Medicaid Politics and Policy

David G. Smith

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781412856744
• eBook ISBN: 9781351295789
• Topic: Business
• Subtopic: Politics
• Index: Business

The story of Medicaid comes alive for readers in this strong narrative, including detailed accounts of important policy changes and extensive use of interviews. A central theme of the book is that Medicaid is a "weak entitlement," one less established or effectively defended than Medicare or Social Security, but more secure than welfare or food stamps.

In their analysis, the authors argue that the future of Medicaid is sound. It has the flexibility to be adapted by states as well as to allow for policy innovation. At the same time, the program lacks an effective mechanism for overall reform. They note Medicaid has become a source of perennial political controversy as it has grown to become the largest health insurance system in the country.

The book's dual emphasis on politics and policy is important in making the arcane Medicaid program accessible to readersand in distinguishing policy grounded in analysis from partisan ideology. This second edition features a new preface, three new chapters accounting for the changes to the Affordable Care Act, and an updated glossary.

1

Historical Background

Institutional Setting

Medicaid began as an add-on to public assistance, designed as much to help states pay for medical vouchers added to welfare categories as to provide medical assistance as such. It was essentially a program of “welfare medicine”¹ and in this respect inherited a long, if not rich, tradition of categorical welfare grants based upon local poor laws, charitable movements of the nineteenth century, and the “mothers’ pensions” of the early twentieth century. Much of the history of the Medicaid program could be described as rising above humble origins—but there is no denying this heritage.

Medicaid was and has been a uniquely American system. More is meant than that no other advanced country chooses to care for its medically needy in this fashion—although it is a fact worth pondering as to why Americans do so. Medicaid was, in its unique way, shaped by weaknesses of American government and our cultural attitudes toward the poor, women, and racial minorities. It shared in the American “exceptionalism” described by Alexis de Tocqueville: a weakly institutionalized program created by a weakly institutionalized system of government.²

The American system of government was itself weakly institutionalized and intended to remain so—a historic legacy of continuing importance. The constitution contemplated was, according to James Madison, a “compound Republick,”³ in which federalism and the separation of powers would operate together to check the accumulation of power, contain factionalism and sectionalism, and prevent political extremism.

This particular feature of the Constitution is important for Medicaid in several ways. It sets to work mutually reinforcing checks on government—typically replicated by state governments—that limit or fragment government and counter partisan politics. It also gives rise to a specialized “constitutional politics” of federalism that plays a large and constructive role in Medicaid policy and politics, by setting the larger context for action and shaping specific policy outcomes. Most importantly, Medicaid is a state-based and administered program, so that federalism is itself one of the most important checks on power and a source of pressures for decentralization or devolution.

The characteristic of being weakly institutionalized is not peculiar to Medicaid. It is important, though, in accounting for programmatic and political adaptations that make Medicaid seem peculiarly American, especially in its incorporation of dominant social and political norms. A good example is the connection between public assistance and Medicaid. A combination of nastiness toward the poor relieved by selective generosity for other folk has characterized American social welfare. Much of this is because Medicaid was created, and has adapted and grown, by incorporating and building incrementally upon traditional categories of aid. Such an approach allies itself with the familiar and defensible, but like the common law, preserves much that is outdated, even retrograde, in custom and attitude.

Tocqueville noted, in accounting for American “exceptionalism,” that these people were “born free, without having to become so.”⁴ They had no king or hereditary nobility and lacked the domestic or foreign policy that had in less fortunate countries strengthened the state, the army, and the bureaucracy. Instead, they had a love of the laws and a genius for local association, relied little on government, and were busy mostly with material pursuits and private activities.

Until the last decades of the nineteenth century, Tocqueville’s appreciation would have fit the American democracy well. People lived apart, in small, individualistic “island communities,”⁵ concerned mostly with local affairs. Neither the state nor the national governments dealt with domestic policy as we know it. Mostly, they collected taxes (or customs, excises), dispensed, licensed, and distributed patronage. They seldom legislated, except to codify the common law, modify the powers of an existing authority, or take action when a local government failed to perform. The Civil War and Reconstruction produced a temporary mobilization and expansion of governmental power, after which the “state of courts and parties” returned.⁶

Although formal government and public institutions remained relatively undeveloped, the private and voluntary sector did not. Tocqueville accused Americans of being absorbed in their own affairs with a kind of “virtuous materialism.” That was true enough, as evidenced by the rapidity with which Americans occupied their vast domain and developed transportation, commerce, and local and national business enterprises. But Americans were also much influenced by religious movements, self-improvement activities, and benevolent appeals. And these collective impulses did get institutionalized—in charity associations, private hospitals and asylums, settlement houses, professional associations, universities and medical schools, libraries, and museums. As contrasted with most other countries, the private sector—and especially the voluntary and charitable part—developed separately and more independently. It was often more responsive to need, better run, and more “enlightened,” at least according to professional or otherwise informed opinion.

In the last two decades of the nineteenth century, Americans experienced a fundamental transformation of their society driven by concurrent revolutions in agriculture and industry, successive waves of foreign immigration, and rapid growth of urban populations. At the time, Americans boasted that they had achieved in twenty years what had taken Britain more than a century to accomplish. Whether true or not, this statement points to an important fact: that a vast amount of change was compressed into one short period of time. Moreover, these changes brought problems unfamiliar to a simpler, largely agrarian society—such as urban vice, crime, and ethnic conflict; single working mothers and delinquent, vagrant, or neglected children; industrial working conditions and child labor; cyclical employment and global markets.

Toward the end of Democracy in America Tocqueville prophesied that the American republic would survive the Civil War, which he believed would surely come, but was more pessimistic about the age of industrialism and the advent of mass society. No doubt, the republic survived—depending upon what one means by “survive” and “republic.” In the present context, though, this crisis of transition probably reinforced some salient characteristics of both public and private benevolence: especially their separatism, categorical emphasis, and multilayered incrementalism.

One form of this separatism was a widening of the distance between private charity and philanthropy, and public assistance—with the former tending to emphasize “scientific” charities, casework, and rescuing the poor from poverty and dependency, and the latter taking primary responsibility for the traditional “poor law” welfare categories and some institutions, especially custodial care for the mentally ill, the developmentally retarded, the disabled, and elderly disabled.⁷ One undesirable consequence was that public institutions, with the states’ police and taxing powers and court jurisdiction, were separated from some of the most active civic and professional leadership in the private sector.⁸

An important legacy of the Progressive Era was to associate health and welfare policy with income security and labor legislation—a seemingly trivial matter, but important for the future. An example illustrates the importance of this association. In the first decade of the twentieth century, there was talk of the German and British approaches to health insurance, but little prospect for anything of significance at the national level. One initiative from the American Association for Labor Legislation, though, was a model state law for employer-based sickness insurance.⁹ Confined to industrial enterprises, the plan would insure only for lost wages, not for the costs of medical care. This initiative failed. At the same time, starting with the states and with industrial employment and income security (rather than health insurance) made sense as a way to avoid constitutional, political, and administrative difficulties that would attend a publicly sponsored proposal for health insurance.

Another example, more relevant to welfare policy and to Medicaid was that of “mothers’ pensions.” Throughout the Progressive Era, there was concern about the plight of both women and children and how best to cope with working conditions, poverty, homelessness, neglect, vice, and delinquency. A category singled out for special attention was the single mother, who was often forced to work at night, neglect her children, let them wander in the streets, put them out to work, or give them up for foster care or adoption. One response to these problems was the mothers’ (or widows’) pension. Beginning around 1908 at the state level, these pensions provided for categorical payments to mothers for the benefit of minor, dependent children. This kind of subsidy was justified not as “charity” but as support for a useful and needed activity that would help to hold families together and be less expensive than putting the children in an institution. As part of the scheme, it had to be established—often in orphans’ court—that the mothers were truly needy and that they would maintain a proper home environment. Some states included only widows; others excluded divorced women or unmarried mothers, and married women usually had to be themselves “dependent”—i.e., with husbands in prison, the insane asylum, deserting, or incapacitated for labor.¹⁰

Except for the war, there was little activity in health and welfare at the federal level. A lengthy campaign that publicized the high rate of infant mortality in the United States led to a White House conference on dependent children in 1909. That event helped to establish a Children’s Bureau in 1912, located in the Department of Labor. Six years later, a Women’s Bureau was created, also located in the Department of Labor. And in 1921, the Sheppard-Towner Act¹¹ passed. A substantial victory for the women’s movement, this act provided federal grants-in-aid to the states to reduce infant mortality and protect the health of mothers and infants. It was upheld as constitutional by the Supreme Court¹² but repealed under the Hoover administration.

These examples illustrate health and welfare policy made a century ago but in ways still relevant today, especially for Medicaid. Health and welfare were “local” issues, both constitutionally and by settled tradition—matters for states and local government.¹³ Government in general was not reliably competent or trustworthy, either in legislating or administering. There was also a strong presumption in favor of ordinary lawful business and the private ordering of affairs. The burden of going forward in law or administration was on the moving party. Under these circumstances, new public initiatives tended to depart cautiously from existing law or private arrangements, to build upon existing foundations, to proceed incrementally and categorically, and to percolate upward from locality to state and, occasionally, from the state to the federal government.

In a polity characterized by institutional weakness and corruption or incompetence, categorical incrementalism was a low-risk and effective way of proceeding. It was useful to focus energy and attention on a proposal, build support among advocates and clients, take advantage of some legislative niches, get earmarked funds, and monitor implementation. As a way of getting money, it was also highly adaptable and, because of latent support and roots in existing local institutions, likely to have considerable staying power.¹⁴

The “mothers’ pension” example also illustrates negative aspects of categorical incrementalism, especially for welfare policy. Labels can stigmatize a person as a “welfare recipient” or “delinquent child.” Establishing a category also tends to define the “problem”¹⁵ and may determine the approach to solving it as, for example, picking the category of “dependent child” for mothers...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Acknowledgments
• 1 Historical Background
• 2 Legislating Medicaid
• 3 Medicaid Implementation
• 4 Amending the Classical Model
• 5 Maturity and Trouble
• 6 A Critical Phase
• 7 Medicaid Under Siege
• 8 Devolution and Waivers
• 9 Medicaid and the Affordable Care Act
• 10 Federal Implementation
• 11 Implementation: State Action
• Postscript
• Glossary
• Bibliography
• Index