Huh? (Medicaid Edition)

Renowned economist and respected libertarian Tyler Cowen (who blogs at Marginal Revolution) has a piece in the New York Times from this weekend about the forthcoming troubles facing the Medicaid expansion included in the Affordable Care Act. You can, of course, read the whole thing yourself but here is my understanding of his viewpoint (and my responses after each):

1. Medicaid is unpopular. Furthermore, when ‘the people’ understand the implications of the expanded version it will become even more unpopular.

Okay. Where does Cowen find that Medicaid is unpopular?

Here is how the public feels about Medicaid:

So 92 percent of the American public considers Medicaid very or somewhat important. Such a fact might discount the possibility of people ‘understanding’ the expansion in such a way as to consider it less important than they do now. Only two percent consider it “not at all important.”

2. Because it benefits low-income people, and low-income people don’t participate politically, Medicaid has no block of support. Essentially, no one but the people who don’t vote or donate time/money to the political arena wants it. This is also self-evident given the joint financing structure – neither the states nor the federal government is willing to fully pick up the tab. 

Save for the causal assumption about the financing structure, this is actually quite accurate in my opinion. Yet this also ties into the first point, because there is a significant demographic that doesn’t consider Medicaid to be very important:

The majority of those who make $40,000 annually or more say Medicaid is “not at all important” or “not too important” to themselves or their family. This makes perfect sense, of course, as Medicaid is entirely reserved for low-income individuals and families. Yet people do tend to support programs they benefit directly from (assuming they know they’re benefiting at all) and political/voting participation is progressive along the income scale.

3. Thus it stands to reason that Medicaid is ready for cuts.

Sure, that makes perfect sense. Except it doesn’t, or at least not without the following logic: government programs are ‘ripe’ for cuts when they become unpopular. This would seem to be irrespective of the actual goals, efficiencies and/or achievements of the program in question. Of course using the same logic it then makes perfect sense for the federal defense budget to be slashed – given the popularity of such a move.

4. Ergo, this:

The greater likelihood is that, over time, American voters will rebel against Medicaid and dismantle the subsidies that keep the states locked in, and will prefer instead to spend the money on other programs.

If Cowen views this as a ‘greater likelihood,’ then what’s stopping voters from doing so now? The engine of Medicaid’s evolution into a entirely different program lies within the hands of states and factions within the federal government who hope to use the expansion as a bargaining chip for block grants. I suppose you could make the case that these people are popularly elected, ergo voters support those specific policies towards Medicaid. Yet this inherently assumes that there isn’t a general dissonance between what the public wants and what politicians actually support doing. Instead this estimate of voter reaction strikes me as arbitrary wishful thinking.

5. Something, Mitt Romney, something, Barack Obama.

Honesty, this is just filler to make the argument that Cowen’s preferred policy outcome is inevitable regardless of who’s elected.

6. Medicaid has the worst features of a single-payer health care delivery system.

This is where he makes the transition to the next point. Needless to say this portion of his argument is factually-challenged.* For now remember that it is built upon the assumption of ‘voter rebellion’ and the non-importance of who is president.

7. The “most positive path that can be achieved” would be subsidized catastrophic health care coverage coupled with Health Savings Accounts.

Count me shocked that this tortured wasteland of zombie assumptions leads to the inevitability of the conservative ideal on health care structure in this country – people having tax-preferred Health Savings Accounts coupled with tax-payer subsidized catastrophic health insurance plans.

Part of me is at a loss for words at this chain of logic. This is where the “Huh?” reaction comes into play. I like Tyler Cowen (really!) and I read his blog daily. Sometimes, though, the stuff he writes can be a gigantic miss. This is one of them.

* For a more authoritative (and link-heavy) viewpoint on Cowen’s post see this Aaron Carroll response. Here is the lead-in:

Tyler Cowen had a piece in the NYT this weekend on Medicaid. He doesn’t seem too thrilled with its use in the ACA’s coverage expansion.

I have a ton of respect for him. I think he’s an excellent blogger and writer. I’m not an economist, but economists I respect also think he’s a pretty talented guy in that field, too. But I have to admit that his article set me off a bit. It could be that he didn’t have space in the NYT for more nuance. Perhaps he’ll provide it on his blog. In particular, I’d love him to address some of the points below…

*Update: Hat tip to @mattyglesias for pointing out this polling:

I’d say that with only 13 percent support for “MAJOR reductions” to Medicaid, Cowen’s projected ‘voter rebellion’ has some work to do.

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One response to “Huh? (Medicaid Edition)

  1. Pingback: More on Cowen’s “Medicaid Wars” | Punditocracy·

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