C4 WEDNESDAY, MARCH 4, 2020 LATIMES.COM/BUSINESS
grant program. The co-
ronavirus shows exactly
why that idea would be
sheer folly.
Medicaid is the nation’s
largest public healthcare
program, with more than 71
million enrollees as of the
end of 2019. Because the
federal government covers
at least 50% and as much as
90% of states’ expenditures
for those enrollees, it’s ideal
for delivering the kind of
services that will be urgently
needed as COVID-19
spreads across the country.
It’s also uniquely flexible.
States are responsible for
enrollments and treat-
ments, and states hand the
bills over to the feds for the
appropriate reimburse-
ment.
That allows Medicaid
funding to rise or fall with
need, responding to unfore-
seen shocks.
In the past, such shocks
have included storms in-
cluding Hurricane Maria in
Puerto Rico, new and ex-
pensive technologies such
as hepatitis C cures or dis-
ease outbreaks like Zika —
or COVID-19.
Block grants don’t re-
spond to shocks. Under an
administration proposal
made official Jan. 30, states
would receive a lump sum
for Medicaid based on their
past experience. If their
spending came in below the
lump sum, they could
pocket the difference for
spending on other health
programs; if it exceeded the
block grant, they’d be on the
hook for the excess, 100%.
The danger here is obvi-
ous. COVID-19 is almost
certain to drive up screen-
ing and treatment costs in
almost every state. To con-
tain its spread, many resi-
dents will have to be tested.
Some will have to be quar-
antined in hospital wards,
served by medical profes-
sionals with specialized
equipment.
Under the best circum-
stances, the public health
infrastructure of even afflu-
ent states will be tested; in
poor states, it will face utter
collapse. If they’re reliant on
Medicaid to help cover the
cost, they’ll be sunk.
The administration
proposal does offer a relief
valve in the event of “unfore-
seen circumstances out of
the state’s control, such as a
public health crisis.” But it’s
not a simple fix.
As the proposal sets
forth, states will have the
“opportunity to submit new
information and relevant
data, describe the circum-
stances and proposed
amendment, and renegoti-
ate relevant [terms and
conditions]. The data pro-
vided by the state will be
validated” by federal Medi-
caid officials “in consulta-
tion with other appropriate
federal entities.”
That sounds like a six-
month process, or more. As
health insurance expert
David Anderson observes,
“If there is widespread
community infection and
plenty of people unexpect-
edly being admitted to
hospitals for significant
care, things could get ex-
pensive fast in an unantici-
pated manner.”
Medicaid block grants,
however, would create “a lag
and an uncertainty on the
part of a state as to whether
a public health crisis will
have additional federal
funding under a proposed
Medicaid block grant.
Under current rules, the
new, unexpected claims are
submitted to CMS and thefunds show up in the normal
course of business. The
uncertainty would cast a
pall on decision makers.”
The block-grant propos-
al was issued before
COVID-19 struck. Proof of
its folly couldn’t have come
faster.
That’s true too of the
administration’s other
favorite initiative on Medi-
caid, which is the imposition
of work requirements.
Although work rules
have been blocked in federal
court, the proposals, origi-
nally implemented by Ar-
kansas and contemplated
by Kansas and other states,
would have thrown enroll-
ees off the program for
failing to work a minimum
number of hours a months
or documenting their work
histories. Even worse, the
proposals would have
locked people out of Medi-
caid for months if they
breached the rules.
All this is especially
worrisome because the
target population for Medi-
caid could be especially
susceptible to the spread of
COVID-19. In the cities,
low-income neighborhoods
tend to be more densely
populated, making it harder
to isolate patients. They
have less access to medical
treatment.
Trump has further
undermined the ability ofpublic health programs to
reach them by imposing the
so-called public charge rule,
which penalizes immigrants
— documented and other-
wise — for utilizing public
assistance programs, such
as Medicaid. If one were
determined to spread
COVID-19 as fast as pos-
sible, driving a susceptible
population underground
and depriving them of treat-
ment would be a perfect way
to do it.
Meanwhile, Trump has
taken steps to undermine
an important instrument
for getting treatment, espe-
cially a vaccine, to the pub-
lic. That’s the Affordable
Care Act, which requires
that insurers provide cer-
tain preventive vaccines to
their members without
co-pays or deductibles. A
COVID-19 vaccine, once it’s
available, would almost
certainly make the list, as do
seasonal flu vaccines.
But if the ACA is de-
clared unconstitutional in
federal court, as the admin-
istration advocates, that
mandate would disappear.
Price is a significant obsta-
cle to medical treatment in
the U.S. across the board.
The Supreme Court
announced Monday that it
would take up the federal
lawsuit aiming to overturn
the law, brought by Texas
and 17 other red states andsupported by the Trump
White House. That’s being
viewed as a positive devel-
opment by the law’s defend-
ers, who include California
and other blue states. But it
means a decision probably
won’t be rendered until next
year.
Another feature of the
U.S. healthcare system that
complicates the fight
against the novel co-
ronavirus is its reliance on
insurance deductibles and
co-pays to reduce the utili-
zation of medical care. The
idea here, favored by con-
servatives, is that giving
patients “skin in the game”
by requiring them to shoul-
der some of the cost of care
will force them to think
carefully about their health-
care choices.
As John Graves of Van-
derbilt points out, however,
that system makes the
timing of the coronavirus
“uniquely challenging.” The
reason is that relatively few
insurance customers have
hit their deductibles this
early in the year. Therefore,
they’ll be paying more out of
pocket for testing or treat-
ment. Insurance should
encourage customers to
seek out services in a public
health crisis, but the skin-
in-the-game system dis-
courages them instead.
Several studies have
shown that deductibles and
other cost-sharing tools do
discourage people from
seeking unnecessary treat-
ment, but discourages them
from seeking necessary
treatment too.
The most important
unanswered question about
the Trump administration’s
response to COVID-19 is
whether it will exploit the
opportunities that exist in
the national healthcare
infrastructure to stem the
infection’s spread, or
whether Trump will fixate
on the response of the stock
market to the crisis.
A good model for the
government to follow comes
from the 1970s, when Con-
gress used Medicare to
address a crisis afflicting
end-stage renal disease
patients. Because kidney
dialysis, the condition’s
chief treatment, was soexpensive that those pa-
tients could not obtain
medical insurance at any
price, Congress decreed
that dialysis for patients of
any age would be covered by
Medicare.
Democrats in Congress
may be moving in that direc-
tion. Over the weekend,
Senate Minority Leader
Charles E. Schumer (D-
N.Y.) advocated that any
COVID-19 vaccine be cov-
ered by Medicare.
Schumer was reacting to
the doubts expressed by
Health and Human Serv-
ices Secretary Alex Azar
that a vaccine would be
universally affordable, but
it’s unclear if Schumer
meant that to apply only to
those over 65 and eligible for
Medicare, or to everyone. It
should be the latter.
The main problem with
Trump’s healthcare policies
raised by the coronavirus
crisis is its uncaring ap-
proach to the beneficiaries
of the nation’s healthcare
programs, especially Medi-
caid and the ACA.
The administration
treats those programs as
handouts to a privileged
class of low-income Ameri-
cans. Last January, Verma,
who as director of the Cen-
ters for Medicare and Medi-
caid Services is Medicaid’s
chief, implied in a speech
that the program was irrele-
vant to anyone who was
working or healthy.
“To most of us, Medicaid
is remote,” she said. As I
reported then, she couldn’t
be more wrong. Medicaid
pays for roughly half of all
births in the United States,
covers 62% of all nursing
home residents, is the larg-
est single source of payment
for mental health services
and provides coverage for
one-third of all children in
the U.S. Medicaid, Medicare
and the ACA could do so
much more, if this adminis-
tration focused on using
them, instead of killing
them.Keep up to date with
Michael Hiltzik. Follow
@hiltzikm on Twitter, see
his Facebook page or email
michael.hiltzik
@latimes.com.Healthcare policies leave U.S. unprepared
SENATE MINORITY LEADERCharles E. Schumer has said that any vaccine
for COVID-19 — none has yet been developed — should be covered by Medicare.Zach GibsonAFP via Getty Images[Hiltzik,from C1]
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