A Health Economist’s Take on Medicaid: Medpage Today

“Medicaid’s original objective was to provide medical care coverage to the poor. The poor, like the elderly (whose medical care would be covered by Medicare), had been largely left out of the U.S.’s growing employer-based insurance market because, starting in the 1950s, insurers began the practice of risk-rating (i.e., basing insurance premiums more on the individual’s expected medical costs and less on the community’s average medical costs),” Adam Wilk, a health economist at Emory University, is quoted as saying over at MedPage Today, in a great explainer on Medicaid. “Because the poor have difficulty affording even average health insurance premiums, the fact that poorer families have greater healthcare needs on average — and so would have higher premiums — means they would often be without meaningful access to health insurance and, thereby, healthcare. Medicaid aimed to close that gap. But not full coverage and not for all of the poor. Initially, Medicaid allowed states considerable flexibility in designing their benefits above and beyond a minimum set of benefits (which included long term care in institutions like nursing homes), states’ Medicaid programs varied greatly. Some states like New York and California had more generous Medicaid programs, while other states were less generous. Arizona declined to have any Medicaid program at all until 1982. States also varied in how much they would agree to pay providers, affecting how many providers would accept Medicaid patients and often stigmatizing the program in ways it has not yet recovered from. And states’ decisions about which demographic groups would be eligible varied too. The elderly and disabled, the principal users of long-term care services, could not be made eligible until 1972, and the federal mandates that Medicaid programs cover some welfare-eligible children (≤5) and pregnant women were not in place until 1984 and 1985; for older children (≤18), not until 1990. This variation under the Medicaid program of the 1960s and 1970s is also part of the program’s original intent, as it allowed states to weigh how much money they wanted to spend on the program and how many individuals and families with limited access to medical care they wanted to help.” “Friday Feedback II: A Health Economist’s Take on Medicaid,” Medpage Today.