Medicaid: Why It’s Broken and How To Fix It

Posted by – August 1, 2008

The point of this post is to explain what the Medicaid system is to the uninitiated, and describe the vast inequalities between states, and the gangrenous corruption that undergirds the system.

First off, before I begin, Medicaid is NOT the same as Medicare. And if you talk like you don’t know the difference (o hai Mr. Bush) you should not be president. Medicare is a federal entitlement, the same everywhere, and everyone over 65 is eligible, but Medicaid is state-run (with federal matching funds and federal guidelines from CMS) and you’re not eligible unless you’re poor and/or disabled (eligibility varies depending on the state).
Because I am a Medicaid Wonk and long-term care reform activist, and Medicaid is the primary provider of long-term care in this country, Medicaid is my primary focus.

My battle with Medicaid was because the federal guidelines only say states have to cover disabled children, so in many of the poorer states, once you turn age 21, tough luck. In my friend Chris’ case, they cut him off and he died.
This week, I’m reading that states are still arbitrarily cutting kids off at 21, with much suffering resulting, and this has prompted a flurry of posts and emails by me. In Texas, they dumped over 300 people off the cliff in the Houston area alone, even those, who, like me, are on life support! Just like my case, advocates are seeking injunctions in court to block these cases from being “terminated.” Houston Press Article: What happens when chronically-ill kids grow up?

Also, the same story in Illinois, filing an injunction to keep a ventilator case covered.

Let me explain the root of these problems.

We don’t have one health care system in America, we have 50. Medicaid is different in each state. They even have different names (in CA it’s Medi-Cal, in OR it’s the Oregon Health Plan, in MA it’s MassHealth, in Alabama it’s Alabama Medicaid Agency, etc). I cross a state line, and I start from scratch with different regulations, different eligibility and different services available.

The programs already exist to provide universal health care. Why do we fall so short of that and why do these tragedies keep occurring? Because of how it’s designed. We don’t force the 50 state Medicaid programs to cover everyone, due to “‘states’ rights.” If you’ve read the 1965 Medicaid statute (I had to, due to this) you will see it is mostly head-spinning legal contortionism; the feds created a cluster of a system, where states are required to do things, yet simultaneously not required to, incentives given and matching funds provided, yet complicated loopholes allow states to opt-out of most provisions, or opt-out of Medicaid entirely. Where does this leave us? It leaves us with THIS: 50 different, separate health care systems, some near-universal coverage already in New England, and the South scraping every loophole and, in some cases, barely having the Medicaid program at all. It leaves us with the states blaming the feds and the feds blaming the states, while people die.

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It is very apparent to me that we need strong federal solutions to overhaul this ad hoc patchwork system. Leaving states alone to manage Medicaid can lead to states’ functioning as “laboratories,” where new approaches are tested, but more often it just means horrific funding disparities and radically different quality of life for severely disabled people. In Minnesota, New York, and other states, I saw people in wheelchairs all over, integrated with the assistance needed to live in their own places and have their own lives, whereas here in Alabama, disabled people get stuck at home without help or shoved in back wards of nursing homes, and to see one of us moving about in society is a rare oddity (people do double-takes seeing me down here, while in NY, seeing mutants like me is the norm and people didn’t gape).

Historically, we don’t like the federal government telling the states what to do. Should we accept an inferior health care system that gives us less than our Canadian neighbors as “a necessary evil” just because we don’t like strong government? No, that is not a good enough reason to keep the current system. We have to rebuild this thing. Here are my ideas, none of which the current candidates have talked about on the stump.

Solution: simplify, streamline, regularize and bring parity to funding for the health system, at least change the funding scheme to bring the poor states up into the 21st century. End the ad hoc patchwork system. The shocking disparity between states is inhumane. Let’s fix it by mandating that a county with comparable population in the South gets the same percentage matching funds (FMAP) as a county up North.

Solution: Stop sucking away people’s self-sufficiency. Alabama Medicaid has the most severe limits on income they can have and still keep federal matching funds. If I get a job making over (roughly) $1200 a month, they will “terminate services,” they say. It is both immoral and harmful to taxpayers to actively discourage self-sufficiency. In NY, where I am attempting to move, their rules are much more liberal, and I will aggressively pursue employment. As I understand it, NY Medicaid has a much higher eligibility cap, and even if you make over the cap, they don’t cut you off like here, you just have to pay a “buy-in” on a graduated scale depending on your income bracket. It should be a no-brainer to require all states to have the graduated scale buy-in, and encourage people with disabilities to enter the workforce and be, at least partially, self-sufficient.

Solution: Stop forcing people into expensive nursing homes.

This is my personal crusade since the state gave me no option but a nursing home or nothing after I fell off their eligibility at age 21 and I waged my campaign to fix it.

Improvements in technology mean that even people like me who depend on ventilators to breathe can better succeed in a home setting, instead of nursing homes, which study after study has proven cost WAY more. Why do they cost so much more? Because you’re paying rent, utilities, food, and company overhead and profits, typically over $30,000 annually for a low-end place, whereas at home, family and friends often cover rent, utilities, food, etc. and Medicaid only has to pick up the care (on average, roughly $5000 a year, since many elderly people are still ambulatory and require little assistance.)

But, of course, the government mandates the more expensive, least desirable, and most dangerous option (statistics for infections and abuse in institutions vs. home care are staggering). The 1965 federal Medicaid law requires states cover nursing homes, but home care is a difficult-to-fund “optional” service (in disability rights circles, we call this the “institutional bias”). Why was it designed this way in 1965? Well, technology did not advance enough so that severely disabled people could thrive at home until the 1980s. If Nick, ventilator-dependent 24/7 and on oxygen and tube feedings, can live at home, nearly ANYONE could with proper supports, and live at less cost than the institutions, which are heading toward the fate of the horse and buggy.

Right now at age 21 we are actually forcing disabled people out of college and into nursing homes in order to get the care they need. Everyone should be outraged and the waste of tax dollars, wasted human potential and the crushing of personal liberty and self-sufficiency. Right now most have no choice, they’re unnecessarily forced into these institutions, to become mere profit sources for corporate entities, sort of how humans are farmed for energy in The Matrix.

It doesn’t have to be this way. Why hasn’t Medicaid law adapted to changing conditions? Because the nursing home industry won’t give up their gravy train. Special interests basically own the system lock-stock-and-barrel. They have billions spent to buy legislators and lobbyists in DC and all 50 state capitols. Their dominance in Ohio is such that they passed legislation giving nursing homes an automatic annual funding boost, by statute, not subject to an annual vote. In Alabama, they have rigged the laws so nursing home directors get an automatic ($300,000 a year I think) salary from Alabama Medicaid Agency. I managed to get this exposed on the front page of the Mobile Register down here, but the industry defended it by saying “we cannot continue to care for the elderly and disabled without this, etc.” and the voting public didn’t even waste a yawn on the subject.

We must stop forcing people into expensive nursing homes. How? The Community Choice Act.

The Community Choice Act would end the “institutional bias” in federal Medicaid law, and bring home care into parity, thus letting the consumer choose where to live. If America is about freedom, we should be able to choose where to live. Allowing more to chose to stay home would also save billions. New England has already caught on–MA and NY passed similar legislation years ago. Congressmen from both parties have signed on to the bill, which was formerly named MiCASSA; how can you argue citizens shouldn’t be able to choose where to live? Newt Gingrich even agreed to co-sponsor after ADAPT activists barricaded his nursing home fund raiser in 1996. :twisted:

Back in 2004, I met with my Congressman, Jo Bonner (R – AL 1st district), and convinced him to co-sponsor (he said he would not have co-sponsored had he not seen my fight).
Gore backed it in 2000, Kerry did in 2004, now Obama in 2008. McCain said he wouldn’t support it, and ducked explaining why in any substantive way.

Read the latest on the Community Choice Act here.

More funding is definitely needed, especially in the poor states, but unless we cut out the gangrenous corruption that is wasting billions with laws propping up things like the outdated and costly nursing home model, then the extra funding will go into perpetuating the problem, or straight into the hands of Boss Hog-style nursing home owners. Obama should put the Community Choice Act front and center. We shouldn’t just expand the system without really overhauling the underpinning corruption and brokenness of how Medicaid is designed. But a major change would require breaking the back of numerous corporate special interests, hurting people’s feelings and would risk open revolt from legislators who are sponsored by the industry. Unless Obama puts the Community Choice Act into law, and attacks other special interest “leaks in the system,” such as hospitals charging $70 for a band-aid and similar nonsense profiteering off the weak, then I fear we will simply bloat the existing system more instead of the monumental systems change that’s so desperately needed.. Cobbling something together on top of the very corrupt, wobbly-legged and near-incoherent 50-state hodgepodge may make the system more prone to collapse.

Obama is trying for incremental change that could actually pass Congress. I really hope we somehow provide some relief, but to really get me rallying behind a health care plan a candidate would need to stump about the Community Choice Act, or say something along the lines of “I will completely replace the Medicaid program with something that doesn’t suck.”

Let’s pass the Community Choice Act and honor our people’s inalienable right of freedom of association.

And let’s take the best of other nations’ systems and make an American version better than anything the world has ever seen. If we can put a man on the moon in 10 years we can certainly craft a workable health care system that protects health while protecting our liberties.

Please forward this blog far and wide.

Lead on!

Nick Dupree


  • jason

    i’ve blogged on it, and learned from it. Luck!

  • Angel

    I too am frustrated with the way the states treat those over 21 years old. I have been told multiple times that the only way to qualify for Medicaid is for me to get pregnant and or have a child. This is insane to promote people to reproduce who cannot take care of themselves let alone children and to penalize someone for making responsible decisions. I am looking for any advice to start a campaign to change this injustice. Replies will be very welcome and good luck to you Nick.

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