Alexandra Thayer

Public Finance
2/18/16

Medicaid The Good and the Bad

Trapped in Americas Safety Net One Familys Struggle by Andrea Louise Campbell is
about the story of Andreas sister-in-laws experience with Government Welfare Medicaid in
particular. The book tries to explain how Medicaid and other government welfare programs
could benefit the American people, but only if it is changed. The way they are currently the
programs keep people in poverty, doing more harm than good. She uses the following four main
points to get her prove her thesis. The first main point is our nations social protections are
divided into different tiers that provide vastly different experiences for recipients. Moreover,
with demographic and economic change, the means-tested tier that many believe is residual is in
fact becoming increasingly important. (xi) Her second main point is many of these meanstested programs dont give people a hand up, as policy makers profess, but actually have designs
that keep people trapped in poverty. (xi) The third main point is social protections for lowincome people vary tremendously from state to state, along every conceivable dimension, from
the profound (can your baby get health care?) to trivial (can you get cavities in your molars
filled?). It all depends on where you live. (xi) Her fourth and final main point is the many
shortcomings of American social policy leave people exposed to tremendous risk. Nowhere else
among advanced industrialized democracies can a single accident render you bankrupt, or
forever impoverished. Nowhere else can your fate differ so much from one locale to another
within the same country. The inadequacies of American social policy set people up for disaster,
even those who play by the rules and work hard. (xii) Her sister-in-laws story is not unusual
but is very tragic.

The evidence the author gives to support her first point of our nations social protections
are divided into different tiers that provide vastly different experiences for recipients. Moreover,
with demographic and economic change, the means-tested tier that many believe is residual is in
fact becoming increasingly important (xi) are: Medicare is the only option for some people, and
the way government welfare programs are set up make them hard to navigate. This main point
means that the tier of society that needs or relies on social welfare is growing due to economic
and demographic changes and thus is more important than ever for the government to focus its
attention on. The social welfare tier is divided even further into many different tiers, which
receive different benefits and have very different experiences.
Marcella, Andreas sister-in-law, can never get private health insurance. The first reason
being that Medicare is the only option for people who need long term personal care. There is no
social insurance LTC program [so] Medicare, the only public source of long-term services and
supports (53) would be the only option if someone did not want to pay for the cost of personal
care out of pocket, which is very expensive. Twelve hours of care per day, at $20 per hour,
would total $87,000 per year (53). Who can afford that? Probably only the top 1%. Now there is
private long-term care insurance which can be bought before becoming eligible for it, but it is
not worth the cost. It is very expense to buy and the services are very limited and time sensitive.
So the person who bought this would have worse care than a person on Medicare for more
money. Even if a person did have private long-term care insurance, it would be of little help in
the face of a lifelong disability: such policies typically have benefit periods of three to five years,
not the decades the nonelderly disabled need (54). So after the benefit period runs out they
would need to go on Medicare to continue to get the care they need. It makes more sense to just
go on Medicare from the start.

The second reason is that the way to get private healthcare makes it impossible for
Marcella to attain private health insurance. Marcella would first have to find a full time job that
offered private healthcare and second of all she would have to qualify. She is unable to buy it
herself and the changes are that she will not be able to get a job that offers health insurance. With
the extra care she needs she will probably be unable to meet the demands of a full time job. Even
if she could find a job that offered it and she could manage to hold the job it takes a year to
qualify. Since the job would bring her above the allowed income she would lose her Medicaid
eligibility. How would she get the care she needs during the waiting period? Also since she did
not work for enough years before becoming disabled she is not eligible for Social Security
disability. She could go back to work to qualify but it would take years to qualify. Also while she
tries to qualify she will lose her Medicaid eligibility due to the increase in income. This means
that she would go without the care she so desperately needs for a period of time which is not an
option for her.
Government welfare programs are extremely complicated to navigate. Medicare is a
collection of over one hundred programs each with its own income methodology and rules (28).
About two years after Marcellas accident, they learned that they were not enrolled in a different
program than they had been led to believe. The reason is that Dave, Marcellas husband and
Andreas brother, had decreased his salary to the income limit before Marcella was enrolled. As
they tried to figure out if Dave could increase his salary without changing programs, they were
met with many I dont knows and figure it out yourself. How can the Medicare officials not
know this information, when it is their job? They could not ask the state officials who actually
know the answer because county caseworkers are incredibly busy, particularly with Medicare
expansion under the Affordable Care Act (27). Since there are so many different programs and

people are not given the necessary information to figure out the system themselves, they are lost
and confused. Government officials need to go a better job of educating people on the options
and help them to navigate the complicated system since it is impossible to do so on your own.
The evidence the author gives to support her second point of many of these means-tested
programs dont give people a hand up, as policy makers profess, but actually have designs that
keep people trapped in poverty (xi) are: Marcella has and will never have financial security, and
Medicare has an asset test that ensures poverty. In other words, this main point means that even
though government is trying to give people a help up and claim that they do, the people in them
would disagree. Since means-tested programs are designed for the truly poor, their design in
reality keeps the people in them trapped in poverty.
The accident may have changed Marcellas life physically, but the government changed
her and her familys life psychologically but taking away their security their piece of mind.
Marcella needs lifelong care and in order to receive it she will have to remain on Medicaid for
the rest of her life. Because she is unable to save money for Logans college, Daves retirement
or even for emergencies without losing her eligibility and in turn her Medicaid benefits, Logan
will not attend college without a full-ride scholarship or taking out loans and Dave will not be
able to retire until he is eligible for social security. If Logan takes out loans or receives a full-ride
scholarship it might affect his mothers eligibility if he is still a dependent of his parents at the
time, since it would be considered income. So the likelihood is that he will not go to college,
which will limit his options for work. People without a college education usually earn less.
Logan will probably live in poverty for the rest of his life.
When Marcella got into the accident she had no health insurance. To be able to pay for
her hospital bills and the care she needed due to her injuries she had to go on Medicaid.

Medicaid is a government program run by states that gives health care to the poor. In California,
where Marcella lives, there is an asset and income test. Even though Dave earned only $3,250 a
month for their family of three they did not qualify. They also had more assets, not including
their house or one car which are excluded from this test, than they were allowed to have to be
considered poor enough to qualify. So to qualify they sold many of their assets and Dave cut
back on his hours so that his income was less than about $2,100 per month. Before the accident
they had been smart and had saved for their retirement in a 401k. However, to qualify they were
not allowed to have this as it counts against their asset test. After doing all this they were now
officially poor and qualified for Medicaid.
If Dave had not lowered his salary they would have still be eligible but only by giving
100% of what he earns above and beyond the $2,100 per month. This cost-sharing [Medicare
program] is a 100 percent tax on Daves earnings (16). By earning $2,100 per month Dave and
Marcella are at the 133 percent of the federal poverty level for a family of three (16). The asset
tests were put in place to ensure that people were receiving the help they need, and not getting a
free ride, but failed to recognize that it is making some people poor. If someone really needs to
care and clearly are not just getting a free ride, they still have to meet the asset tests even though
otherwise they would be eligible.
The evidence the author gives to support her third point of social protections for lowincome people vary tremendously from state to state, along every conceivable dimension, from
the profound (can your baby get health care?) to trivial (can you get cavities in your molars
filled?). It all depends on where you live. (xi) are: states, not the federal government, decide the
level of care a citizen will receive while on Medicare, and that government officials are thinking
in theoretical economics instead of seeing the real life problems. Just because something

theoretically should work does not mean that it does. Human nature is unpredictable and
complicated so cannot be put into a simple model.
America is the only developed country that allows different regions (states) to make
decide who gets help and how much they will receive. This makes it so that someone like
Marcella could qualify for a program in one state but not another. She could get a lot of help in
one state, a little help in another and none in yet another different state. Take California,
Nebraska, Tennessee and North Dakota. Logan is eligible for CHIPS in California, Nebraska and
Tennessee but not in North Dakota. In contrast North Dakota does not have an asset test limit but
California has an asset test of $3,150, Nebraska has an asset test of $6,025, and Tennessee has an
asset test of $2,000. California is the only state that does not offer food stamps to people on SSI.
Even SSI varies from state to state. California is highest at $190 per month, then Nebraska at $5
per month. Tennessee and North Dakota do not have a SSI supplement. Only Nebraska has EITC
but it is only 10%. California is also the offer paid family leave.
The biggest factor that would affect Marcella is the personal care services. California
offers 9.3 hours of care per day, Nebraska offers 5.7 hours per week, Tennessee offers no
personal care and North Dakota offers 10 hours per day. (87) Not only of these states is
consistently better than the others. One offers better benefits in one area but not in others. This
makes deciding which state is the best for your needs difficult. Should you move to a state that
offers more money or more hours of personal care or should you stay where your family is so
that they can help you?
This brings us to the fact that government officials do not see a problem with the
difference in benefits from state to state. Advocates of policy decentralization argue that state
control and interstate variation breed responsiveness, innovation, and efficiency (90). In other

words, the state officials will better know what their constituents will need than officials all the
way in Washington D.C. They also use the economic ideas that states will offer better services to
encourage people to stay in their state or move to their state. The idea behind it is that if the state
where they currently reside does not offer what they need they can just move to a state that does.
This in theory would be correct, but the real world is not so simple. Moving is expensive. Where
is someone supposed to get the money to move if they are not allowed to save or have more than
a few thousand dollars? If they moved they would lose the support network of family and
friends. Is the limited added benefits worth losing that? If your family is picking up all the extra
hours of personal care so that the person has 24/7 care would going from a state with only 5.7
hours a day from the state but almost 24 hours total with the help of friends and family to 10
hours a day without extra help from family and friends worth it (87)? Probably not.
The evidence the author gives to support her fourth, and final, point of the many
shortcomings of American social policy leave people exposed to tremendous risk. Nowhere else
among advanced industrialized democracies can a single accident render you bankrupt, or
forever impoverished. Nowhere else can your fate differ so much from one locale to another
within the same country. The inadequacies of American social policy set people up for disaster,
even those who play by the rules and work hard (xii) is that national health care is a thing in
every developed country with the exception of America. As previously mentioned each state in
America offers vastly different coverage. This is not the case in other developed countries,
because the federal government sets the coverage. When the federal government sets the
standards it applies to all citizens and as such does not vary among different states or regions.
The way the American public health care is set up citizens are worse off than in any other

developed country. American public health care resembles that of emerging or third-world
countries.
America is the only developed country that does not have national health care. Germany
and the Netherlands provide universal coverage of both institutional and home-based personal
care to all care-dependent individuals (116). While most other developed countries offer two
different options: means-tested and universal services. Some healthcare services are universal for
all citizens while others are only for those who are poor. America only has means-tested services.
The universal healthcare in these countries is financed through general tax revenues, instead of
taking away the assets and income that are above and beyond the allowed amount. Marcella
would be better off in any other developed country. She would either be automatically eligible
for the services she needs in the universal systems and would not have to spend down her assets
to the poverty line. In a mixed system she would have access to more care and depending on the
country may or may not have to spend down her assets but would still be better off than in
America.
Andrea fails to consider the effects Medicare has on people with private healthcare when
she wrote the book. Andrea mentions that the stigma that comes with Medicare means that
people do not want to go on it even if they are eligible. If they go on Medicare, they will benefit
from the program. Their children will have a roof over their head, food at every meal, and health
care so they can be healthy. By denying their children the benefits of Medicare, so that they will
not be subjected to the stigma, they are not only causing their children harm, but opening their
children up to other stigma and bullying. Even the adults benefit from going on Medicare. The
extra food, the roof over your head, the doctor visits are in my opinion worth people looking at
you funny when you receive them. If people do not go to the doctor for yearly checkups and get

the vaccines they need, they could end up very sick, or in extreme cases dead. To go to the
emergency room can be thousands of dollars and has caused a fair number of people to go
bankrupt. So if a person is already poor enough to be eligible for Medicare, and they have to
make a trip to the emergency room, they are going to go bankrupt and now they will be the
poorest of the poor. Medicare helps to stop this from happening.
However, Andrea fails to consider the effects the people who do not go on Medicare who
are eligible to have on the people with private healthcare. If people cannot pay for their trips to
the emergency room, their costs are then transferred to the other patients in the form of price
increases. Americans need to figure out a way to get more people who are eligible for Medicare
to actually go on it. This would benefit not only the people who are eligible but all Americans.