reduction would raise costs for low-income people and most likely degrade their health.”
    Huh? Taxpayers save cash by taking it back from someone who took it from them? And I’m supposed to be alarmed?There is no shame in being poor. I’ve been there and done that. But what Mr. Chapman and his fellow welfare statists always ignore, is that human beings react to economic incentives. Poverty is not a life sentence unless you find it preferable to busting your ass to enter the middle class or beyond. If you get free food, housing and healthcare the tradeoff is obviously worth it to a significant portion of the population to remain poor.

    1. I’ve been a Reason reader for decades going back to when there was no online magazine or online at at all. I’d await my glossy magazine, put it on the toilet tank, and be done by the next month’s edition. I’d have to scratch my head at Virginia’s promises that technology would make everyone on the planet rich and work would be an anachronism in the near future, but I always found the publication an interesting alternative to whatever paper I might pick up. This article is straightforward statist crap. Do the editors not read this shit? What exactly is the criteria for publication in Reason? Free markets and free minds? Chapman fails both tests.

  30. The ones who are doing the taking are the people who take the subsidies, not the other way around.

  31. Well, I am trying to be fair-minded with this article.

    I think Chapman is saying that if the Medicaid cuts actually go through, it doesn’t mean that the total cost of health care would *necessarily* go down – all else being equal – it’s just that other people would end up picking up the tab. Which I think is a fairly unconventional conclusion. But it should be noted that those people who would end up picking up the tab would be doing so from a more voluntary premise. Probably not 100% voluntary, because there would still be laws like EMTALA and the like, but more so. But the general idea, that the costs borne by individuals are those that are voluntarily accepted rather than coercively extorted, is to be celebrated, not condemned.

    I also don’t fault people like Chapman for being concerned with what happens to the health care of those at the margins in society, if Medicaid does get cut. Personally I have never thought that libertarianism means cold-hearted disregard for the welfare of others. But the solution is to promote private, voluntary associations that provide health care, not to continue a redistributionist government program because it is the status quo. It is easy to raise one’s fist in anger at the coercive government, but it is much harder to seek out and do the heavy lifting for those voluntary associations that would inevitably take the place of the coercive government program.

    1. I think this is one thing that could separate libertarians from both the left and the right.

      The left generally believes that everyone deserves health care, and that the government via force and coercion ought to be the institution to provide it. Their premise is right, but their proposed solution is wrong.

      The right generally believes – well I don’t know what they honestly believe anymore when it comes to health care. I USED to think that the right also generally accepted that everyone deserves health care, just that it should be provided by markets not the government, much like libertarians believe, but I don’t think that is true anymore. Look at the current bills under consideration after all. I think perhaps a better way to frame the right’s current beliefs is that only “deserving” people should get health care as an entitlement provided by the state, and that everyone else – the “moochers” – should be left to fend for themselves. So they agree with the left that the government ought to provide health care, just that they don’t want to provide it to everyone. So they are wrong both in their premise and in their solution.

      Libertarians can be the ones to offer the non-coercive alternative – everyone deserves health care, but that deservedness does not come with an expectation of coercion by the state. Voluntarism works every time over coercion even with health care.

      1. everyone deserves health care

        I “deserve” a Lamborghini- tell me my delivery date.

        1. But “deserving health care” doesn’t necessarily imply “health care should be coercively supplied to you”. That is the difference.

          1. What DOES it imply?

            And if it implies nothing that has any obvious public policy implications, what’s the point of claiming it?

            1. In the big picture, I think it implies a moral duty to help other people.

              Even Ayn Rand believed in charity, as long as people didn’t fool themselves into labeling it some altruistic act – it’s ultimately a selfish act.

              It is more about how we frame the message rather than the particular public policy involved. When we talk about tearing down the edifice of statism, we should also talk about what would replace it. Talking about tearing down Medicaid is great. We are all on board with that (well, everyone maybe except Chapman). Talking about a post-Medicaid future is tougher but we should do that as well. If we don’t do the latter, then a lot of people who believe the government’s spin that “Medicaid is the only thing saving poor people from certain death” won’t be convinced with getting rid of it, even if they don’t particularly like how Medicaid is run. Take the DMV as an example – virtually no one actually likes the DMV, but if you told people that the only alternative to the DMV is “LAWLESS CHAOS IN THE STREETS” then they would probably begrudgingly vote to continue the DMV. It’s the same deal here.

              Personally I would love to see more discussion about how HSA’s could be used as a vehicle for near-universal health insurance coverage in one form or another, because I tend to really like the HSA concept.

              1. It is more about how we frame the message rather than the particular public policy involved.

                You haven’t actually specified any message at all. If you want to preach about other people’s moral duty, go to church.

                If you can’t articulate any particular policy out of your claimed moral obligation, its just empty rhetoric.

                1. Of course morality transcends religion.

                  I do not think a moral obligation to help people should necessarily lead to a coercive public policy of forcing others to help people. I do think that we should frame our message in a way that says replacing the coercive welfare state with voluntary associations and solutions that help people is fully compatible with a broader moral duty to help people, with the added benefit that it doesn’t involve sticking a gun in anyone’s face and robbing them. But just talking about getting rid of the welfare state, that doesn’t send the same type of message.

              2. ” I think it implies a moral duty to help other people.”

                Then, as a libertarian, you should act to meet that duty. If you don’t you are not being moral.

                Compelling others, either personally or governmentally, does nothing to help you meet your moral obligation to ‘help other people.’ That you might also be forcing people to do something against their own wishes does not reflect well on you libertarianism either.

      2. “Their premise is right…”

        No. Their premise is (at best) faulty. Or worse it is ignorant, even worse it is shamefully dishonest.

        de?serve
        [d??z?rv]
        VERB
        do something or have or show qualities worthy of (reward or punishment):
        “the referee deserves a pat on the back for his bravery” ?

        Health care does not exist absent the effort of others. Nobody deserves anything they have not in some manner earned.

    2. Personally I have never thought that libertarianism means cold-hearted disregard for the welfare of others.

      How much did you donate last year? I’ll bet you just let the Gov’t take care of it.

      1. I actually do donate to various causes of my choice. How much did you? But these types of ad hominem arguments are generally preposterous anyway.

  32. I can’t believe Chapman just made the preposterous claim’ there’s no free lunch’ is some kind of made up axiom.

    Makes me wonder why his articles are published at what’s supposed to be a libertarian (classical liberal) publication. He’s closer in line with progressives with this illogical nonsense.

    “Nearly two-thirds of the funds come from the federal government, and the rest comes from the states.”

    That’s a fancy way of saying 100% from taxpayers.

  33. I realize that libertarianism isn’t a lock step ideology but there is not a single libertarian idea in this article. Why is Reason publishing this?

    1. I’m hoping that someone like Soros gave them a big bag of money because I’d hate to think they publish stuff like this for no reason at all.

    2. Chapman’s ass’n w libertarian outlets goes back 40 yrs. to when he was among rotating “Byline” (“liberal, conservative, & libertarian” but with an overall libertarian slant) radio commentors for Cato. But that was when:

      (1) The Fairness Doctrine was still in effect, & they needed balance so the program wasn’t conspicuously ideologic overall.
      (2) Cato was trying to sneak libertarianism in in disguise via Inquiry magazine.
      (3) They weren’t running all his columns, but picking for commentary bits where libertarians could agree on the narrow issue.
      (4) It was a time when even the libertarian-ish was hard to come by in the media. “Conservative” voices were relatively common, but there was a desire to distance the libertarian brand from that sector.

      Of course that was when Reason & Cato were competitors, but people went back & forth. Exactly how that resulted in Chapman’s columns getting into HyR now I don’t know, but I can only suspect someone made a hasty decision to fill out content here with a familiar-somehow originator they really had no memory or knowledge of. Chapman doesn’t seem even mildly more libertarian than the avg. person now.

  34. For starters, taking my own advice, here is an article on HSA’s as a vehicle for universal health insurance coverage.

    http://dailycaller.com/2017/02…..ax-credit/

  35. Chapman should have told Rhode Island that it was impossible for them to spend less money and get better patient outcomes. Because they fucking did. Stupid fucking asshole.

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  37. Cutting back Medicaid coverage would save taxpayers some cash, but only by taking it from others.

    It’s pretty gross to see Reason run this.

    Reason editors, I await your apology.

  38. HIIIIIIIIIIIIIHHHHHHHHNNNNNNNNNNFECTION

  39. Had to check to make sure I was on reason.com just now. What the fuck is this horse shit? Do you guys want my money or not? Have you been infiltrated? Blink twice if you need help.

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