Medicaid is the worst healthcare insurance anyone can have. Everyone knows that. Doctors are paid so little to see Medicaid patients that most refuse to accept them. Healthcare outcomes have been shown time and again to be worse than any other kind of healthcare insurance. The Oregon Healthcare Experiment, an ongoing study since 2007, has repeatedly found that Medicaid patients are no better off than those who have no insurance, especially when it comes to controlling blood pressure and diabetes.
So it comes as a shock when someone makes the claim that ObamaCare can be worse than Medicaid! But that’s exactly what John C. Goodman, acclaimed healthcare economist and founder of Health Savings Accounts (HSAs), recently stated in The Wall Street Journal.
Goodman’s argument is that the best hospitals and doctors are now refusing to accept ObamaCare exchange plans while still accepting Medicaid in some cases. For example, consider Houston’s MD Anderson Cancer Center, named America’s best cancer-care hospital by U.S. News & World Report in 13 of the past 16 years. The hospital’s website says it doesn’t accept a single private health insurance plan sold on the ObamaCare exchange in Texas, but it does take Medicaid.
In Minnesota, the world-renowned Mayo Clinic, once cited by President Obama as a model for the nation – withdrew from the ObamaCare exchanges in 2016. In New York, Memorial Sloan Kettering is now off limits for every exchange plan sold in New York. Both hospitals are open to some Medicaid patients, though Mayo’s CEO has predicted publicly that Medicaid patients may eventually have to stand in line behind privately insured peers.
We all remember when Obama promised healthcare insurance for everyone and “if you like your doctor you can keep your doctor.” What kind of healthcare insurance was he talking about? Most of us believed it would resemble the employer-provided plans that most Americans enjoyed before ObamaCare. Goodman says, “Who imagined that the only products available would be more limited than Medicaid?”
How did we come to this?
When ObamaCare was introduced to the nation in 2014, it looked a lot different from today. Blue Cross of Texas as it was initially sold on the ObamaCare exchange looked a lot like most employer plans. Coverage extended to every hospital in the Dallas-Fort Worth area, including the prestigious University of Texas Southwestern Medical Center. But after sustaining huge financial losses trying to work within the ObamaCare regulations and pricing structures, the insurer pulled back on benefits and treated the UT Southwestern Medical Center as an out-of-network hospital.
That meant patients who chose to go there faced steep out-of-pocket expenses on top of rising high deductibles. The following year UT Southwestern was excluded from the plans entirely. This process of elimination of the best hospitals, and doctors, has been repeated around the country. Large insurers, including Aetna, Humana, and UnitedHealth Group have withdrawn from the marketplace for ObamaCare patients in most locations.
That doesn’t mean Medicaid is getting any better. In June, the Dallas Morning News published a year-long investigation into Medicaid in Texas. The paper uncovered hundreds of cases in which “essential medical care was delayed, denied or not delivered to people with critical health needs.”
The Fundamental Problem
The ObamaCare system of insurance is a broken model. The fundamental problem, says Goodman, is community rating. This requires insurers to charge the same premium to all comers regardless of their health status. “This gives insurers an incentive to seek healthy buyers and avoid sick ones. Since healthy people tend to pick the cheapest plan, and sick buyers are much likelier to look carefully at coverage details, plans with low premiums and narrow coverage networks are suited to attract the healthy buyers insurers want.”
Something called “risk adjustment” was supposed to compensate insurers for the expensive patients but it has failed to deliver as promised. Goodman says, “The program’s administrators don’t always assess risk properly. When ObamaCare’s risk adjustment undercompensated insurers, they passed along the cost to certain patients through higher out-of-pocket charges, according to a 2016 study by Harvard and University of Texas economists. Insures also have an incentive to spend not a penny more on the plans than the risk-adjusted compensation they get for enrollees, meaning such plans tend to offer restrictive coverage.”
The Individual Mandate was supposed to force Americans to purchase health insurance they didn’t want just to subsidize the high cost of coverage for sicker patients. Although it was upheld in a controversial decision by the Supreme Court, it was weakly enforced and provided little incentive to purchase expensive, poor coverage. Millions of healthy patients refused to enroll and the Trump administration finally eliminated the mandate in 2017.
It is obvious that Congress needs to do something about this healthcare train wreck. When even dreadful Medicaid is better than ObamaCare, you know the train is off the track.