The dire problems of the Medicaid program reflect the lack of middle-class support for domestic programs for the poor.
The solution - becoming part of a universal health-care system in which the middle class has a stake - can become a model of how to regain the public confidence necessary for further social advances.Medicaid and Medicare were passed in 1965, at the height of President Lyndon B. Johnson's Great Society, to serve similar goals: The extension of health coverage to an underserved population, in Medicaid's case to poor people and for Medicare to all the elderly.
Medicare has largely fulfilled its promise. By providing coverage for virtually every person 65 years and over it has developed a strong and vocal middle-class constituency.
Because it is financed and administered centrally by the federal government, Medicare benefits, management and cost controls are uniform and stable. Younger workers have an interest in protecting Medicare for the day they and their parents will become beneficiaries.
Medicaid, on the other hand, is a disaster from virtually every perspective.
Its costs are out of control, imposing a rapidly growing burden on the federal deficit. For states, which partially finance it and must live under balanced-budget constraints, it is the fastest-growing expense.
Medicaid began as a $1.6 billion program in 1966, grew to $12.6 billion by 1975 and $52 billion in 1988.
By the next fiscal year it will have more than doubled in four years, to more than $105 billion.
Yet only about 4 million more people are served by Medicaid, now 26 million, than were served in 1975, and the percentage of poor covered by Medicaid has actually dropped from 63 percent to about 50 percent.
Physicians stay in Medicare but are dropping out of Medicaid because of lengthy delays in payment and ridiculously low payment schedules.
Medicaid pays physicians on the average only 69 percent of what Medicare would pay for common services, and in some states less than 40 percent.
Medicaid averages only 57 percent of the market rate of reimbursement for a pediatrician; not surprisingly, the proportion of pediatricians who refuse to serve Medicaid patients jumped from 26 percent in 1979 to 39 percent in 1989.
The poor people who are the supposed beneficiaries find a crazy quilt of eligibility standards depending on the state.
Because Medicaid eligibility is tied to each state's AFDC standards, which have failed to keep pace with inflation for some 20 years, 47 states failed to maintain inflation-adjusted benefit levels between 1970 and 1986.
There are many causes for Medicaid's miseries.
Its mixed nature, in which the federal government contributes from 50 percent to 80 percent of the states' costs but states set eligibility standards and administer their own programs, produces a lack of uniformity in eligibility and services and precludes efficiency or cost control.
But at the core of Medicaid's failures is the loss of middle-class support for expanded programs for the poor. In times of economic health, such as the 1960s, a middle-class consensus could be created for programs to benefit those below it on the social ladder.
But in times of stagnating income, such as the United States has experienced for almost 20 years, this consensus erodes.
The solution to Medicaid's problems is to tie it to middle-class health benefits. The time is ripe for combining Medicaid and Medicare into a universally accessible national health-care system.
There is dissatisfaction with the current system: 19 million working adults and 10 million children in families headed by workers have no health coverage; insured workers are worried their coverage will not follow them to a new job; and soaring health-care costs are eating into employers' profits.
By combining broadened access and more uniform eligibility for Medicaid beneficiaries to universal health coverage and strict cost controls, middle-class support can be obtained at the same time for improved benefits for the poor.
States should still play a role. They can pay for acute care, with the federal government taking over full costs for long-term care for the poor elderly.
For this reduced burden states can be given greater responsibility for financing programs that are now federally financed.
Medicaid will only fulfill its promise if it is consolidated into a broader health-care program.
Likewise, education, job training and other forms of federal aid must be more accessible if they are to garner the middle-class support needed to have a better-educated, efficient and healthy work force.