False positives and false negatives in the Medicaid crackdown

by Doron Taussig

Published Dec. 15, 2011, 10:02 a.m. ET

When I covered child protective services, experts talked about choosing between the risk of false positives and the risk of false negatives. Basically this meant that when social workers received an abuse report, they sometimes had to choose between leaving a child in a home where he might not be safe (a false negative), or taking a child away from a family when it might not be necessary (a false positive). Avoiding a false positive meant increasing your risk of a false negative, and vice versa. The question, for policy-makers, was which side to err on, and it was a profoundly difficult one.

You see this same false positive/false negative dynamic at play in the discussion of Pennsylvania's medicare rolls. Don Sapatkin reports in today's Inquirer about the Corbett administration's efforts to remove waste from Medicaid spending:

Since August, the Corbett administration has cut off more than 150,000 people - including 43,000 children - from medical assistance in a drive to save costs.

[snip]

The Department of Public Welfare in Harrisburg says most of the people cut were dead, had moved out of state, or were found to be ineligible, but it could provide no breakdown. Advocacy groups, clients, and representatives for caseworkers paint a different picture. Pressure to quickly review a backlog of files and close cases overwhelmed the system, they say, as reams of paperwork were lost and computer programs automatically ended benefits when patients' responses had not been entered by preset deadlines.

If you're trying to root out waste, a false negative is letting someone collect benefits when he's not eligible. The false positive is taking away benefits from someone who is eligible. If you get aggressive about eliminating false negatives -- and especially if you do it sloppily -- you increase the risk of false positives. Pennsylvania is cracking down on false negatives to save money. And indeed, the state says cutting folks from the Medicaid rolls has saved taxpayers $34 million. But the question is, is that the right side for the state to err on when so many people need access to the safety net?