The Southern Segregations’ Plan to Institutionalize Racism and Inequality
In a conversation with Lyndon Johnson prior to passage of Medicare and Medicaid, the late segregationist Congressman Wilbur Mills of Arkansas told President Johnson that across town from his mother in Arkansas, “…a Negro woman has a baby every year. He went on to explain that every time he went home, his mother complained that the “Negro woman now got eleven children. He proposed that welfare should be designed to let “the states pay for more than a small number of children if they want to.”
Joseph Califano, Jr., President Johnson’s Secretary of Health Education & Welfare (HEW) in the room at the time noted that Johnson turned to him after Mills left and said,
“You hear that good, now. That’s the way most members feel. They’re just not willing to say it publicly unless they come from redneck districts.”
Most member of congress aside, Mills was not your run of the mill congressman. He was the influential Chairman of the exceedingly powerful and critical House Ways and Means Committee. He was a product of Southern one-party politics run by the all-powerful Southern planter class. Mills and his Southern brethren in the Senate and House had in 1957 signed and issued the “Southern Manifesto” – a protest against Brown v. Board of Education and the civil/human rights enveloped within the Supreme Court decision.
As I will explain, these segregationists had designed and legislated a precursor to Medicaid into existence. The passage of the Mills-Kerr program in 1960 included the framework of Title 19 of the Social Security Act in 1965 (Medicaid). Medicaid became Kerr-Mills 2.0. Designed into Kerr-Mills was devolution of power over federal welfare to states, which would allow them to arbitrarily place onerous administrative burdens on qualified applicants and maintain a lower status for African Americans. They were successful in keeping Hill-Burton funded hospitals segregated for ten years after Brown v. Board of Education had declared that “separate is not equal.”
The Concepts of Kerr-Mills – Especially the Power of States Over Welfare – Are Barriers to Transforming an Embarrassingly Bad U.S. Medical System
Like the Hill-Burton Act of 1945, which initiated a massive hospital building program across the U.S., Medicaid is funded by the states with federal matching funds. Administration and regulation of Medicaid funded nursing homes have been left to the states. Long-term care and skilled nursing operators have benefited from lax oversight and political power in state houses. As should have been expected, legislatures and agencies have been captured by deep pocketed industrialists and are therefore likely to serve the interests of operators at the expense of ethical and humane medical care.
States and powerful interests have devised ways to siphon off Medicaid funds for the benefit of corporations and special interests. Consequently, poverty medicine is enriching corporations and wealthy individuals (see previous posts on this blog re: The Ensign Group & Centene Corporation) while the medical care and health of poor Americans have been deteriorating. For instance, the state of Indiana discovered a loophole in federal law that allowed the state to buy nursing home licenses from for-profit corporations and skim a considerable amount of nursing home funding off for other purposes. The nursing homes continued to run the facilities and extract their usual cash flow as before.
Having studied cost reports submitted by thousands of nursing home facilities, I can safely conclude that the states shield the industry from exposing cash flow into and out of the system. If you can complete daunting tasks of gaining access to legally required and public cost reports (or pay a considerable sum for them) you will discover that you are dealing with closely held corporations that are not required to make their financial statements public. Therefore, you can follow the money to a point. But the pools of payments to their parent corporations’ shell companies are kept secret. The public cannot see consolidated balance sheets, income statements, and cash flow statements of parent corporations and holding companies.
Without clear and honest financial information, no amount of reform of what most everyone agrees is a bad system is possible. The industry can and does engage in misinformation and falsehoods to maintain myths that the biggest problem in long-term and skilled nursing care is skimpy government funding.