Tangled logic and reaching for excuses: Medicaid version

Twitter: @rodgermitchell; Search #monetarysovereignty
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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..

Since the Trump administration’s all-purpose excuse for everything is “Hillary, Obama, Democrats, and Fake News media,” one ought to be refreshed to see an article that tries to justify the GOP’s health care plans, without resorting to those pitiful alibis.

And yet . .

Sorry, Liberals: Protecting the Medicaid Status Quo Won’t Save Patients
The program desperately needs radical surgery
Shikha Dalmia | July 17, 2017 | Reason.com

Medicaid provides health care to 75 million Americans. It’s also a hideously expensive program that is at the center of the raging health-care debate in Washington.

It’s not Medicaid that’s expensive. It’s health care that’s expensive. Medicaid actually is less costly, in that contrary to popular wisdom, Medicaid is not funded by federal taxpayers.,

Even if all FICA collections were $0, the federal government, being Monetarily Sovereign, could continue funding Medicaid, forever.

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Medicaid doesn’t treat patients. It simply pays bills, as any insurance company does.

Republicans want to scale back the program, and Democrats warn that doing so will cause nothing short of mass death.

But that is not a credible—or responsible—claim.

ObamaCare extended Medicaid eligibility to able-bodied adults at up to 138 percent of the poverty level.

To do this, the federal government promised to pick up 100 percent of the tab for the first three years, and then 90 percent in perpetuity in participating states.

Republicans want to trim back Medicaid eligibility to the pre-ObamaCare days, when “only” the poor, children, the disabled, the elderly, and pregnant women qualified.

See, it’s like this. The GOP says if you are at, or 138% above, the poverty level, you’re not poor. Right? Wrong.

The official poverty level is pitifully low:

$12,060 for individuals
$16,240 for a family of 2
$20,420 for a family of 3
$24,600 for a family of 4

Try supporting a family of 4 on 24,600 a year, or even 138% that amount.

The Republican plan, assembled by millionaires means millions of poor people will not be able to afford health care insurance.

Conservatives also want to take the opportunity to fundamentally reform the program, which consumed half of most state budgets and a tenth of the federal budget even before the ObamaCare expansion.

To this end, Republicans want Uncle Sam to stop handing states on average 50 cents for every Medicaid dollar they spend and instead give them a fixed lump sum on a per-patient basis and tie its growth to general inflation.

The sole purpose is for our Monetarily Sovereign federal government to spend less and the monetarily non-sovereign states to spend more.

Those of you who understand economics immediately will see the fallacy.  A Monetarily Sovereign government never can run short of its own sovereign currency. A monetarily non-sovereign government can and does run short of money.

The federal government can afford anything. Many (most?) of the states are short of dollars.

Bottom line: The Republicans want less spent on the poor.

If Senate Republicans’ plan is enacted—a big “if” at this stage—federal Medic aid spending would drop from $4.6 trillion between 2018 and 2026 to about $3.9 trillion.

Right. There’s no magic in this. The GOP simply wants to cut benefits to the poor.  Period.

This reduction is hardly draconian.

It isn’t draconian unless you consider $700 billion to be a significant amount of money, and 22 million uninsured to be a health problem for America. 

However, given that liberals want health-care spending to go in only one direction—up—it’s hardly surprising that they’d fight this. But their claim that the cuts will kill Americans—about 208,500 over the next decade, per a Vox analysis—is pure sensationalism.

Let’s think about it.

Vox’s calculations are based on straightforward projections from a Congressional Budget Office report that estimates that scaling back ObamaCare spending would mean loss of insurance for some 22 million Americans. Vox also claims that every 830 people covered means one life saved, hence, presto, the GOP plan will mean killing 208,500 people.

The first problem with this analysis—apart from its chutzpah—is that it assumes that all insurance saves lives, even a substandard plan like Medicaid, which accounts for the vast majority of the people covered by ObamaCare. That is emphatically not the case.

According to the author, if fewer than 208,500 people die to young for lack of health care, there is no problem. We are not told how many additional deaths would be unacceptable to the Republicans.

As I have argued before, Medicaid is perhaps the civilized world’s worst program. It costs just as much as private plans—about $7,000 per patient—but produces worse outcomes, including higher mortality, than private coverage.

So given that one of ObamaCare’s dirty little secrets is that many of its Medicaid enrollees are folks kicked off their private plans due to the Medicaid expansion, the law may have actually cost—rather than saved—lives in this cohort.

This last claim goes under, “Figures don’t lie, but liars figure.” Two reasons:

  1. Medicaid doesn’t treat anything. Medicaid pays the bills. Period. It’s just like private insurance. In both cases, doctors do the treating. So if Medicaid patients have worse outcomes, it’s because . . .
  2. They are poorer. They lead harsher, more stressful, less healthful lives.  Poor people always have had “worse medical outcomes.”

Apparently, the author want you to believe that cutting Medicaid payments to doctors and hospitals somehow will improve the medical outcomes.

But what about the uninsured? Extending Medicaid to these people improved their health and diminished mortality, right? Wrong. Plenty of reputable studies suggest that this might not be the case:

A 2010 study by the University of Virginia of 893,658 patients in the university hospital found that individuals on Medicaid had the worst post-surgery survival rate of any patients, including the uninsured, after controlling for age, health status, income, and other relevant factors.

So there it is. By some unexplained miracle, being able to afford health care worsens “post-surgery survival rate.

This ridiculous nonsense is what the right wing wants you to believe.

A 2011 Journal of Heart and Lung study found that of 11,385 patients undergoing lung transplants, Medicaid patients were 8.1 percent less likely to survive than the uninsured after 10 years. They also found Medicaid insurance was a significant predictor of death within three years, after controlling for other clinical factors.

And then there is the famous 2013 Oregon study — the closest thing to a lab experiment in the real world — co-authored by ObamaCare architect Jonathan Gruber.

It contrasted uninsured patients who were randomly assigned to Medicaid with those who remained uninsured and found that the Medicaid patients did not have significantly better outcomes for diabetes, high cholesterol, high blood pressure, and even mortality.

Stop and think about it. If you had seen a selected study that showed having health care insurance worsened survival rates, what would you think about that study?

All Medicaid does is pay bills.  It doesn’t perform operations or provide post operative treatment. So, by what twisted logic would you come to the conclusion that being able to pay your doctor and hospital bills will kill you?

Or would you rightly conclude that other factors must be involved. Would you sensibly conclude that being able to pay your bills does not lead to an early death.

The author doesn’t have that sense, or hopes you don’t.

The main evidence to support Vox’s claim that Medicaid improves mortality rates comes from Massachusetts’ experience with universal coverage.

Vox claims ObamaCare emulates Massachusetts’ system, but as the Manhattan Institute’s Oren Cass points out, that comparison doesn’t fly: In contrast to ObamaCare, Massachusetts’ private plan component accounted for about 80 percent of coverage, while Medicaid comprised 20 percent at most.

So, the solution is to reduce coverage???

And even if Medicaid’s mortality outcomes were somewhat better for the uninsured, it would still not necessarily follow that extending the program would save lives on balance—or that eliminating the program would do the reverse.

Get it?

The Republicans claim increasing the number of people who can afford to pay doctors and hospitals doesn’t improve life span, and being unable to pay doctors and hospitals doesn’t reduce lifespan.

In short, doctors and hospitals don’t help people live longer, healthier lives. Do you believe that? It’s what the right wing wants you to believe.

In a world with finite resources, one also has to consider the opportunity costs or other ways of spending that may potentially save more lives.

What are the “finite resources”?  Money? The federal government can spend infinite money; the states cannot. So illogically, the right wing wants to take some the costs from the federal government and push them onto the states.

Or are we talking about doctors and hospitals as being “finite resources”? If so, the right wing seems to be saying that these resources should be allocated only to higher income people and not “wasted” on the poor.

Indeed, a 2016 study in the journal Health Affairs found that states that spent a smaller portion of their budgets on Medicaid and Medicare than on social programs such as housing, nutrition, and even public transportation, showed “significant” gains on a myriad of health factors, including mortality, over states that did the reverse.

It may be the case that these programs improved general quality of life and lowered stress levels, thus bettering baseline health and preventing people from falling prey to life-sapping illnesses in the first place.

And what holds true for state-level spending might be doubly true for individuals spending out-of-pocket.

It absolutely is true, which in part explains why the poor die younger. And the problem is that states and individuals, being monetarily non-sovereign, are limited in what they can spend. 

The main advantage of health insurance in general and Medicaid in particular is not really to prevent death but to protect against catastrophic illnesses that wipe out patients financially—in other words, to provide a psychic comfort.

What!!? The main benefit of health insurance is to provide “psychic comfort“? That’s the “main benefit”?? Yikes!

But patients are not willing to pay for any insurance product to receive that comfort, presumably because at some point, other uses of the money — like a car fitted with state-of-the-art safety features or a more expensive home in a low-crime neighborhood—can offer an even stronger sense of security.

As if the above were not clueless enough, the author now drifts into abject delusion:

As George Mason University economist Alex Tabarrok recently pointed out, in Massachusetts, buy-in for Medicaid-like programs fell precipitously when patients were asked to bear more of their cost.

Medicaid recipients value the program at about one-fifth its actual cost, research shows.

In other words, they’d buy only after an 80 percent discount.

By liberal logic, if they declined to buy in, they’d be courting death. But the calculus of health insurance is much more complicated than their simplistic arithmetic.

Uh, excuse me, but the reason people don’t buy in is because THEY ARE POOR.

Get it, right wing? Poor people do without insurance because they struggle to pay today’s bills.

When you, don’t have enough money to put food on the table, or to pay the rent, or to afford transportation to a low-paying job, insurance seems like a luxury.

The right wing wants to cut Medicaid payments to doctors and hospitals, and has invented some truly obnoxious excuses for this cruelty to the poor.

The bottom line is:

  1. Medicaid does not treat patients. It simply pays doctor and hospital bills. It is does nothing more than replace for-profit insurance companies. Thus, to claim that Medicaid “care” is better or worse than private insurance care or patient-paid care is utter nonsense.  Medicaid just issues checks.
  2. The notion that somehow, not being able to pay for health care has no effect on health, is among the more ridiculous claims by the right wing.
  3. The Federal government, being Monetarily Sovereign, cannot run short of dollars. The states, being monetarily non-sovereign, can and do run short of dollars. Thus it is nonsensical to shift costs from a government that can afford everything to governments that cannot.
  4. The only, ONLY, reason the Republicans make these outrageous claims is because they have been bribed by the rich to widen the financial, educational, and opportunity Gaps between the rich and the rest. Causing poor health widens all Gaps.

The solution to America’s health care problems is a completely federally funded, comprehensive, no deductible, Medicare for All plan (See the Ten Steps to Prosperity, below.)

To claim that cuts to federal spending somehow will improve America’s health is an unacceptable combination of ignorance and cruelty, a tangled logic, reaching for excuses to enrich the rich and impoverish the rest.

Rodger Malcolm Mitchell
Monetary Sovereignty


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.


4 thoughts on “Tangled logic and reaching for excuses: Medicaid version

  1. Roger,

    There’s a huge omission in this … Those of you who understand economics immediately will see the fallacy. A Monetarily Sovereign government never can run short of its own sovereign currency. A monetarily sovereign government can and does run short of money. Insert (non-)


    On Mon, Jul 17, 2017 at 6:02 PM, #Monetary Sovereignty – Mitchell wrote:

    > Rodger Malcolm Mitchell posted: “Twitter: @rodgermitchell; Search > #monetarysovereignty Facebook: Rodger Malcolm Mitchell > …………………………………………………… > …………………………………………………… > ………………………………………..” >


  2. Besides being cruel and clueless these right wing “experts” do not understand how or why insurance works. “Psychic comfort”? Seriously!?!?

    Insurance is a scheme in which a large number of people contribute a modest amount, usually periodically, to pay the large expenses of the few that would be difficult or impossible for them to afford. Medicaid isn’t a true insurance plan. It’s a medical expense payment plan with no contributions from the participants.

    Then there are the Congresscritters who believe people should be able to pay only for those benefits they plan to use. Or, the one who thinks those with pre-existing conditions shouldn’t be able to buy insurance because you can lose your auto insurance if you have a wreck.

    I would question every one of the studies referred to in that article as to the sponsor and researchers and their conflicts of interest.

    One small correction. In your 4th paragraph you make one of your favorite true statements about FICA falling to $0. However, FICA “funds” Medicare, not Medicaid. I have noticed that you mix up the two on infrequent occasions.

    Liked by 1 person

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