The Billings Outpost

Medicaid arguments don’t quite add up

Republicans must be getting nervous about their refusal to expand Medicaid in Montana. Last Wednesday’s Gazette published not one but two opinion pieces making the case that the Legislature was right to oppose Medicaid expansion.

Weighing in were Tom McGillvray of Billings, the House majority leader, and Joe Balyeat, a former state senator who is now state director of Americans for Prosperity-Montana.

Rep. McGillvray, it seems, is having bad dreams about the Legislature giving Montanans money to buy Cadillacs. By “Cadillac” he doesn’t mean a car; he means health insurance. In his view, the rising cost of health insurance can be blamed on requirements that insurance companies cover a broad range of conditions instead of a limited menu of options people choose for themselves. If you want insurance that covers maternity care or treatment for autism or mental illness, for example, you are shopping for a Cadillac.

Sounds good, but his plan does turn health insurance into a bit of a lottery. We all go through life full of optimism that we will never have a child with a terrible illness or drug addiction or that we will never need exotic treatments and screenings with long names that we have never heard of and would never think to buy insurance against. But some of us are bound to be wrong about that.

It’s not clear in any case how much money McGillvray’s approach would save. Health insurance is expensive in America because healthcare is expensive in America – twice as costly as in most other industrialized countries, all of which offer some sort of universal coverage.

An article by Steven Brill in Time magazine earlier this year made a detailed case that medical costs vary wildly, based in part on who pays for the care. Medicare patients get a better deal than private insurers, who get a much better deal than individuals paying out-of-pocket costs.

Mr. Brill concluded, “The health care market is not a market at all. It’s a crapshoot. Everyone fares differently based on circumstances they can neither control nor predict.”

Just last week, the Centers for Medicare and Medicaid Services released a giant study of hospital costs. An analysis by the Washington Post found that one Washington, D.C., hospital charged more than twice as much for a patient on a ventilator as another hospital in the same town. In Texas, one hospital billed nearly four times as much for a lower joint replacement than another on the same street just five miles away.

Even in Billings, the study found, bills for various procedures can be as much as 70 percent higher in one local hospital than in the other. For example, the study showed the cost of treatment for diabetes at St. Vincent Healthcare at $17,119. Treatment for the same diagnosis at Billings Clinic was $8,876.

On the other hand, major bowel procedures at Billings Clinic were listed at $31,625 but only $25,285 at St. Vincent. To compare for yourself, go to

Both Rep. McGillvray and Mr. Balyeat say that Medicaid expansion must be blocked to control “runaway deficit spending.” Yet deficit spending is driven largely by medical costs, and Congress has routinely blocked efforts to rein those in.

For instance, Congress forbids Medicare to negotiate for lower prices on drugs. When President Obama proposed saving more than $700 million over 10 years in Medicare costs by cutting payments to insurers and providers, opposition to the cuts became a centerpiece of Mitt Romney’s presidential campaign.

When a public option was proposed in the Affordable Care Act to help control costs, congressional opposition forced the Obama administration to back off. Just last week, Republicans in Congress announced they would refuse to appoint members to Medicare’s Independent Payment Advisory Board, which is designed to slow the rapid growth in healthcare costs.

Instead, Rep. McGillvray suggests, states could save more than $600 billion over the next 10 years by rejecting Medicaid expansion. But savings to whom? Failing to pay for healthcare does not make the expense go away; it just pushes the costs onto someone else.

None of that would matter if Rep. McGillvray and Mr. Balyeat were right about a point they both make: that Medicaid is a waste of money. No need to feel bad about cutting a program that doesn’t work.

As evidence, both point to a new study out of Oregon. Mr. Balyeat said the study proves “conclusively” that Medicaid is ineffective.

But the study was far from conclusive, and lots of smart people are still debating what it means. A little background: A few years ago, Oregon found enough money to add 10,000 people to its Medicaid rolls. About 90,000 people were eligible, so Oregon held a lottery to pick the lucky 10,000 who were added to the program.

The bad luck for the 80,000 turned out to be good luck for scientists: They could compare the health of those who got in with the health of those who didn’t and see whether Medicaid was actually doing any good.

Results from the second year of that study, which came out May 1, showed that the lottery winners were more likely to have illnesses diagnosed, were less likely to be depressed and were financially better off, with virtually none of the catastrophic medical costs that lead to 60 percent of personal bankruptcies in the United States.

The Medicaid patients also had positive results for blood pressure, diabetes and cholesterol, but none of those results were statistically significant. The sample was just too small to find enough people with all of the right medical conditions to measure everything with certainty.

The Washington Post reported that the lead author of the study, Harvard Professor Katherine Baicker, said it might take longer than two years for the positive effects to show up in statistically significant ways. A separate study she conducted found that after five years, three states that expanded Medicaid had lower death rates than neighboring states that didn’t.

Mr. Balyeat probably also had in mind a University of Virginia study that found Medicaid patients had worse healthcare outcomes than even uninsured patients. But the study also reported that Medicaid patients were much sicker when they got medical care than even uninsured patients, who in some cases are in good health and have respectable incomes but refuse to buy insurance.

Balyeat is an accountant and presumably understands how numbers work. But he is not a man to let figures on a calculator get in the way of his ideological certainty.

If he and Rep. McGillvray were serious about finding out how effective Medicaid really is, they could have proposed a Montana experiment: Pay for Medicaid expansion for half of the 70,000 Montanans who would qualify for coverage. In a few years, we would have a good scientific test of how good Medicaid is: just compare the 35,000 who got Medicaid with the 35,000 who didn’t.

If Medicaid flunked the test, Republicans could crow that they were right, pay only half as much as full expansion would have cost and stick the feds with nearly the entire bill.

If they turned out to be wrong, then they would have the consolation of knowing that their policies were only half as cruel and foolish as they now appear to be.

Copyright 2012 Wild Raspberry Inc.

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