MEDICAID CAN BE REFORMED

During the welfare-reform debate, the Left predicted that scaling back federal cash assistance to the poor would be similarly disastrous. The most hysterical predictions were that one million children would be thrown into poverty and that the poor would be starving in the streets.

Welfare reform produced exactly the opposite of what the Left expected. Caseloads plummeted and poverty decreased — often dramatically — for every racial category and age, including children. Poverty remains lower today than at any point prior to welfare reform, going back to 1979. Many who opposed the 1996 law have since admitted that it accomplished a large measure of good. And evidence stemming from part of that law suggests that with regard to Medicaid, the Left is again misreading the tea leaves.

Though wholesale Medicaid reform was thrown overboard in 1996, the welfare-reform law contained a little-noticed provision that eliminated Medicaid eligibility for non-citizen immigrants. One person who did notice was Harvard economist George Borjas. He discovered that the result of this “draconian” measure was exactly the opposite of what many would predict: coverage among non-citizen immigrants increased.

Borjas explains, “The immigrants most likely to be adversely affected by the new restrictions significantly increased their labor supply, thereby raising their probability of being covered by employer-sponsored insurance. In fact, this increase in the probability of coverage through employer-sponsored insurance was large enough to completely offset the Medicaid cutbacks.”

The robust economy of the late 1990s cannot explain these results, Borjas argues, because states that offered coverage to those cut from the Medicaid rolls saw coverage levels for this group decrease, while states that did not saw coverage levels increase. As author Jason DeParle has written, “When welfare was there for the taking, they got on the bus and took it; when it wasn’t, they made other plans.”

Borjas notes that immigrants responded not just to the Medicaid cuts, but to all the changes in the 1996 law. Nonetheless, a natural experiment has demonstrated that Medicaid cuts produced exactly the opposite of what opponents would predict, and that — by at least one measure — the cuts were more compassionate than the program’s previous (supposed) generosity.

More -- much more -- here

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation.

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