Why Paul Ryan's half-baked poverty report is genuinely problematic for hospitals

Whenever matinee idol politician Rep. Paul Ryan (R-Wis.) makes a public pronouncement, Albert Brooks' description of the devil from the 1987 movie "Broadcast News" filters through my mind: "He will be attractive! He'll be nice and helpful. He'll get a job where he influences a great God-fearing nation. He'll never do an evil thing! He'll never deliberately hurt a living thing ... he will just bit by little bit lower our standards where they are important."

Ryan, when he isn't busy trying to repeal the Affordable Care Act, chairs the House Finance Committee. When that body released its report, "The War on Poverty: 50 Years Later," earlier this month, it became clear that the devil was in the details of this 205-page missive, a bulwark of half-truths stuffed with so many strawmen that much of the Midwest is probably wondering who made off with its hay.

The report is particularly dangerous for hospital finances and here is why: It systematically attacks Medicaid, one of the programs that stemmed from the War on Poverty (quite conveniently, the report barely mentions Medicare).

Ryan's report concluded that the War on Poverty was an abject failure and the reason why the poor are shiftless and lazy, and therefore, the government should remove the safety net from under them for their own good.

The report strives for authenticity by referring to a bunch of studies authored by actual academics, which is why it contains 681 footnotes, or nearly 3.5 for every page of text. And appearance is all that matters. Ryan's constituency is older and often obstinately impervious to facts. Therefore, if that nice young, attractive, God-fearing man says the government should scrap Medicaid and he has 681 footnotes to prove it, it must be so!

Anyone who has watched the wonderful film "Nebraska" will see that one of the main characters, the aging Woody Grant, is a core audience member for this study. Woody refuses to believe that the junk mailer he received saying he won $1 million isn't true. And, because of health issues, he winds up in the hospital twice during the running time of the movie. That the lawmakers of the three states where the film's action takes place--Nebraska, Montana and South Dakota--have all refused to expand Medicaid eligibility under the auspices of the Affordable Care Act suggests that is where Woody Grant votes as well.

Indeed, half the states in the U.S. have refused to expand Medicaid. Should the refusenik states win this political tug-of-war, not only could the government roll back Medicaid expansion, it may also cut the core of the program as well.

Many journalists work to expose the suspicious scholarship buttressing the Ryan study. However, what hospitals need is a guide to hand out or mail to the Woody Grants in their communities who might come in the door on the dime of their beloved Medicare, but then wonder aloud why all those poor people are loafing around the waiting room.

Here are some talking points that I suggest belong in such a guide:

The Ryan Report assertion: Citing a 2008 study by Gene Steuerle of the Urban Institute, it concludes that "the complex web of federal programs and sudden drop-off in benefits create extraordinarily high effective marginal tax rates, which reduce the incentive to work."

The Ryan Report omission: Steuerle observed that "while bringing down marginal tax rates for high earners has been a goal of supply-side adherents for many years...not enough focus has been given to effective marginal rates facing lower income groups."

The Ryan Report assertion: There are not enough primary care physicians participating in Medicaid. The Ryan report cites National Bureau of Economic Research scholar Sandra Decker's 2013 study published in Health Affairs.

The Ryan Report omission: The report also mentioned a 2012 Decker study that also appeared in Health Affairs, but completely ignored its crux: That the rising fees primary care physicians receive under the ACA could help increase the level of participating clinicians. The entire study's name: "In 2011 Nearly One-Third of Physicians Accepted New Medicaid Patients in 2011-12, But Rising Fees May Help."

The Ryan Report assertion: Expanding the Medicaid program to serve pregnant women and children (S-CHIP) encouraged more care in public hospitals or clinics, which many industry experts claim is less efficient than in doctors' offices. It cited a 1998 study by Laurence Baker and Anne Royalty of Stanford University.

The Ryan Report omission: Baker and Royalty's study also "points to the availability of public physicians as a critical factor in the success of expansions of public insurance in producing better health outcomes. If public settings are to be the main source of care for newly eligible populations, their availability is crucial."

The Ryan Report assertion: A Medicaid managed care plan in California led to poor birth outcomes for enrolled pregnant mothers. The report cited an August 2007 study published in The Review of Economics and Statistics.

The Ryan Report omission: It completely ignored the conclusion of the study's authors--that the health plans "are not responsible for paying the costs of high-cost newborns and so have little financial incentive to improve birth outcomes. Hence, our results demonstrate the importance of countering the tendency of managed care plans to ration care by having them internalize the longer-term costs of reductions in utilization."

These half-baked baguettes appear in just the first half of the report. The rest could fill an entire half-bakery.

May I suggest that hospitals send out  brochures to debunk the report's assertions and raise the standard of discourse on Medicaid as quickly as possible, otherwise they may have to contemplate yet another movie: "Shake Hands With The Devil." -Ron (@FierceHealth)  

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