Book Review: Olson’s The Politics of Medicaid

Laura Katz Olson, The Politics of Medicaid (Columbia University Press, 2010) 416 pp.

Medicaid is often described negatively by politicians and the media, despite the fact that polls consistently show that the public supports the program.  This is just one of the many contradictions that exists within Medicaid, the federal program that was intended to mainstream the poor into the healthcare system by providing states with matching federal funds for particular expenditures on welfare medicine.  It is a multifaceted program with a complex history and an opaque structure.  Someone who needs an introductory explanation for why the program looks like it does will find that The Politics of Medicaid concisely tells the tale from a political scientist’s point of view (240 pages of prose).  Those who have studied Medicaid, however, may find that at least the first half of the book covers ground that has been traversed by other prominent sources.  And, readers in either category, take note: Medicaid has changed significantly because of the Patient Protection and Affordable Care Act (PPACA), which postdates publication.

The introduction promises that everyone is fair game.  Olson appears to be particularly interested in indicting healthcare entities, and others that she calls “stakeholders,” in driving the costs of Medicaid.   The initial chapters tell a cohesive tale of Medicaid’s history, but much of the information has been covered in iconic books such as Robert Stevens’ and Rosemary Stevens’ Welfare Medicine in America, a seminal study of the history and advent of Medicaid.  The first half of the book also describes the access problems that Medicaid enrollees have long faced, such as partial coverage of medical needs; selective coverage of healthcare; and general tinkering with the program depending on the state in which enrollees live, its fiscal strength, and its political sympathies.  While these problems are real, they are regularly documented by such organizations as Kaiser Family Foundation and Urban Institute.  Likewise, the chapter regarding long term care (“LTC”) is a nice description of the problems inherent in the system; but, cost shifting, problems with quality of care, and the idea that LTC is the “800 pound gorilla” are also well-documented.  Nevertheless, there are insights in these chapters.  For example, Olson ties healthcare fraud to problems in quality of care, a link that is often ignored.  Likewise, Olson is direct in describing how Medicaid’s structure has been manipulated to allow for state exploitation of federal funds as well as for variations in states’ programs that have led to lower quality of care for Medicaid enrollees.

Later chapters provide some important observations.  Chapter 7 describes the quality problems Medicaid has suffered as a program that is supposed to provide not only equal access but also equal care to the poor.  Olson convincingly describes how, from the beginning, cost concerns have trumped quality and how managed care has made Medicaid more expensive while often providing inferior care to enrollees.  The book also accuses fraud prosecution of being too focused on monetary recoveries and harm to the program rather than harm to enrollees through failures in quality or outright negligence (especially in nursing homes).

I wished that this point was further expounded, as healthcare fraud has become its own big business with entrenched ‘stakeholders’ who are focused on the headline-grabbing big settlement.  By example, the Centers for Medicare and Medicaid Services just published draft regulations facilitating the Medicaid Recovery Audit Contractor system, an initiative to recover billions of dollars in suspected waste and fraud from the Medicaid program.  As Olson has described, the press releases tied the Medicaid RACs to the federal fisc rather than to quality of care or medical integrity.  While the False Claims Act is held out as a possible solution to Medicaid quality problem, Olson provides just a few examples of successful quality prosecutions.  Deeper exploration of the potential for a different kind of fraud prosecution would have been welcome.

Chapter 8 is likely the most controversial.  This chapter describes the “Medicaid medical industrial complex” by walking through each of the big players in the program and how they keep federal money flowing to serve their individual interests.  The author, frustrated by the hand-wringing over the escalating costs of Medicaid, observes that few seem to be willing to take a hard look at the stakeholders and how they drive costs.  If you agree that the medical-industrial complex is overly powerful, you will probably find this chapter to be eye-opening.  If you believe that healthcare providers suffer vilification while offering invaluable services, then you will likely find this chapter frustrating.  Likewise, the next chapter follows up by explaining how states leverage federal dollars for many state purposes that are often unrelated to Medicaid.  Thus, Chapter 9 too could be read differently, depending on point of view: it either continues the theme of stakeholders being responsible for their own problems, or it is unsympathetic to states that shoulder the burden of welfare medicine in an era of escalating medical costs.

As its conclusion states, the book paints a “picture of the social, economic, and political dynamics that have shaped the program over the decades, has attempted both to explain its inexorable growth and to explore the extent to which it meets the needs of low-income families.”  (p. 223)  Olson tells us that Medicaid impacts everyone, and yet it does not deliver on its promises, cost containment is often dangerous, and states are incapable of leading the way to better coverage.  Readers sympathetic to these views will wish they had been explored in greater depth.  Ultimately, the book calls for a move to national healthcare because medicine is a basic human right.  Whether or not the reader agrees with this point, it seems a logical conclusion to the arguments Olson puts forth, but it also feels a bit abrupt given the narrower focus of the rest of the monograph.

At the risk of being persnickety, the book suffers from a sloppy edit, both in form and substance, that can detract from its authority.  For example, the book asserts that the Supreme Court “upheld” the constitutionality of the Medicaid Clawback, a provision of the Medicare Prescription Drug, Improvement and Modernization Act that forced states to pay the federal government for certain drug costs that the law had shifted to Medicare.  It happens that I wrote about the constitutionality of the Clawback, so I am comfortable stating this is not accurate.  The Supreme Court denied the states’ motion for leave to file a complaint seeking an injunction, then the states lost steam in lower federal courts seemingly in the hopes that political maneuvering would help to end the Clawback.  (Perhaps Olson mistook denial of the petition for original jurisdiction for upholding the constitutionality of the Clawback?

Nevertheless, too many Medicaid policy judgments have been made out of ignorance, so having a book that efficiently summarizes the current status of the Medicaid program and highlights its real troubles could help to alleviate this problem.  But, this leads to a final caveat: the PPACA Medicaid expansion impacts a number of the points made in the book.  As I have described in Federalizing Medicaid, PPACA effectuated a major philosophical shift by rendering everyone up to 133% of the federal poverty level eligible to apply for Medicaid.  For the last 46 years, only the “deserving poor” have been eligible to enroll (elderly, disabled, pregnant women, children, etc.).  Thus, Medicaid historically has served only about 40% of the nation’s poor.  Now, not only will Medicaid be open to all who meet the requisite poverty levels, but also the federal government will almost totally fund this new population.  Thus, some of the criticisms leveled in this book are moot, a natural hazard when writing about a program that has been amended nearly every year since its inception.  But, given the complexity of Medicaid, Olson’s book provides a service in succinctly describing the current state of the program, its shortfalls, and some solutions.

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Nicole Huberfeld is the Gallion and Baker Associate Professor of Law at the University of Kentucky and studies the cross-section between constitutional law and federal healthcare programs.  Her article arguing for full federalization of Medicaid from a federalism perspective is forthcoming in Penn’s Journal of Constitutional Law.

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