Cross posted on Daily Kos

Wed Dec 07, 2005 at 11:06:44 AM PDT
Please don’t let this story go under the radar.

Remember the faces of Katrina.

Remember our fellow citizens being herded like cattle into the Superdome.  We all know what happened there.

Now Jeb Bush has set his sights squarely on a similar population living in Florida. He has plans to “reform” Medicaid. This time the targeted citizens whom I’ll call the Katrina Cohort, are residents of Florida. Like the Katrina evacuees, they are among the most vulnerable and the most needy in our society.

This time the setting is Florida. This time it’s about Medicaid and the delivery of health care to 2.3 million of Florida’s sickest and poorest citizens.

Medicaid is a program sponsored by the federal government and administered by states that is intended to provide health care and health-related services to low-income individuals. It is a lifeline for many of our fellow citizens. It’s by no means perfect, but Jeb’s changes could inflict tremendous hardship on those who depend on it.
The following is a brief summary how Medicaid is structured in Florida and the proposed changes:

Current Medicaid program in Florida:

60 percent of recipients can visit any Medicaid doctor and receive almost unlimited services in what’s known as a ”fee for service” model.

40 percent of recipients are in HMOs, which offer services not guaranteed in the fee-for-service program, such as access to specialists.

Yearly spending is set by the governor and Legislature after analyzing the yearly fee-for-service costs and projecting growth in the program and inflation.

Medicaid HMOs are given a prepaid rate that is 9 percent less than what fee-for-service recipients are projected to receive yearly.

Medicaid reform outline:

Most recipients, starting in July, must choose from an array of new-managed care plans that are to serve specific Medicaid populations, such as the elderly or people with AIDS.

Rather than define most Medicaid benefits, the government would define the annual amount of money a recipient is entitled to spend. That caps spending and largely substitutes private companies for the government in the decision-making process. It also could ensure the companies cut down on fraud.

That annual amount — called a voucher or risk-adjusted premium — would take into account a recipient’s age, sex, location and health history, which isn’t accounted for now.

Choice counselors would be hired to help recipients determine which plan best suits their needs. They would buy into the plan — or a private insurance plan — with the voucher.

Recipients could tap a special savings account, derived from a portion of their voucher, to buy medical goods, such as diapers or eyeglasses, if they or their caretakers demonstrate healthy choices, like quitting smoking or getting regular checkups.

The scheme will be tested in Duval and Broward counties then go statewide according to the following timetable:

Medicaid reform timeline:

Test sites from July 2006 to July 2008: Broward and Duval counties.

Statewide expansion: July 2011.

By July 2009, the developmentally disabled, foster care children and children with special health needs will be included in reform.

By 2011, all eligible pregnant women and people in hospice-related eligibility groups will be included.

A separate reform plan will deal with people in other institutions, such as nursing homes or psychiatric facilities or homes for the developmentally disabled.

Sources: Agency for Health Care Administration, Centers of Medicare and Medicaid Services, Miami Herald interviews. ——

Why is Jeb Bush’s “reform” not reform, but an assault?

It boils down to a theory known within the insuance industry as moral hazard.  Moral hazard is a concept which you might want to familarize yourselves with because it is the lynchpin of all the Bush healthcare reform proposals. Moral hazard is the term economists use to describe the fact that insurance can change the behavior of the person being insured. Hence, according to the Bush brothers, if you give a person their “own” account they will “consume” healthcare services in a very judicious and cost efficient manner. How does the theory translate?

I am a middle class individual. When I had insurance I had what is known as a PPO. If I went outside the network of approved doctors, I paid–alot. There was a financial incentive for me to use a PPO doctor (a modest $20.00 co-payment). There was an equally large financial disincentive for me to use a non-PPO doctor–a large out of pocket fee, then much pleading with the insurance company to get reimbursed. The theory behind a PPO is to negotiate low rates with a group of doctors, then give enrollees a financial incentive to use these doctors.

Health Savings Accounts are an entirely different beast. If you force people to in effect spend their own money (the HSA) maybe (hopefully) they will “consume” less health care. The logic is deeply flawed. It assumes people consume health care wily nily. It assumes people “consume” healthcare in a profligate manner.  Some probably do, but most don’t. They use healthcare services when they are hurting, sick and need help.

What happens when you inflict this “ownership” crap on a population of poor people? What will they do?  The answer is simple. They will delay getting treatment–because they are paying out of their own HSAs, and they will get sicker. A small medical problem will become a big and expensive medical problem.

The best discussion of moral hazard that I have seen (best for the layperson) was an article in the New Yorker by Malcolm Gladwell. You can read it here:

Gladwell neatly summarizes the deeply tortured logic of moral hazard. It is bad healthcare policy for a middle income population. It is cruel healthcare policy when used against a population of people living below the poverty line. Gladwell writes:

“Under the Health Savings Accounts system, consumers are asked to pay for routine health care with their own money–several thousand dollars of which can be put into a tax-free account. To handle their catastrophic expenses, they then purchase a basic health-insurance package with, say, a thousand-dollar annual deductible. As President Bush explained recently, “Health Savings Accounts all aim at empowering people to make decisions for themselves, owning their own health-care plan, and at the same time bringing some demand control into the cost of health care.”

The operative word here, engrave it on your brain is: “demand control”.

The other operative concept owning your own health-care plan”. This is supposed to make you think long and hard before calling a doctor. Something akin to having one foot in the grave before you obtain medical care.

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