EDITORIAL: Medicaid expansion hype meeting funding reality

Aug. 04--Those who support expansion of Oklahoma'sMedicaid program often claim it will increase health care access and treatment. In reality, Medicaid's financial problems are already leading officials to ration health care treatment nationally, even if this means that people are denied prompt access to life-saving cures.

Consider Gilead Sciences' revolutionary new treatment for hepatitis C, Solvaldi. The 12-week treatment has been shown to cure the virus in 90 percent of patients, if not more. Given that hep C, a blood-borne disease of the liver, kills 80,000 people annually, this is big news.

But the treatment costs $84,000. That's a bargain compared to the lifetime costs of treating a chronic disease. A liver transplant alone costs around $580,000. But hep C is more common among low-income citizens who comprise Medicaid enrollees. The upfront cost of Solvaldi has many Medicaid programs balking. To control costs, Medicaid programs in California, New York, Colorado, Pennsylvania and Oregon have already announced that they'll limit use of the treatment.

In short, for budgetary reasons a life-saving, life-altering cure is being rationed. "Free" health care isn't really free! Who would have guessed?

To provide Solvaldi to every enrollee infected with hep C, Oregon officials estimated that they'd have to spend $360 million, which nearly equals the $377 million they spent on all prescription drugs for about 600,000 members in 2013.

The human impact of such decisions is immense. Diana Sylvestre, who founded an Oakland clinic treating hepatitis C patients, offered a blunt assessment to The New York Times: "The new policies are going to further restrict access to care for thousands of patients on the basis of no evidence."

In 2010, Oklahoma's acute hepatitis C incidence rate was more than three times higher than the U.S. average. Legislation approved by lawmakers this year has since allowed the Oklahoma Health Care Authority to place Solvaldi on the list of drugs requiring prior authorization before Medicaid will cover them. Simply having hepatitis C won't be enough justification for the state to pay for this treatment.

The controversy over cost has led some to demonize Gilead Sciences for "price gouging." Critics are demanding price controls. But the cost of developing miracle cures is substantial. If you take away the ability to recoup those expenses and make a profit (including a healthy profit), you also take away the incentive for people to develop miracle cures at all.

In Oklahoma, lawmakers already struggle to cover the expenses of the existing Medicaid program. Federal funding for Oklahoma'sMedicaid program was cut by $66 million this fiscal year, forcing lawmakers to divert millions away from schools, roads and public safety programs to maintain Medicaid. And the program still increased co-payments to make up part of the shortfall.

Such financial challenges won't diminish if you increase the number of people enrolled in the program through expansion, even if lawmakers refuse to pay market rates for miracle cures.

Cost-benefit analysis and associated trade-offs are inevitable in health care. But when consumers obtain insurance through the private market, they can largely determine for themselves which trade-offs they find acceptable. The Solvaldi example shows that not only do those getting coverage through government programs like Medicaid continue to face barriers to health care treatment, but also a future in which others make major medical decisions for them.

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