Millions get by on $2 a day. Can Medicaid help?

EDITOR’S NOTE: healthinsurance.org’s Curbside Consult is a periodic informal dialogue with medical and health policy experts about pressing issues of the day.

H. Luke Shaefer – co-author of the new book, “$2.00 a Day: Living on Almost Nothing in America” – and Curbside Consult host Harold Pollack discuss the book’s focus on poverty in America and consider the role that Medicaid might play in offering relief.

In this edition, I’m talking with the University of Michigan’s H. Luke Shaefer, co-author of the important new book, $2.00 a Day: Living on Almost Nothing in America. Co-written with the distinguished sociologist Kathryn Edin, the book includes poignant interviews with many families trying to survive on virtually no cash income in America in 2015.

Edin and Shaefer document that over a million U.S. households – including about 3 million children – live in extreme poverty in which their cash incomes are less than $2 per person per day. Many of the people affected are workers – or are trying to work – within an unforgiving economy that offers meager wages and hours to those stuck at the very bottom of the blue-collar economy.

In Part 1, Shaefer and I talk about how families survive on such meager incomes. What are the accompanying costs to adults and children of doing without basic necessities, of moving from shelter to shelter, of precariously doubling-up with friends and relatives, of having to sell blood plasma, or of becoming dependent on a dubious male partner who offers one’s children a couch to sleep on?

Twenty years ago, traditional cash welfare was highly flawed, but at least offered some floor for poor parents and kids with no other source of support. What happened to these programs after welfare reform? In Part 2, I ask Shaefer whether Medicaid is helping these poorest of the poor – and whether Medicaid expansion might offer hope for the poorest states. Since I write frequently for this blog about Medicaid, we’ve led with that segment and included a transcript of that Medicaid-specific conversation below, but for a fuller discussion of the book and its findings, be sure to watch Part 1.

Writing about this book in the New York Times, William Julius Wilson concludes:

This essential book is a call to action, and one hopes it will accomplish what ­Michael Harrington’s “The Other America” achieved in the 1960s — arousing both the nation’s consciousness and conscience about the plight of a growing number of invisible citizens. The rise of such absolute poverty since the passage of welfare reform belies all the categorical talk about opportunity and the American dream.

It’s hard to imagine a more important or poignant subject this campaign season. It’s a special pleasure to hold this conversation, since I was one of Professor Shaefer’s graduate school mentors.

Transcript of Medicaid discussion:

Harold Pollack: Hey Luke, this is Harold Pollack at healthinsurance.org doing a Curbside Consult with Luke Shaefer and this is actually sort of a little interlude in the interview that we did. We were talking about your book if you want to hold up your book …

Luke Shaefer: With pleasure …

Harold: … $2 a Day, which is just a rocking best-seller by academic standards at the moment. It’s really had a big impact and we were talking about how you’ve been doing briefings in Washington DC at the Center on Budget & Policy Priorities and with Senate folks and have some great excerpts planned which I won’t spoil but a lot of media outlets that are showing interest in the book. Why do you think by the way it’s attracted such interest?

Luke: I think that’s a good question. I mean I’ve been interested to see what people picked up on and I think of all the articles that have gotten play perhaps the one that has come back to mean more the most was an excerpt in The Atlantic … it really focused on Jessica Compton … one of the moms who tries to donate plasma twice a week. It’s the only source of income that her family has.

That seemed to have a very much a visceral impact on people I think so … so you know what we really try to do was tell a big-picture story about what’s going on in the low-wage labor market and what’s going on with our government programs for the poor. And a big piece of that is Medicaid, so I’m excited to talk about that. But to do it through stories and to do it through people’s lives and I think to some just degree we were successful in sort of capturing people’s attention and bringing some of it home, so I’m really happy about that.

The impact of Medicaid

Harold: Now let’s talk about Medicaid because Medicaid is the main tool in some ways that we’ve used certainly to provide healthcare to poor people and I should say that you and I actually … our first work together was on Medicaid and on the impact of Medicaid and CHIP for kids … and maybe we should just start by reviewing since you’re the first author … we should at least mention that I’m sure that everyone that’s listening to this is a regular subscriber to Health Services Research and some of the other journals …

[cross talk]

Harold: But why is CHIP so important and Medicaid so important for low-income kids?

Luke: Well, we note this in our book and it was really the genesis of this paper of one of the great things we did in the 1990s was pass SCHIP in 1997 … so sort of on the heels of the ‘96 welfare reform. And I think going along with this trend towards trying to provide supports to low-income working families.

So we did this expansion of SCHIP and allowed states some flexibility in just providing coverage to poor and low-income kids of the income distribution and states really responded. And I think all states have SCHIP eligibility thresholds that reach 200 percent or twice the property rate … some go up to 300 and even a little bit more than that … and it really caused a shock downwards in the number of uninsured kids.

And there was lot of concern at the time about crowdout … how much were these kids that would’ve had private insurance that was just shifting over to public insurance. And you and I, as I recall, wanted to try to further develop the conversation about what the impacts of SCHIP were and we were thinking in particular public health insurance tends to be more comprehensive and costs families less … you know, less in premiums … less on co-pays …

And so you might see this big financial effect of reducing what people were paying themselves and there was some methodological challenges of selection into the program and we particularly saw that kids who were in worse health tended to move from private to public and we dealt with that in using some instrumental variables that were well documented in the literature.

And we found this quite significant impact on reducing medical costs for families of a switch from private to public and I think since then that’s been substantiated in some experimental results that we had out of Oregon of course.

Harold: And we’ll get to Oregon in a minute but I think just to build on what you said for a moment … both the good and bad about what we found … good in terms of sick kids in particular really benefited from going on to CHIP and there was definitely more of a movement of kids with health issues into the program than there was among other kids and at one point we calculated it’s worth something like $1,500 per family that was provided when you think about the two-dollar-a-day standard in your book that’s a substantial amount.

Now one of the challenges that really bring out the importance of the Medicaid expansion is implicit in that paper which is as we expanded CHIP there are more and more families where adults would go without insurance and they’d be like “OK, I can get my kid on CHIP. I can’t really afford insurance for myself …” and there was a lot of that in our data and there’s actually a lot of that in your book … a lot of the kids that you talk about they’re pretty well insured as you describe it but not at all true and for the adults.

Sobering personal stories

Luke: Yep that’s absolutely what we found in fact I might say that Medicaid did the best of blanket covering people … for kids and then for the adults, we would see a lot that weren’t covered and we had a few experiences … which I think we’re not that uncommon … where often, when a state hits a budget crunch, it’s adult Medicaid services that are the first to go … so like adult dental coverage in Medicaid.

We saw examples where we had Jennifer Hernandez in Chicago … has a long work history … super hard worker. Her gums were in just awful condition. And I found it a little hard look at her I’m embarrassed to say. We … I actually had a trained social worker call around the city of Chicago just trying to find a free dental clinic that would give her free care. She has no money and there was not a … we couldn’t find a place … that’s not to say doesn’t exist but trained social worker couldn’t find it and we looked into it the adult Medicaid dental insurance had just been cut like a month before we met her and I think that’s indicative … you know so you had on coverage not on coverage for the adults as well as sort of changes in what that means at least around the edges.

Harold: Now how do people in states that just didn’t expand Medicaid … I mean you went down to the Mississippi Delta and actually I guess in your Tennessee work Medicaid did not expand … was it palpable that there was a real difference there for families because there was no Medicaid expansion or is that something that’s a little early to see? What you see as far as the Medicaid issue goes.

Luke: Well I think we saw it so like one interesting story was Paul Heckwelder and his wife in Cleveland … they were in one of these situations where all of their kids were grown. They had like 20 people living in their two-bedroom house but she was terribly sick and had no health insurance so I think she was maybe 59, 60 … she was in this sort of gap. So all of her kids are grown she wasn’t eligible and she had a stack of medical bills that was I mean I think we took a picture of it like it was this high.

And that should be solved in Ohio I mean at least there’s something we can get her on now with the expansion right and we saw that in Chicago too … I think the adults were more likely but you know we were mostly with adults with kids but I think everyone we talked to in Appalachia … the parents were not covered and in the Mississippi Delta I think I mean we didn’t exactly look at this but you know another problem in the Mississippi Delta was just plain access.

You know, there was a county one of the counties in the area we were in … there’s no ambulance service, we were told by multiple people, so people can’t even get to the hospital.

Medicaid’s role in the ‘ecosystem’

Harold: You know one of the points that that raises is that there’s sort of two ways that Medicaid expansion helps … it helps the individual secure access but it also provides the financial foundation for the whole ecosystem of care and so one of the things that so many of the severely poor people that you’re interviewing … even if they’re in a state that has Medicaid expansion … if they’re undocumented or if they have life issues they may be turning to things like the emergency department and one of the things that has been really strong since health reform is that uncompensated care costs have just plummeted in the expansion states and they haven’t budged in the non-expansion states at all.

And if you look at all the major private for-profit hospitals in their financial reports, they’ve all emphasized this and in fact their stock all spikes whenever there was a … both Supreme Court decisions that were favorable to the Affordable Care Act … their stock spiked the moment that there was favorable news. And so if you want to pay for an ambulance … even if an individual is uninsured … for that ride if there’s sort of seven other people that you can get paid for, then you can actually have an ambulance.

Luke: It’s almost like an insurance pool for the providers. I mean it reduces the risk, I guess, I’m not sure how to say that.

Harold: And there’s also economies of scale that make it easy for … you know if there’s big fixed costs, Medicaid can help pay for those and then it’s a lot easier to help that extra patient who’s got an issue that’s hard to get paid for and you go down to the Mississippi Delta and there’s just no oxygen for that medical ecosystem. It’s a really tough situation and it’s a really tough situation for the local economy too because probably some of the people you interviewed could have driven that ambulance or could have done something.

Results since reform implementation

Luke: Yep. Exactly. Have we seen … so we’ve seen reductions in uncompensated care … have we seen any changes in the cost curve, Harold? Do we think it’s going to result in lowering costs overall or does it still sort of remain to be seen?

Harold: I think it remains to be seen. The remarkable thing is that it certainly has not increased costs. I mean, Medicaid is so cheap, compared to other forms of insurance. The irony is all of the political debate is about people who are really not that expensive to take care of and … on average … I mean some of the people you interviewed had really serious health problems and have to be dealt with. A lot of those people … they have pretty basic needs and overall, they’re not that expensive.

So what’s happened in terms of the cost curve is that the overall cost curve has been bent down in a favorable direction and there are parts of ACA that have helped with that. I think it’s mostly helped in Medicare and some other parts of the system. But the Medicaid expansion has been quite economical and I think its’ been … I think there have been some services that there’s more intense needs for and some of it comes up in your book … a lot of people using mental and behavioral health services.

There’s just a lot of mental health need among some of the new enrollees so we have to deal with that. We haven’t figured out how to get some of the systems like substance abuse treatment that have existed off on their own in a silo … they have to figure out how to work with Medicaid. And some of that’s very nitty gritty stuff [crosstalk] does our computer system bill Medicaid and all that kind of stuff.

So the jury is still out about the blocking and tackling of it but one thing that we do know is that the cost of it has … you know the forcecast for costs going out are actually lower than they were predicted to be in 2010 for Medicaid even taking into account that not every state’s expanded and all that kind of stuff.

You also mentioned the Oregon experiment which speaks to how Medicaid helps but maybe doesn’t help enough in peoples lives. I wonder if you wanted to pick up on that.

The Oregon experiment

Luke: Well yeah so the Oregon Medicaid experiment was sort of a randomized trial of adults who were not eligible in Oregon off of a very long waiting list and my interpretation … and you’re more expert than this … we randomized and we followed health outcomes for a couple of years and financial outcomes and mental health outcomes and the physical health outcomes, I think, were maybe a disappointment to people that there wasn’t a lot of impact in things that you know some of our best people thought we should be able to impact.

The financial outcomes, I think, were pretty good … right … that we actually saw reduced out-of-pocket expenditures maybe at levels that were in the similar scale of what we found in our paper and actually there was some really positive mental health results … right … that we reduced sort of anxiety and depression. And as I’ve been meeting with families, I think, you know in terms of the physical health, there’s just this … it seems to me like there’s this compounding effect for people at the very bottom that you’re talking about repeated exposure to stress and to trauma.

And I don’t know if I mentioned in our last segment but I got into the literature on toxic stress and was … it was just really quite striking as I’d read the papers and then go out into the field and I’d feel like I could see the manifestations of toxic stress exactly as they sort of had been written about in the paper. And I think it just takes a long time to, I think, impact health outcomes when you’re dealing with that situation and frankly I think it’s probably too much to ask the health care system to do on its own … you know the problems that are really impacting the health and I know you’ve written on this … are really outside of the domain.

If you’ve got these unstable living arrangements … unstable jobs … it’s very hard to keep continuity of care … right … among physicians and you know … if you’re just constantly dealing with the stress of “where’s my … where’s the money gonna come to keep on going for another day” … you know … I’m just not sure we can sort of expect that providing health insurance to solve sort of all the health problems that people face.

Harold: I think that’s right although I also think … I tend to think the Oregon one … that it was more helpful than a lot of people have taken from it in a couple of ways. One is some of the basic issues people worry about at Medicaid turned out to be much less of an issue. There’s this stereotype that if you have Medicaid you can’t get in to see your doctor … that it’s basically like a fake insurance card …

And people were very happy with the coverage that they got. People get into … all the data we have are when people get onto Medicaid, they get appointments … you know, they’re just as happy with their coverage as basically they would be under the kind of private insurance they’re likely to get if they say “Are they as happy with Medicaid as they might be with insurance that Harold Pollock gets that cost $20,000 a year for my family?” Probably not. There’s a difference there but that’s not what that’s not what they’re going to be getting … and also some of the expectations … the Oregon experiment was pretty short and there weren’t that many people with serious health problems.

So we really have no idea based … I think we learned from that experiment if you’re expecting a really quick benefit on something like high blood pressure, you’re probably not going to see it right away.

Luke: Yeah, it’s going to take a while … and was it a pretty low take-up, Harold, in terms of the take-up group?

Harold: Yeah. It was pretty low take-up for a variety of reasons just having to do with the mechanics of running an experiment. It was beautifully done experiment that took all of that stuff into account but what that led to was it meant that you would’ve had to have seen a pretty dramatic effect in a pretty small number of people in order for the experiment to actually see that there’s benefit.

So if we for example looked at people with diabetes … were we lowering their blood sugar level? Really, they just didn’t have the ability to see that although I think that I was disappointed that we didn’t see more benefit for some things like blood pressure and also things like smoking … I think this is where gets into the whole psychosocial dimension. All your folks were … a lot of your folks were smoking … and we don’t see any real benefits from improving people’s health behaviors and I think that that’s a big … that’s one area where health insurance just seems to be less powerful than we’d like it to be.

So if you look at things like obesity, diet, smoking … you know … you really don’t see any concrete evidence that we’re getting people to live healthier lives although we do see that we’re managing people’s health conditions better. So it’s both … so it’s a half-full half-empty thing: people don’t have to worry about losing their house because they’re going to get sick which is fantastic …

Luke: That’s a good outcome …

Harold: Yeah and you in your case people will be less likely to be homeless or chased around by bill collectors … But we’ve got some work to do on the health side. So I know …

Hope for the system?

Luke: You’re probably watching the new health insurance numbers that came out a couple of days ago and I thought it’s striking that sharp reduction in the number of uninsured. I think we went from 13-something percent to 10.1 percent. I mean that’s that’s a success …

Harold: Yeah out it’s kind of amazing especially since it’s been a rocky road; it’s been a big challenge, but I think you could argue that the past five years have been the best five years in the history of health policy if you look at … costs have really come under control to a much greater degree … The quality of healthcare has gone up a lot … More people are insured and there’s been continued progress that I don’t think people fully appreciate. Death rates have really been dropping consistently over like the past 20 years and it’s been continuing.

If you look at age-adjusted death rates in America it’s just remarkable … we just continue to … largely because cardiovascular diseases … we’re doing a better job on … smoking is down … Americans are really living longer and the health system is genuinely getting better. Now it shouldn’t cost $3 trillion to get the kind of outcomes we’re seeing but I’m thinking, you know, if we can have another five years that looks like the last five years in terms of progress … especially if we can get a couple of states like Texas and Florida and Mississippi to come into the Medicaid expansion … we’re going to have a healthier country.

And it’s a little hard to see that now because we’re sitting here debating Donald Trump-level of policy discourse, but it’s there and I hope that … I think your book actually is going to contribute to this because it highlights the problems that we’re not dealing with well at the very bottom where we really do have a lot of public health problems we could deal with.

And so congratulations on its success but also I’m rooting for your book success partly because I’m rooting for you but partly because I just think that it’s highlighting these issues that we just we need to get to and that we have the capacity now with the Medicaid expansion and other tools to really go after in a better way.

Luke: Thanks, Harold.

Harold: Ithink this is good place to to stop this portion of the interview but I’m very gratified that you’re getting the kind of attention that you’re getting because I think there are a lot of those people living on $2 a day could use a little exposure and your book does that beautifully so congratulations on that.

Luke: I appreciate that … and in this interview I feel like I learned more from you then you possibly learned from me so … It’s always good to talk to you.

Harold: Well, thank you. You paid me tuition so it seems like it should go that way. Great to talk to you.

Luke: All right. Take care.

Harold Pollack is Helen Ross Professor of Social Service Administration, and Faculty Chair of the Center for Health Administration Studies at the University of Chicago. He has written about health policy for the Washington Post, New York Times, New Republic,  The Huffington Post and many other publications. His essay, “Lessons from an Emergency Room Nightmare,” was selected for The Best American Medical Writing, 2009.