March 8 2012

Medicaid Flexibility for States - A Real Possibility?

Hadley Heath

Medicaid is one of the biggest drivers of our national debt.  It costs states about 23% of their budgets each year.  And yet the program still fails to meet the needs of many people: its below-market reimbursement rates discourage doctors from treating people on the program, and this results in longer wait times and worse care.  Clearly, this program is in need of reform.

In 2010, ObamaCare introduced big changes to the Medicaid program.  Wait.  Not really.  Instead of reforming Medicaid, ObamaCare just took the program further and faster in the wrong direction by forcing states to push millions more Americans into dependence on government - all of this in the midst of budget crises at every level.  Worse yet, the health care law did nothing to adjust doctors' reimbursement rates, meaning the millions of new "beneficiaries" in Medicaid would face even greater difficulty accessing the care they need.  Not beneficial, if you ask me.

But there's hope for the ailing program: Representatives Todd Rokita, Tim Huelskamp, Paul Broun, M.D., and Jim Jordan have introduced the State Health Flexibility Act, which would reform Medicaid in the right direction.  Instead of spreading a broken program thinner, the State Health Flexibility Act would turn control over eligibility, benefits, and reimbursement rates to states.  This way, individual states could tailor their health care solutions to the needs of the indigent populations within their borders.  States could focus on how to best meet the needs of their citizens, instead of figuring out how to fit into federal one-size-fits-all mandates.  This is good news for health policy.

Did you know that the current structure of Medicaid encourages autopilot increases in spending each year?  Whatever a state spends on Medicaid, the federal government will "match" at a rate that varies by state.  This rewards states who spend more with even more money, and encourages irresponsible spending.  The State Health Flexibility Act would turn Medicaid into a block grant based on current funding levels.  This would simply mean that states could seek innovative solutions to focus aid on the people who need it most.  Not to mention that this would result in $1.8 trillion fewer in borrowing and spending at the national level.

This type of reform is based on the successful welfare reforms of the 1990's.  I've written before that lawmakers should apply those lessons learned to modern-day Medicaid in order to make the program more efficient.  Plus, if you're looking for more evidence that decentralizing Medicaid can better serve the poor, look no further than the pilot program currently underway in several Floridian counties.  

Americans understand that policy decisions are made best when they are closest to the stakeholders involved.  The State Health Flexibility Act would be an important step in the right direction.

 

 

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