Should one give the same help to fewer people or less help to the same number of people? That is the tradeoff faced when government attempts to meet some social need with a limited budget and one Minnesota Gov. Tim Pawlenty addressed squarely in his budget message last week. The governor proposed the first option — aid to fewer people. The ball is now in the Legislature’s court. Regardless of how that body acts, the issue raises questions of fairness that are not unique to Minnesota or to health care.
Health care costs undoubtedly are rising rapidly. New technology and an aging population are just two responsible factors. Minnesota spends considerable amounts on care for low-income individuals under Medicaid, MinnesotaCare and other programs. As the governor noted, if rates of increase continue, health care eventually would dominate the entire state budget.
Not everyone gets state-paid care, of course. Each of the different state-funded programs has standards specifying who is eligible including what economists call a “means test.” How low must one’s income be to qualify for the program? This cut-off varies with household size and status and between different programs.
When health costs increase, the state can respond in different ways. It could, of course, raise taxes or cut spending on other programs. The governor and House have put these off the table. Even if they had not, ongoing rates of cost increases are rapidly pushing budget demands to levels where most support for increased taxes would dwindle.
We thus face the question posed at the beginning: Is it preferable to help a larger number of people in a limited way or give a smaller group more extensive health?
When we face this question in other programs, the decision frequently is to give fewer people substantial help rather than giving larger numbers reduced assistance.
This happens in the federal Women, Infants and Children food assistance program. Unlike Food Stamps, WIC is not an entitlement with a statutory commitment to provide stated levels of help to everyone who qualifies. Congress has never funded WIC at a level to provide benefits to all eligible applicants. In many states, program administrators maintain waiting lists to determine who gets added when.
The same happens with the federal Section 8 housing assistance. Appropriations are sufficient to cover only a fraction of eligible households. Program administrators cannot cut benefit levels so as to include more applicants. They would rather maintain waiting lists or simply stop taking applications once available funds are fully committed.
It is not self-evident whether it is fairer to offer the full panoply of modern medical services to a limited number of people or a restricted set to a larger number. Again, historically we have preferred to tell some people they are not eligible for any help rather than tell others that the help will not cover procedures that some beneficiaries may find vital.
© 2005 Edward Lotterman
Chanarambie Consulting, Inc.