...but not Medicaid expansion

March 09, 1998|By Ellen R. Sauerbrey

MARYLAND has a big decision to make, concerning how we will provide health care for children of the working poor. New federal money has been made available to create a health insurance program for uninsured low-income children. We must decide whether to use the new money to expand Medicaid or sponsor an initiative in the private sector.

Gov. Parris N. Glendening wants to expand Medicaid. That would be a mistake. Under a public/private partnership, more children would be covered, families could choose their plans, and the state would be at less risk financially in the advent of an economic downturn.

Federal and state laws require that certain benefits be included in Maryland's Medicaid package, making it much more expensive than those of commercial plans. It is estimated that federal mandates raise the benefit costs in the Medicaid program by 10 percent over private-sector costs; state mandates add an estimated 22 percent to the cost. The difference between a Medicaid plan for children and a commercial plan may be as high as $700 annually per child, according to our research.

Parents' choice

Also, an expansion of Medicaid could have serious economic consequences. Parents in the targeted income range could simply stop purchasing dependent coverage and shift the responsibility for their children's health insurance to the state. This occurred in some form in the early 1990s during the first Medicaid expansion.

In the end, Maryland would find itself spending millions of dollars in matching funds to insure children who did not need the assistance. Rather than covering those who really need help, our share of federal money would be spent on many people who dropped their coverage in pursuit of free care.

Mr. Glendening has a "solution" to this problem. He would require any family dropping private coverage to wait before entering Medicaid. The risk of going without coverage, he says, would deter families already insured from moving into Medicaid.

But this would be bad policy. Some parents may decide to risk their children going without health insurance in order to qualify for Medicaid. The free health insurance dangling on the other end of the waiting period would be almost an incitement to reckless behavior.

Even worse, the waiting period would be an incredible injustice. It penalizes parents who have been doing the right thing all along by sacrificing financially to insure their children. Those who haven't sacrificed get automatic entry.

Mr. Glendening insists that his Medicaid expansion plan is not an entitlement. But for all practical purposes, it is.

If a recession hits the state and insufficient funds are available to cover the cost of the children's health insurance program, it is quite possible that the courts would judge the program to be an entitlement under federal law.

Many policy-makers believe this could happen, because the Glendening plan constitutes an expansion of traditional Medicaid everything but name. Under the equal protection clause, the ++ courts could order additional state funding when the appropriation was exhausted, which could mean increasing taxes on overburdened Maryland families.

The governor's Medicaid expansion would allow the state to roll back eligibility standards during a recession to make fewer children eligible. But, politically speaking, it would be impossible for state government to toss children out of a health insurance program under such circumstances.

A better plan

I support the House Republican plan grounded in the private sector -- which would cover more children, is fiscally responsible, would treat people with identical incomes equally and would not be hemmed in by the language of entitlement. It would allow parents to choose the most appropriate coverage for their children rather than forcing them into a Medicaid health maintenance organization. It would not tempt parents and employers to rely on government by fine tuning the assistance.

The plan calls for direct subsidies and tax credits for eligible families. The first hurdle is to get some kind of coverage to as many children as possible. This plan would do so and, because of the savings generated, could insure newborns at an even higher income level than that called for by Mr. Glendening.

After families had spent a certain percentage of their income, the subsidies and credits would be made available again to help parents pay for other medical-related costs for their children. This would help protect families from enormous medical bills.

This is a better plan than the governor's. It is morally just and economically smart.

Ellen R. Sauerbrey is a Republican candidate for governor.

Pub Date: 3/09/98

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