The Bush Agenda: No Aid for Medicaid

by Joe Auciello


Critics of President Bush’s scheme to privatize Social Security have pointed out that the president has exaggerated the danger of that program’s future difficulties and has misled the public to pursue his political agenda: Reduce a guaranteed benefit for many retirees to finance income tax cuts for the wealthy minority.

The problems with Medicaid, however, are real. What’s more, the crisis of Medicaid is worsening by the day. The Bush administration proposes no viable systemic solution to these problems. Instead, the stop-gap measures emanating from the Republican White House and already applied by Republican and Democratic governors increase the suffering of the most vulnerable minorities in society while providing no security for the majority.

The crisis of Medicaid is a symptom of the larger crisis of the American health care system itself. Until that system is changed so that universal national health insurance and health care become rights for all, the problems with Medicaid will intensify. With less medical care available or affordable, a greater number of people will suffer more and will die sooner. That, in short, is the president’s proposal for Medicaid reform.

Medicaid, enacted in 1965 as part of President Johnson’s “unconditional war on poverty,” is a federal-state insurance program that guarantees medical assistance to low income families. States are required by law to provide health insurance through Medicaid to children 18 or younger who live below the poverty line—$15,670 annually for a family of three. On average, the federal government pays approximately 60 percent of the expenses.

Currently, 53 million Americans receive Medicaid at a cost of $300 billion a year. The federal government distributes money to the states, which then, in accordance with federal regulations, provide medical aid to the needy. Medicaid costs have risen 9 to 12 percent a year for the last five years while state budgets have been cut, or in best case scenarios, have kept pace with inflation. Medicaid costs are predicted to continue increasing about 7 to 8 percent through the next decade.

Faced with these spiraling fixed expenses, governors across the country are looking to Washington for financial help. Instead, President Bush proposes a $60 billion cutback in Medicaid funding during the next ten years. It would be the largest of the social spending cutbacks that Bush claims are necessary to reduce the national budget deficit by half. At the same time, Bush’s $2.57 trillion federal budget includes a 5 percent increase in military spending, from $400 billion up to $419 billion, plus an additional $81.9 billion to pay for the military occupations in Afghanistan and Iraq.

Bush’s attacks on Medicaid are not new; these latest measures simply accelerate the cutbacks begun in his first term. At that time the attacks came largely in the form of increased restrictions of eligibility and a lack of federal oversight of services provided by the states. In 2003 the General Accounting Office found that the Bush administration allowed a record number of Medicaid waivers, which enabled states to ignore federal guidelines and also allowed the states greater discretion to prohibit services. Not surprisingly, the GAO found that when the states were not held accountable for the quality of care, fewer services were provided, eligible patients went unenrolled, and greater problems were reported.

These bureaucratic maneuvers designed to reduce aid to the elderly and the sick, continue today. On Feb. 1, according to the New York Times, Bush’s secretary of health and human services, Michael O. Leavitt, “said states should be free to provide less comprehensive benefits to ‘optional populations,’ whom they are not required to cover.”

This is not merely rhetoric aimed at denying Medicaid assistance to illegal immigrants or to middle class families who want to preserve a retirement nest egg. It is also aimed at nursing home residents, a majority of whom obtain Medicaid funds as optional beneficiaries. For the Bush administration, Medicaid reform is a license to restrict entitlements and reduce the number enrolled in the program.

The process is well under way. According to Business Week (Feb. 21, 2005), “Already, states are scrambling to cut costs…47 states are cutting or freezing payments to doctors and hospitals this year: 43 are lowering [what they will pay for] drug costs, 15 are making it tougher for low-income people to enroll in the program, 9 are cutting benefits, and 9 are increasing patient co-payments…17 states have targeted long-term care for cuts, either by trimming payments to nursing homes or slashing enrollments.” In New York, Republican Governor Pataki has announced a 1.1 billion cut in state funds for Medicaid, a program that serves 4 million New York residents. In Tennessee, formerly known for its ample state funding, Democratic Governor Phil Bredesen has initiated cutbacks that will take away Medicaid coverage from an estimated 323, 000 adults. As state budgets are lightened, people’s suffering grows heavier with little or no opportunity for relief.

But why do Medicaid costs continue to increase? Part of the answer is generational: As the 40 million baby boomers grow older, their medical needs grow with them. But this circumstance was entirely foreseeable and adequate provisions could have been made in the Medicaid budget.

The real problem is the state of the economy and the weakness of the U.S. labor movement. Medicaid enrollment increases because low-wage workers cannot afford the health insurance programs offered by the bosses and the corporations. The average health insurance policy for a family costs $9,000 a year. In 2002, more than 60 million people aged 25 to 64 earned less than $25,000. (These figures, of course, do not include the young and the elderly.)

No family can afford to pay about one-third of its income on health insurance. The inevitable result is that these working families have no other option but Medicaid. Unable to visit a doctor for relatively inexpensive preventive care, the working poor are forced into emergency rooms, where the cost of treatment is much higher.

Additionally, a major study conducted by the Harvard Law School and Medical School (published in the journal Health Affairs for February 2005) shows that traditional “middle class” families are only one major accident or illness away from hardship, poverty, or bankruptcy. A review of 1,700 bankruptcy cases revealed that almost half of the filings resulted from medical bills. Three-quarters of those filing for bankruptcy already had medical insurance, but the policies did not cover the expenses. Those inadequate policies are the direct result of the bosses’ wish to save profits. Companies that pay a portion of their workers’ health insurance costs will choose the least expensive and therefore least comprehensive policy, which leaves workers less protected.

As the study observes, “We doubt that such under-insurance reflects families’ preference for risk. Few Americans have more than one or two insurance options. Many insured families are bankrupted by medical expenses well below the catastrophic thresholds of the deductible plans that are increasingly popular with employers.” The study shows that each year about 2 million people go into bankruptcy as a result of medical expenses. These families must try and enter the Medicaid programs for any health protection at all.

The Bush administration has responded by promoting legislation in Congress that, if adopted, will make it more difficult for financially impoverished families to qualify for bankruptcy.

In the past, a stronger labor movement fought for health insurance for its members. Even non-unionized industries had to try and match the benefits unions won for their members. Today, Wal-Mart, one of the largest employers in the nation, has no union and offers no medical benefits to most of its workers. As the union movement declines, health care benefits erode or disappear.

Yet while the United States spends more money on health care than any other industrialized nation on earth, U.S. citizens have the fewest health benefits of any capitalist country. An estimated 45 million people are without health insurance, while an untold number lack adequate health insurance. In Europe and Canada, where pharmaceuticals are not advertised, the elderly do not pay for the drugs they require; in the United States, where advertisement is the norm, they do. The United States is the only industrialized nation without a national health program. What’s more, a Congress dependent on corporate campaign contributions and corporate lobbying will not enact legislation necessary for the public interest.

Until health care and health insurance become a right, like public education, instead of a privilege of wealth, the American ideal of life, liberty, and the pursuit of happiness will be out of reach for the working class and will hold little meaning for the elderly, the ill, and the poor.