David R. Henderson  

John Goodman on Medicaid

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Economics teaches that people reveal their preferences through their actions. If people act as though they are indifferent between being uninsured and being on Medicaid, we may infer they are equally well off in both states of the world from their own point of view. If someone drops a $20 bill on the floor in Parkland's emergency room, how long do you think it would stay there? Probably not very long. If someone drops a Medicaid enrollment form on the floor, how long do you think it would stay there? Probably until the next janitor comes along with a broom. Health economists tend to think Medicaid insurance is really valuable - worth a lot more, say, than $20. Many patients, through their actions, communicate that they disagree.
This is from John Goodman, "Is Medicaid Real Insurance?" Worth reading.

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COMMENTS (8 to date)
Tracy W writes:

Um, isn't the difference that Medicare enrollment forms are very likely to be easy to get? It's being actually enrolled on Medicare that's the problem, or perhaps more precisely being enrolled on it non-fraudulently.

David R. Henderson writes:

@Tracy W,
Read the piece I linked to.

Lori writes:

If someone isn't reaching for the Medicaid enrollment form as if it's a $20 bill, it's probably because they assume (usually correctly) that they wouldn't qualify anyway. Where the Medicaid forms appear in hospitals is in some hospital financial office with the patient or their family, when payment options are discussed, usually in those cases in which a (formerly) middle class family has satisfied the requirements of Medicaid 'spend down.' Put another way, means tests are mean.

Lori again writes:

@Tracy W, 'care and 'caid are two different animals. Medicare, being a non-means-tested program, offers at least a modicum of dignity.

Goodman concludes that Medicaid is worthless because there are eligible persons who have not applied. That is a symptom of the kind of reductionist thinking that assumes every decision with economic implications can be predicted in terms of costs and benefits. Applying for means-tested programs requires a swallowing of one's pride, and in socially conservative states, the application process itself is often humiliating by design. The apropos question is not whether Medicaid is worthless, but whether it is worth more than certain intangibles such as self esteem and dignity.

David R. Henderson writes:

@Lori again,
You're agreeing with Goodman's analysis. You're simply putting into the cost side those intangibles, about which you may be right. I'm not sure Goodman would disagree. More important, whatever the reason for people putting a low value on Medicaid, the point is that if he's right--and you aren't denying that he's right--that has implications for Obama's increased use of Medicaid to get a higher % of Americans covered.

joe Cushing writes:

Maybe people just figure that they can sign up for it if they need it. If they don't need to go to the doctor, why fill out papers? Filling out government papers is as fun as doing taxes. I'm supoosed to fill out some papers at the VA once a year. It takes half they day in a damn waiting room to do it. I have only done it twice in the last 10 years. Does that mean I'm not covered? No. I can fill out that paper and wait if I need care--which a rarely do.

joe Cushing writes:

On another note: I could get private insurance through my job but why pay $200 -$300 or whatever it is they are charging per month so all the AARP types who work for my company can go to the doctor once a week and take 30 prescriptions? I'll take the 2nd rate coverage from the VA. At least they don't charge me a monthly fee. It's been 5 years since I've seen a doctor. At $200 to $300 a month, that would be $12,000 to $18,000 for one visit plus a follow up if I had been paying for it all these years.

lemmy caution writes:

If a Medicaid enrollment form is worth $20, imagine how lucky I would be if I got my hands on a big stack of Medicaid enrollment forms. I would be on easy street.

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