Medicaid’s Poverty Trap: Learning the Right Lesson

The Annals of Internal Medicine has an original article demonstrating that patients who had interrupted access to Medicaid in California (Medi-Cal) were more likely to be hospitalized than those who were constantly enrolled during a five year period.

The New York Times concludes that the culprit is California’s requirement that Medicaid beneficiaries frequently confirm their eligibility. This is so the state knows if your income has risen above the cut-off level, but the “hassle factor” also causes many continuously eligible patients to let coverage lapse until they fall ill.

This tempts the conclusion that the state should simply not require people to prove their eligibility. That’s the wrong lesson. The right lesson is that the government has artificially divided people in to populations eligible for Medicaid, Medicare, private insurance, etc. A solution is not to maintain a government-run health care ghetto for those who cannot afford private coverage, but to give everyone a tax credit (like described in Sen. McCain’s presidential campaign), that they can use to buy health insurance that they choose – not chosen by Dr. Tom Daschle (as of January 20 – we’ve only got one Health Secretary at a time, to paraphrase Mr. Obama).

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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