Another Not-So-Public Program: US Medicaid and Adaptive Accumulation

Among advanced industrial countries, the United States is conventionally understood as a benchmark for state-society relations under neoliberal capitalism, whereby minimal state involvement is the default preference. Nowhere does this reality seem more apparent than in the politics of US healthcare, where the government has mandated, over the last decade, expanded access to a predominantly privatized health insurance system through the Affordable Care Act (ACA). To counteract the unequal access of private healthcare, the ACA originally mandated: 1) the creation of state-based healthcare exchanges, with an eye to affordable, fair healthcare for those without employer-based plans, and 2) the expansion of Medicaid eligibility for those earning up to 133 percent of the Federal poverty line. Medicaid, a federally-subsidized, state-administered program for those in poverty, has met with the most state-level resistance, often demonized as another unnecessary and intrusive government intervention. Indeed, following a Supreme Court decision in 2012 that struck down this Federal mandate, 12 US states continue to decline participation in the ACA expansion, and a range of states have sought waivers that allow deviation from federal Medicaid guidelines. In the context of grossly unequal access to healthcare in the US (30 million still uninsured and up to 44 million under-insured), as well as the devastating effects of the COVID pandemic across marginalized populations, scholarly explorations into public healthcare programs like Medicaid take on a special urgency. This paper will explore the unique and peculiar nature of Medicaid as a ‘public’ policy objective within the terrain of US political economy. Medicaid makes up some 18 percent of overall US healthcare expenditures, a figure that has grown by 10 percentage points since the Reagan administration. However, any cursory review of state Medicaid calls into question its purely public nature. In fact, the strong majority of states which have entered the ACA’s Medicaid expansion also utilize alternative delivery program, increasingly squeezing out public, single-payer, fee-for-service government medical insurance. Private, for-profit managed care organizations (MCOs), as mediating agencies, have grown from a minority position in state plans to almost three-quarters of all Medicaid delivery in 38 states, plus DC. Arguably, MCOs have proliferated across state programs to such an extent that beneficiaries’ recognition of the public origin of their health funding has been largely obscured. In this sense, Medicaid appears to fit the model of what I have elsewhere referred to as ‘adaptive accumulation’, wherein private actors execute public state functions under pre-arranged, publicly-funded payment structures. They do so not only with an eye to stable, publicly-derived profit streams, but also under the legitimizing guise of public duty. For their part, state governments recognize the opportunity not only to stabilize budgets, which are often highly constrained at the state level, but also actively to reorient government function, tapping into a large swath of political culture that sees governmental activity as inherently inefficient and wasteful. Ultimately, Medicaid appears as one more instance in which the US version of neoliberalism enjoins the use of corporate America, but also paradoxically more—not less—government intervention.