Avik Roy’s new book on Medicaid, How Medicaid Fails the Poor, deserves a wide audience. Glenn Reynolds’ new USA Today column is devoted to the book, and he references Roy’s thoughts on how to create a better health safety net for low-income Americans. Though this part of the book is relatively brief, it suggests a new direction for conservative critics of the Obamacare Medicaid expansion — rather than simply oppose catastrophic coverage for the poor, offer a coverage option that better meets the needs of the poor while also reducing public expenditures:
Start by paying a primary-care physician $80 a month to see each patient, whether he is healthy or sick. That’s what so-called concierge doctors charge, and it would give Medicaid patients what they really need: first-class primary-care physicians to manage their chronic cardiovascular and metabolic conditions.
Dr. Lee Gross is a co-founder of an innovative company called Epiphany Health. He offers “concierge plans for the little guy.” Epiphany is designed primarily for individuals and families who don’t have traditional health coverage. Unlike Deamonte Driver’s mom, Alyce, who had to call dozens of doctors to find just one who would see her son, Epiphany’s doctors are on retainer. You pay $83 a month and receive primary care when- ever you need it. Spouses cost $69 extra, while kids cost $49.
“The most common medical conditions can be successfully managed at the primary care level, meaning most people do not need to see specialists,” Gross writes on his website. “There is also no reason to end up in the emergency room for minor illnesses or injuries because you have no other option.”
That’s the dirty secret of Medicaid. You might have heard the rumor that uninsured people are clogging emergency rooms because the law allows them to get free care there. But the unreported story is that it is Medicaid patients who clog the emergency rooms because they can’t persuade regular doctors to see them.
So give every Medicaid enrollee the Epiphany plan. Then throw on top of that a $2,500-a-year catastrophic plan to protect the poor against financial ruin. The total annual cost of such a program would be $3,460 per person, 42 percent less than what Obamacare’s Medicaid expansion costs. Heck, you could put the entire country on that kind of plan, along with giving people the opportunity to use health savings accounts to cover the rest. [Emphasis added]
As Roy goes on to note, a small number of conservative lawmakers have explored offering a combination of retainer-based primary care and catastrophic coverage as an alternative to expanding Medicaid, including Patrick Colbeck, a Michigan state senator. But Michigan eventually embraced the Medicaid expansion, and so far no states have chosen to pursue Roy’s preferred approach.
What I find particularly intriguing is Roy’s (perhaps playful) suggestion that “you could put the entire country on that kind of plan,” a step that would undoubtedly disrupt existing insurance arrangements, yet which would have the potential to increase disposable income, improve access to primary care, and encourage further business model innovation in the health sector.
But let’s say that we’d prefer not to cut Medicaid expenditures for the sole purpose of reducing the size of government, and we want to ensure that any cost savings benefit low-income households. In 2011, Michael Cannon of the Cato Institute proposed modeling the Medicare program on Social Security, i.e., transforming it into a cash benefit:
Suppose that rather than send $574 billion to providers and insurers, Congress divvied it among Medicare’s 48.9 million enrollees and send each of them a check. The average enrollee would get $11,700 — more if they’re sick, poor or disabled. Call it a “bundled payment to enrollees.”
Enrollees could use that cash to purchase medical care or any health insurance plan licensed by any state. Whatever they saved by being prudent shoppers, they could keep and pass to their kids and grandkids.
Cannon’s approach might be a bridge too far for those who believe that Medicare beneficiaries won’t be able to manage their own care. But Roy’s combination of retainer-based primary care and catastrophic coverage offers an alternative: imagine a Medicare (or Medicaid) program that takes current spending per beneficiary as its starting point and then subtracts the cost of a retainer-based primary care and a catastrophic plan, leaving the beneficiary to purchase supplementary medical coverage or to use the cash for some other purpose. The cost of catastrophic coverage for Medicare beneficiaries would presumably be much higher than for most Medicaid beneficiaries, so perhaps this approach would eat up most of Cannon’s proposed transfer.
As a concept, however, adopting Roy’s coverage model and applying the savings to expanded cash transfers is very compelling, as it addresses the central arguments for expanding coverage, namely that it provides beneficiaries with peace of mind. In How Medicaid Fails the Poor, Roy draws on the findings of the Oregon Medicaid experiment, e.g.:
The Medicaid cohort reported that they felt better about their health and their financial security as a result of enrolling in the program and were less depressed.
It seems reasonable to suggest that if we embraced a low-cost coverage model while also giving Medicaid beneficiaries resources they could use in any number of ways (to invest in their skills, to afford a home in a neighborhood with easier access to job opportunities, to share with relatives and friends, etc.) would improve subjective well-being just as much, if not more.