It Is Possible to Reform Medicaid

As pessimistic as I am about governance in Virginia (see the previous post), I do see occasional rays of hope. The House of Delegates is exploring ways to run government more efficiently, and it’s doing some pretty good work. If there’s any hope for controlling government spending in Virginia, citizens will have to look to the House. The State Senate, by contrast, has become a wholly owned subsidiary of Virginia’s special interests and has shown no interest in anything but raising taxes to feed those interests.

A House Republican task force is developing innovative strategies for moderating increases in Medicaid spending while ensuring the quality of care for Virginia’s poor. Options include health savings accounts, disease-management programs, creating incentives for long-term care insurance, and cracking down on those who transfer their assets to their children so they can throw themselves on the public dole.

For details, read the column published by Del. Phil Hamilton, R-Newport News, in the current edition of Bacon’s Rebellion.

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  1. TheModerate Avatar

    There is no competition in the healthcare sector. Until competitive forces are introduced into the market costs will skyrocket.

    A 5-mile flight on a helicopter from the scene of an accident to the hospital will cost you $15,000-$20,000 and it takes less than 5 minutes to get from point A to point B. Why aren’t there two companies at the hospital competing for that business? Yes, that is an extreme example but it highlights the monopoly many companies have on our healthcare system.

    When is the last time you saw a 15% discount coupon for a physical exam, or an EKG? If society took the time to prevent disease and sickness among all classes – rich poor, and middle class, our overall cost of healthcare might decrease.

    Give ‘em hell Phil. I especially like #9 on the task force’s list – purchasing pools for small businesses to expand access to health care.

  2. James Atticus Bowden Avatar
    James Atticus Bowden

    This is a golden opportunity to put together a comprehensive set of short term fixes, mid term improvements and long term solutions.

    Good ideas need to be shared. The political compromise that results in legislation will be less than perfect, but far better than the present.

    This is a great opportunity for governance at its best. Take the best of the past – shove it into the future. For new problems – think anew. Make a solution that serves Virginia’s principles and The People. Let Virginia lead intellectually – as she should.

  3. 95% of health care costs occur during the last two years of life. Apparently Jim would prefer that we work our entire life so we can turn our efforts over to our terminal health care providers.

    Be careful what you wish for, Jim, in this case there is a high probability that you will get it.

  4. Jim Bacon Avatar

    Ray, I don’t understand your logic at all. Could you please explicate?

  5. Steve Haner Avatar
    Steve Haner

    I’m pretty sure we used that photo of Phil Hamilton in his first House race in 1988. Have to check my direct mail portfolio.

    About a week ago on Today (Yeah, sometimes I watch it. NBC stands for News Babe Channel) they had a piece from Oregon or Washington where a class action suit is challenging hospital costs. The two plaintiffs had employer-provided policies that forced them to pay 20 percent, and with that incentive they actually read and were screaming about their bills. Before when they had low co-pays they hadn’t cared at all.

    Medicaid has none of those triggers and incentives, which is its biggest problem. No copays. I was told by our family optometrist that she dropped Medicaid patients not because of the low payments but because they would cancel appointments or simply not show up — which carried no cost.

    The potential for reform is great, the roadblocks many.

  6. One issue not addressed in Phil’s column is the high cost to Medicaid and all health care payers of the current failure to address patient safety. It is estimated that almost 100,000 people (300 jumbo jets worth)die each year from preventable hospital acquired infections, preventable patient falls and other accidents in institutions and other preventable medical injuries caused by a lack of care. This costs billions in unnecessary health care costs across the country and Virginia taxpayers as much or more than a hundred million a year in Medicaid reimbursements. Medicaid reimbursement (and private insurance reimbursements, for that matter) should be linked to patient safety criteria. Fewer people would die, and we’d save lots in taxpayer financed intensive care and other expensive treatments to cure what simple handwashing may have prevented. Speaking of the market, until hospitals have to bear the full price of preventable accidents, infections and injuries, there will be no incentive for boards and shareholders to demand better and taxpayers will continue to pay the price in unneeded Medicaid expenditures.

  7. Jim Bacon Avatar

    Claire is right that improving patient safety could save health care costs — and improve outcomes — across the entire health care industry, Medicaid included. Because of the state of Virginia’s vested interest in Medicaid, which makes it the largest single payer for health care services outside the Medicare program, the Commonwealth should take a leadership position in pushing this cause.

    I would caution against one comment that Claire makes, however: “Until hospitals have to bear the full price of preventable accidents, infections and injuries, there will be no incentive for boards and shareholders to demand better.” If the solution is to ratchet up the pressure by making hospitals more vulnerable to malpractice suits, then the remedy is worse than a cure. Lawsuits encourage defendants to deny, deny, deny — admit nothing that could be used in court against them. What hospitals need is to get problems out in the open where they can be dealt with, and systems put into place to make sure they don’t occur again. Transparency is an indispensable component of any quality-improvement program. Medical mMalpractice suits are one of the main reasons the health care industry has been so slow to adopt the methodologies that are commonplace in other industries.

  8. We know that the vast majority of your lifetime healthcare expenses are terminal phase healthcare expenses (within th last two years of life).

    We know that health costs are a major cuase of bankruptcy.

    I believe, the current rule is that you must transfer your assets five years before applying for medicaid, otherwise they are subject to recapture.

    You think that we should “crack down” on people who avail themselves of this rule.

    So, here is a guy 85, who might very reasonably transfer assets to his heirs. At 90 he becomes ill and is eligible for medicaid. Another guy, like youself, for example becomes suddenly ill at 45. He faces a course of treatment that has a 50% chance of extending his life by 15 years, but it will cost him most of his lifes savings.

    He can, of course elect to do nothing and die. It is likely that he would fae intense pressre from his family and doctor to fight the good fight.

    His heirs have (or will) pay as much towards medicare as the heirs of the older man. simply because of the “unexpected” nature of their fathers mortality, they will be left with nothing from their father, but the heirs of the older man (with maybe better genes or lifestyl or luck) will benefit from all of his lifes work.

    If the costs are similar for both families, shouldn’t both families receive similar benefits? In fact, shouldn’t we do more for the younger man, not less?

    What options do we have here? Can we prohibit people from selling or giving away their property at any time before they become ill? Can we withhold treatment from all poor people? Can we provide treatment only to people who were always poor? Do we simply withhold treatment from older people on the basis that the longevity payback is small? If that is the case, then what if the younger man’s prospects were different, say a 1% chance that he could rcover completely. In this case the probable longevity impact is also small, should we let him die? Should we let him expend all of his resources and now be faced with supporting his family?

    Here we have a situation where the outcome is well known in a general way. It seems to me that you are advocating a position that has a high likliehood of eventually affecting your family.

    It is a position that resuts in a higher and higher proportion of wealth being re-assigned to the health care and terminal care businesses. Already, some nursing homes require that you sign over your assets before they will accept you for care.

    Si this really what we want? Or are we willing to have a system in which some kind of orderly transfer of wealth is assumed to be a good thing for the general public welfare, and are we willing to accept some costs in the form of medicaid to achieve this?

    I’m not suggesting any particular course of action here. This is an ethical and financial and social rats nest no matter what course we choose. But we should carefully consider what the outcomes are likely to be, before we jump to some ideological conclusion.

  9. Jim:
    Nothing in my post on patient safety suggests that the route to having hospitals bear the cost of their failure to keep patients safe is some expansion of med malpractice litigation. What I said is that hospitals should not be reimbursed for care (by public or private insurers) necessitated by their own negligence or failure to create a culture of safety.

    My views on this issue are informed by my own life experience: my mother (a fall risk on admission) was “allowed” to fall out of her bed at 3am in a cardiac intensive care unit (guard rails not up) two days before she was scheduled to be released to go home. She broke her hip. Had surgery, two strokes, a heart attack and died within the next ten days. Why should Medicare/Tricare (us) bear the cost of the surgery she needed to repair her hip, the days of intensive care necessitated by the surgery, etc? If the stockholders and directors of the for profit hospital knew that they would have to “eat” the cost of the additional and, otherwise unnecessary, “care” my mother needed as a result of the fall, wouldn’t they take patient safety more seriously?

    I believe that we do need a rational system to compensate patients harmed by preventable medical accidents and illnesses. In a two part article I wrote for richmondWOMAN magazine, posted up on my website,, I suggested (as has the Joint Commission on Accreditation of Health Care Organizations) that we should explore creating a workers comp like “no fault” system for preventable injuries/diseases occuring in an institutional setting.

    I agree that fear (unreasoned, I believe) of malpractice litigation has been used to excuse a failure to address patient safety in an effective way. This year’s “I’m Sorry” bill (allowing health care professionals to apologize for screw ups without having their words used against them in a lawsuit) can help here. More needs to be done.

    Reliable studies show that what patients injured in institutions and their families want most is an acknowledgement of a screw up and an apology. When none is forthcoming, they get angry and sue.

    Like the liability insurance “crisis” of the late ’80’s, the current malpractice insurance “crisis” has its origins (at least in part) not in excessive awards in lawsuits (Note: Virginia’s average med mal rates are higher than rates in some other states despite Virginia’s med mal caps) but in the investment decisions of insurance companies that lost big bucks in the 90’s market and now need to replenish reserves and assure returns for their stockholders through increased premiums.

    Insurance companies have done a pretty good job of inciting fights between doctors and lawyers about med mal, in much the same way as they helped panic not for profits about liability insurance in the 80’s. What ended that “crisis” in Virginia was a change in insurance laws to require liability insurance companies to file for rate approval (as workers comp insurers do). Distinctions were made between lines of insurance deemed “competitive” and those defined as “non competitive.”

    Med malpractice insurance currently is not subject to such pre-approval requirements. Currently, med mal insurers file rates but can use them without any prior approval by the SCC.

    In Virginia, the recent med mal premium “crisis” experienced by doctors is complicated by the failure (criminal?) of The Reciprocal, a possible scenario predicted with some concern at The Reciprocal’s inception by then Deputy Attorney General Gail Marshall who oversaw insurance regulation in the AG’s office from 1986 to 1994. When the Reciprocal crashed, some doctors had to pay for insurance twice since The Reciprocal was out of business and they had to go to new carriers for coverage.

    All this is a long-winded way to say that the problem of exponentially rising costs of health care and health care insurance is multi-faceted and complex and requires careful thought and deliberate action rather than accusatory rhetoric and sloganeering.

    We need to start by accepting personal responsibility for our own healthy/unhealthy lifestyle choices (Arkansas Governor Mike Huckabee talks sense here). We need an increased emphasis on disease and injury prevention (early detection, patient safety, wellness programs etc). We need to regulate insurance as necessary to protect both competition and the rate payer. We need to explore all reasonable means to assure that our legal system continues to provide individuals injured by the negligent action of others compensation for the harm caused and losses incurred without giving either the injured or their counsel an unjustified windfall.

    And, on Medicaid transfer of assets:

    As families, we need to accept that it is our responsibility to use our own resources to care for our family members until they are exhausted. Only then should taxpayers step in to provide a safety net through Medicaid. Current law allows too many (upper middle class?) families to transfer financial responsibility for medical care for elderly or disabled relatives to taxpayers by transferring assets. The taxpayer financed Medicaid program should be the last dollar in not the first or second dollar.

    We should adopt policies that encourage (provide incentives?) for families to plan, provide and pay for the medical costs and life assistance needs of the elderly and disabled instead of encouraging people to make financial plans to impoverish themselves so they can qualify for taxpayer financed Medicaid.


  10. Jim Bacon Avatar

    Wow, Claire, maybe there’s hope for the world. I find myself in agreement with just about everything you said in a very long post. Yes, it is outrageous that a hospital’s negligence could result in an injury, and the hospital then turns around and charges for the treatment of that injury. (That’s like an auto repair shop accidentally busting something in your engine, then trying to charge for the repair work.) Such stupidity is the kind of thing that makes people want to sue.

    The key is to create a culture of openness, in which hospitals and docs aren’t terrified to admit that they made mistakes. As you obsrve, saying “I’m sorry” takes a lot of the sting out of a personal tragedy. It also surfaces a problem for the hospital’s quality control manager (assuming they have one) to tackle.

  11. Claire, I tend to agree with what you say about incentives for making adequate plans. But the argument here seems to be that medicaid cannot afford to pick up the tab for everyone who needs catastrophic or long term care. If we cannot afford to do this as a society, averaged over the costs and inputs of all, then what is the likliehood that an individual can afford to do this?

    I don’t believe there is a long term care plan out there that is worth the paper it is printed on, if someone has had a good experience in this regard, I’d like to hear it. Even if you have a plan in place a catastrophic event will still lead to impoverishment of the principle. some would argue that health care will suck up all the money made available, same for college tuition, and road construction. If that is the case, then your argument amounts to a transfer of wealth from the middle and upper middle class to the medical care class.

    If it is our responsibility to use our resources until they are exhausted, that causes a problem as well. Once my father’s resources are exshausted, am I supposed to exhaust mine as well? If I do that, then how can I hope to afford a policy that will prevent the same thing from happening to me.

    If this keeps up, a plan to prevent the middle class from fleecing medicaid will be a plan that eliminates the middle class.

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    group health insurance plans

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