After more than two years living in St. Luke's Methodist Hospital in Cedar Rapids, Iowa, Katie Beckett's family reached the limit of what its private insurance would pay for Katie's care. Medicaid, the state and federal health insurance for the needy, started picking up the cost of that expensive breathing machine and other care. But Medicaid would pay only as long as the little girl lived in the pediatric intensive care unit at the hospital.
Beckett's parents, Julie and Mark, said they wanted their daughter at home. The girl's doctors agreed, saying she needed to grow up in a more normal environment than a hospital room. At first, federal officials refused to make an exception. But then Reagan was told about the family. A few days later at a press conference on Nov. 10, 1981, Reagan expressed his anger at what he called an example of a cold bureaucracy.
It cost six times as much for the girl to live in the hospital, the president said, and "this spending most of her life there and away from the home atmosphere is detrimental to her. Now, by what sense do we have a regulation in government that says we'll pay $6,000 a month to keep someone in a hospital that we believe would be better off at home, but the family cannot afford one-sixth that amount to keep them at home?"
President Reagan changed the Medicaid rules and Katie Beckett left that Iowa hospital and went home in time for Christmas. Shortly after, the government allowed exceptions in other states so that parents like the Becketts, who made too much money to qualify for Medicaid, could be covered for their children with extreme medical costs.
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