Dillon: How Medicaid discourages economic improvement

My son, diagnosed with chronic asthma, received Medicaid for the first two years of his life. I was a single mom making less than $16,000 a year. While I was insured through my job, Medicaid covered fees not assumed by my private insurance, such as my deductible, co-pays and prescriptions. Then something bad happened: I received a salary increase of $2,000, and my son was immediately removed from Medicaid.

My small salary increase wouldn’t come close to paying the increase in medical costs, and I realized that I was actually going to become poorer. A step-down program was unavailable, and my very sympathetic case worker proposed that I lie. If I claimed that my son’s father was not paying child support, she could reinstate Medicaid. While this solution was tempting, I knew it wasn’t an option for me. My parents raised me better than that.

More than 70 million people participate in the Medicaid program nationwide. Similar situations play out for many. While Medicaid finances health care for the elderly and disabled, 33 million recipients are children of low-income, presumably able-bodied parents, and 19 million are able-bodied adults. How many of these people choose not to get a second job or refuse extra hours at work because their Medicaid eligibility is hinged upon their income? With all the good Medicaid does, it’s disheartening that it disincentivizes families from improving their economic situation.

While the federal government mandates minimum Medicaid requirements, state legislators are exploring novel ways to improve the value of the program. Voters must let their thoughts on Medicaid step-down programs be heard. Any action that may reduce health-care costs while improving accessibility should be considered.

In 2014, Medicaid cost a whopping $438 billion. To put that dollar amount in perspective, there are fewer than 400 billion stars in the entire Milky Way. How can we get some of this spending under control? A step-down program where benefits are reduced but not eliminated as financial situations improve would help. Small increases in income would result in small reductions in Medicaid coverage. This would remove the health-care cost barriers associated with greater earnings. Over time, slight increases in salary can add up and reduce people’s need for the program. And they won’t have to lie.

Charleston

This story was originally published July 13, 2015 at 7:03 PM.