Bad Medicaid Experiment

Medicaid is the federal-state health-insurance plan for low-income Americans. For very sick beneficiaries, it is the last stop before destitution or perhaps tragedy. And in a country that does not guarantee health care to all its people, Medicaid offers at least some moral cover.

But Florida has won approval from the federal government to run a pilot program that radically alters the terms of Medicaid. It will change Medicaid from a program that guarantees certain benefits to one that limits coverage to a dollar amount. Florida Gov. Jeb Bush has pushed for this new regime to save the state money. Too bad.

Under the pilot program, Florida will require all beneficiaries to enroll in private health plans. The plans will be given money for each recipient, on the basis of that person's medical condition and history. At that point, the state will wash its hands of the beneficiary's medical needs; for-profit entities will take over. They will have the authority -- and, more ominously, the economic incentive -- to deny people expensive care that they might need to survive.

As things now work, the federal government and the states decide which benefits Medicaid patients may receive, and then they find the money. The new plan turns that around: The governments decide how much they will spend on people's insurance, then send the people into the tender hands of an insurer.

We do not ignore the challenges facing Medicaid. The program continues to grow, partly because employers are insuring fewer employees. It has overtaken education as the biggest item on the states' budgets.

The ultimate solution, as we have said here before, is a national health plan that covers everyone, and thus spreads out the sick pool as much as possible. It need not be a single-payer plan, like Canada's or our own Medicare (for the elderly); a multi-payer program combining government and private coverage is common in Europe. As a further benefit, the simplicity of a national health plan could reduce everyone's health costs. Chaos costs money, and the United States spends a larger share of its gross domestic product on health care than does any other industrialized nation.

In Florida under the new program, 5 percent of Medicaid patients will have exceeded their annual limit. This doesn't sound like an enormous number, and the health plan will still provide services (although we wouldn't want to be an indigent patient whom the insurer now judges a burden to the balance sheet). What we are mostly troubled by is the new principle that would be established: that medical care is determined by a dollar limit, rather than a set benefit. What happens if Governor Bush wants to cut taxes again; or a Florida employer drops its health plan; or a recession produces a budget shortfall? How easy it would be to just lower the maximum per-year limit for Medicaid beneficiaries -- and let the insurers deliver the bad news.

Yes, Medicaid spending must be examined, and no doubt there's always waste and fraud to go after. And society must make painful choices on how much it will spend on what, and for whom. But the idea of states' abandoning their obligation to provide low-income residents with guaranteed health care is of huge concern.

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