ECONOMIC QUESTIONS

How Medicaid Fails the Poor

Americans should be more worried than ever about Medicaid, which provides health insurance

for America's most vulnerable. The cost of the $500 billion program is expected to rise to $890

billion by 2024, according to the Centers for Medicare and Medicaid Services. Yet more

spending doesn't necessarily mean better care for beneficiaries, 57% of whom are low-income

minorities. The expansion of Medicaid is one of the most misguided parts of ObamaCare --

shamefully expanding second-class health care for the poor.

Start with the difficulty patients have getting a physician to see them. Some 55% of doctors in

major metropolitan areas refuse to take new Medicaid patients, according to a 2014 report by

Merritt Hawkins. The Department of Health and Human Services reported that same year that

56% of Medicaid primary-care doctors and 43% of specialists weren't available to new patients.

Medicaid enrollees who manage to see a doctor typically experience outcomes worse than those

under private insurance. That means more in-hospital deaths, more complications from surgery,

worse posttreatment survival rates, and longer hospital stays than similar patients with private

insurance. A randomized study by the Oregon Health Study Group showed that having Medicaid

did not significantly improve patients' physical health compared with those without insurance.

Medicaid's restricted access to drugs, specialists and technology likely accounts for these

failures.

Hillary Clinton's plan for Medicaid is in line with her plans for health-care reform -- expand

government programs and entrench the power of the state over private insurance. For the poor,

this means more of the same Medicaid. Mrs. Clinton would also lower the age for Medicare to

55 from 65, let undocumented immigrants join the taxpayer-subsidized ObamaCare exchanges,

and impose price controls on drugs, among other ideas.

Donald Trump has expressed specific concern about health care for low-income Americans. And

while his commitment to repealing ObamaCare is steadfast, his proposal lacks specifics.

Mr. Trump's website says he supports competition among insurers and drug companies through

regulatory reform and greater transparency. He emphasizes health-savings accounts. He supports

Medicaid block grants to permit state-based innovation. These are sound principles, albeit

without details.

More insight into TrumpCare might be gleaned from two of Mr. Trump's key associates, Ben

Carson and running mate Mike Pence. Last December Dr. Carson proposed universal, markedly

expanded, transferable health-savings accounts, along with expanded private-insurance options

for everyone. He endorsed high-deductible plans to lower insurance premiums and reduce the

cost of care by exposing health-care purchases to value-conscious consumers. He also advocated

replacing Medicaid by using its federal funding to pay private-insurance premiums and seed

health-savings accounts.

Mr. Pence has promoted similar ideas as governor of Indiana while reforming traditional

Medicaid. Mr. Pence's Healthy Indiana Plan 2.0 rests on three principles: individual health-

savings accounts; obligatory out-of-pocket payments, starting at $1 a month to health-savings

accounts for the lowest-income earner and copayments for nonemergency use of emergency

rooms; and incentives for personal responsibility, including rewards for healthy behavior and

disenrollment for failing to pay premiums.

Although laudable, Mr. Pence's plan failed to go far enough. Retaining separate insurance for the

poor isolates them. It perpetuates absolute government authority over payments to doctors -- the

basis of the restricted-treatment options and meager access to care.

More ambitious reforms can liberate poor Americans from the inferior, low-value health system

to which they are shunted. Current federal dollars should establish and seed-fund new Medicaid

health-savings accounts, empowering beneficiaries to seek value and create incentives to live

healthy lifestyles. Medicaid reform also ties federal funding to states' enrolling more citizens in

private insurance.

By changing Medicaid into a bridge to private insurance, Medicaid agencies would help

beneficiaries shop for private plans. Doctors and hospitals would receive payments from the

same insurance that non-Medicaid patients receive. Second-class health care for the poor would

be eliminated, and costs would come down. Shouldn't those be the goals of any administration's

Medicaid reform?

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Dr. Atlas, a senior fellow at Stanford University's Hoover Institution, is the author of "Restoring

Quality Health Care: A Six Point Plan for Comprehensive Reform at Lower Cost" (Hoover

Press, 2016).