In September, the non-profit organization Public Citizen (PC) issued a report comparing Medicaid and Medicare payments to doctors in 10 states and Washington D.C. The results underline the fact that Medicaid has been designed, from day one, to give states an easy cop-out when it comes to health care for the poor.
The study highlights cases where the disparities between what different states pay a doctor to care for a Medicaid patient are greatest: “In New York, doctors are paid $20 for an hour-long consultation with a Medicaid patient, while in higher-paying states, doctors receive an average of $157.92 for the same service – a difference of greater than sevenfold. The difference within a state between what Medicaid pays [a physician to treat a patient who is poor enough to qualify for Medicaid] and what Medicare [pays a doctor to care for an elderly patient] is just as dramatic. For this hour-long consultation, a physician in New York could earn $196.47 from Medicare, almost 10 times more than from Medicaid.”
Last month the AMA posted a chart of these and other disparities on its medical news website, and seen side-by-side, the comparisons are startling: a physician in New Jersey or Pennsylvania gets, on average, about one quarter as much for seeing a Medicaid patient as a Medicare patient; in New York and Rhode Island, less than a third; and in the nation’s capital less than half as much. Other states lie at the other end of the spectrum. Alaska, Wyoming, Delaware, and North Carolina all pay more for Medicaid than Medicare.
Is there any rhyme or reason to how states reimburse Medicaid care? Looking at Alaska (which pays more for Medicaid, relative to Medicare, than any other state) and New Jersey (which pays the least) it initially seems that poverty rates may factor into disparities. Alaska’s poverty rate is the 7th highest in the nation, so it would make sense that it would want to encourage health care for the poor. New Jersey, on the other hand, is almost last in the nation when it comes to poverty rates (no. 47 on the list) so the state may not feel as strongly about the need to ensure care for the poor.
But this logic doesn’t hold past the two extreme examples. Pennsylvania
and Rhode Island’s reimbursement rates are comparable to New Jersey’s,
despite the fact that both are almost smack in the middle of poverty
rankings. Meanwhile, Wyoming and Delaware both boasts low rates of
poverty and high reimbursement.
The real culprit behind variable Medicaid payments is policy design:
Medicare is federally funded and an entitlement program in the fullest
sense; Medicaid is neither. This has unsettling implications for how
much effort states are wiling to expend in ensuring access to care for
Medicaid is a joint state-federal program, a condition that Tim Jost of Washington and Lee law school calls in a 2003 Health Affairs article
“an artifact of a history of which we should not be proud”. The reason
Medicaid has such a strong state-centered component, says Jost, is
because state autonomy makes it easier to sweep the poor under the
rug—an option that was important when Medicaid was passed in the 1965,
when many states were reluctant to spend much on poor black citizens.
With poverty being so closely tied to race, the state-centric design of
Medicaid appeased Southern Democrats in Congress “who insisted on
control over who got welfare and how much.” And so the door was opened
to “endless gaming” on the part of the states, with local politics
affecting Medicaid in ways it can’t affect Medicare.
States also get some added wiggle room to politicize the delivery of
care by virtue of the fact that Medicaid is, as Jost puts it, a “weak
entitlement.” Jost notes that “although Medicaid is regarded as a
federal entitlement program, nowhere does the Medicaid statute
explicitly recognize a federal right of action to enforce recipients’
rights.” This is in stark contrast to Medicare, which is all but
enshrined in the constitution. Looking at the letter of the law, you
find that “Medicare beneficiaries are referred to as ‘persons entitled
to benefits,’ a phrase that appears more than 100 times in various
forms in the current Medicare statute.” The emphasis on entitlement
means that “Medicare beneficiaries are explicitly granted access to the
federal courts to seek protection of their entitlements to eligibility
Medicaid is much more modest in its claims, starting as “an extension
of the earlier Kerr-Mills legislation titled ‘Grants to States for
Medical Assistance Programs.’” Medicaid was designed to provide “funds
‘for the purpose of enabling each State, as far as practicable under
the conditions in such state’ to furnish medical assistance to welfare
recipients and the medically needy.” In other words, Medicaid was
institutionalized as charity—a nice idea, if you can make it work—while
Medicare is an explicit legal right.
From the states’ perspective, that makes Medicaid beneficiaries a much
less powerful constituency: they simply don’t have the same clear legal
recourse as do the elderly, Medicare has to ensure that the elderly get
the care they are entitled to—which means making Medicare services more
attractive to physicians. But states can get away with skimping on
Medicaid payments. And they do: as the Washington Post noted last year, “reimbursements are 69 percent of what Medicare pays and even lower compared with what private insurers pay.”
Of course, understanding how political history and arcane legal
distinctions have shaped low Medicaid payments isn’t the same as
excusing them. Last year, a Center for Studying Health Care System
Change report found that
in 2004-2005, the percentage of physicians who accepted no new Medicaid
patients was “six times higher than for Medicare patients and five
times higher than for privately insured patients,” because “Medicaid
reimbursement rates… have long deterred physician participation in
This is a big problem. There’s nothing intrinsically more important
about caring for the old than there is about caring for the poor.
There’s no logic to the Medicaid-Medicare disparity—it’s just an
unhappy legacy of racism. The payment gap needs to be bridged.
The easiest solution would come state-by-state, with local officials
pushing to boost Medicaid reimbursements within their jurisdiction.
States like Alaska, Delaware, and North Carolina show us that the
payment gap can be bridged without overhauling the whole system. Even
some of the worst offenders are coming around. Earlier this autumn, New
York Governor Eliot Spitzer submitted a request to increase Medicaid reimbursements in the 2008-2009 budget.
Of course, we can’t count on every state following New York’s lead. It
may be that the only way to ensure reasonable Medicaid payment levels
is to incorporate more federal oversight—or to retool the letter of the
law, legally empowering the poor the same way Medicare does for the
elderly. But these are both ambitious undertakings that are probably
best avoided in our era of budget crunches and competing priorities.
For now, we just have to hope that more state and local officials
realize a simple fact: just because Medicaid is designed to give them
an out when it comes to health care for the poor, doesn’t mean that
they should take it.