Medicaid and paperwork

When you buy a typical product, the vendor does its best to make the purchasing process as easy as possible.  There is a reason for this, clearly; they want your business.  State and federal governments, however, have no such incentive.  In fact, oftentimes reducing the number of people using government services saves money.

Thus, it should come as no surprise that the government uses paperwork as a barrier to access health insurance.  The New York Times reports:

In 2003, Washington State was facing a budget crisis and wanted to reduce spending on Medicaid. Instead of requiring people to establish their eligibility annually, the legislature began requiring them to do so twice a year, and added some paperwork. It worked: Enrollment in the health insurance program fell by more than 40,000 children in a year.

A recent decision by President Trump could exacerbate access to health insurance among poor individuals.

The Trump administration’s decision to approve a first-of-its-kind work requirement for Kentucky’s Medicaid program last week has inspired concern that the program will leave behind Medicaid beneficiaries who are unable to find or keep work. But a large body of social science suggests that the mere requirement of documenting work hours is likely to cause many eligible people to lose coverage, too.

“Without being tremendously well organized, it can be easy to fail,” said Donald Moynihan, a professor of public affairs at the University of Wisconsin-Madison, who is writing a book on the effects of administrative burdens.

Clearly providing health insurance is costly.  States that want to cut costs could either (i) reduce eligibility, (ii) make it more difficult to access insurance through paperwork, (iii) reduce benefits among the insured, or (iv) reduce reimbursement for providers of the benefits.  Options (i) and (ii) are functionally similar as both reduce coverage. However, option (ii) is less efficient due to the wasted effort on paperwork; however, (ii) could be more efficient if only people who highly value insurance go through the trouble of doing the paperwork.  Option (iii) does not decrease the number covered, but provides lower quality coverage for these people.  Option (iv) also does not decrease coverage but lowers the quality of insurance provided; as fewer doctors accept the lower reimbursement, accessing care becomes more difficult and thus, de facto, quality of care falls.

What level of public funding on health insurance is a continual debate.  But if lower spending is decided, tough choices that involved fewer people receiving care or people receiving lower quality care (or a combination of the two) would be required.

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