David R. Henderson  

Gorman on Attendant Services Under Medicaid

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Recipients of agency care, that is, care provided by certified agencies, have little control over who enters their homes, when they will come, what they will do, and how they will do it. Theft is a constant problem. In addition, the recipients cannot reward good performers or dock poor ones because personal assistants work for the agency that hires, trains, schedules, supervises, fires, and bills for their services. Because Medicaid beneficiaries often do not see invoices for their care, state officials have no way of knowing if the services agencies bill for were actually rendered. In some states, reimbursements rates are set so low that good workers refuse to work for the program, and Medicaid recipients cannot get the hours of service that they need.
This is from Linda Gorman, "Who Attends You When You Are Ill? Attendant Services Under Consumer-directed Health Care." This is the Econlib Feature Article for June.

Health economist Gorman takes on the "Iron Triangle" idea that in health care you can achieve at most two of the following three goals: high quality, universal access, and cost containment. She examines the empirical literature on experiments in Medicaid provision of attendant services for people who are disabled. She finds that it is possible to achieve all three goals if the beneficiaries are given a budget that they are free to spend and are given a fraction of their savings if they don't spend. Incentives matter.


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COMMENTS (5 to date)
kebko writes:

We recently had Medicare provided hospice for my dying father , and it was absolutely horrible...absolutely horrible.

PrometheeFeu writes:

"in health care you can achieve at most two of the following three goals: high quality, universal access, and cost containment."

I pick high quality + universal access. Actually, things are not quite that binary. You can get a little of all. So I would take universal access 100%, high quality 70%, cost containment 30%.

My reasoning is as follows: I am quite loss adverse. So, having the assurance that if all else fails, I will still have access to medical care (and basic food and housing too) is worth a lot to me. To me, it is worth paying more taxes. Also, it is worth the corruption of my otherwise pristine libertarian ethic when I use the government's hand to reach in your pockets to pay for my safety.

Shangwen writes:

Attendant services are a slightly atypical example of health care, as wages for that group are fairly low, much like orderlies (or health care aides, or nurses aides, various names) and cleaning staff. However in most other respects they are typical of health care services: complex regulation, byzantine administrative processes, and little involvement from the patient.

The big failure in home health care services is that they are always being plugged as upstream cost savers that defer costly nursing home admissions. The evidence there is dismal, but perhaps this is because patients do not see themselves as benefiting financially from that deferral.

Rachel writes:

This article sounds like consumer directed care is wonderful. But the fraud problems are huge. What's to stop a person from claiming disability and then paying their friends to 'care' for them. It's incredibly hard to measure how disabled somebody is.

PrometheeFeu writes:

@Rachel: Yes. If I get to decide what another person is paying, fraud is to be expected. That's why consumer directed usually involves removing third-party payments.

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