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Dec 1, 2006
In "Million Dollar Baby," Hilary Swank's character offers her mother a free house. But the mother angrily rejects the offer, requesting cash under the table instead. The reason: a house would disqualify her for welfare and Medicaid benefits.
Reform of at least one of those problems is well under way, thanks to Pete du Pont and then Bill Clinton and then (mostly Republican) members of Congress - all of whom promised to "end welfare as we know it." What is now needed is to end Medicaid as we know it.
Imagine that tomorrow's newspaper carries the headline: "Supreme Court Declares Medicaid nconstitutional." After much hand wringing, Congress would almost certainly give the Medicaid funds to the states as an unrestricted cash grant and hope for the best. We would then get 50 different experiments - almost all of which would significantly improve the current system.
Why? Because today states only have to pay for 33 cents of every Medicaid dollar they waste, on the average. Federal taxpayers pay the other 67 cents. Conversely, the states get to keep only 33 cents of every dollar of waste they eliminate.
If the states had to pay the full costs of their bad decisions and if they got to reap the full benefits of their good ones, they almost certainly would make better decisions.
With this in mind, The New York Times description of a federal advisory panel's recommendations is disappointing - especially considering that this is a Republican panel appointed by an administration dedicated to consumer directed health care.
Far from calling for an end to Medicaid as we know it, the panel called for enrolling the disabled in managed care, encouraging home care over nursing care, and giving the biggest subsides to those with the lowest incomes.
Reporter Robert Pear called these recommended changes "sweeping." Perhaps inside the Beltway they will be viewed as such.
For the rest of the country, they are not nearly sweeping enough.
2 Responses to “Disappointing Medicaid Advisory Report”
December 19th, 2006 at 10:28 am
If people would change their focus from how to get people more care (no matter what kind of care that is)…to how to get people the right care … we might begin to get somewhere. Thank you Larry Lawrence M. Becker Director, Benefits and Policies Xerox Corporation - Corporate Human Resources
December 19th, 2006 at 11:07 am
John: I was disappointed to read your Alert about our Medicaid Commission report. I would have expected you to refer to original source material for your information rather than to preliminary news reports. When you see the final report, which will be issued by December 31, you will see that the recommendations are indeed visionary and would go a long way toward meeting the goals that you outlined. To your specific points, our recommendations would accelerate the move toward much greater state experimentation. We heard numerous testimonies during our many commission meetings over the last 17 months which convinced us that the states could do a much better job than the federal government of matching their resources to the needs of their populations. A number of our recommendations are designed to give the states much greater flexibility and control. To that end, Bob Helms and I worked very hard in developing a proposal to provide better coordinated care for dual eligibles — patients who cost the most and who are often caught in the maze of the Medicare and Medicaid payment systems that lead to fragmented care. Here is a link to our paper which provides much more detail on our idea for a "Medicaid Advantage" program, which was included in the commission's recommendations. Medicaid Advantage would lead to better coordinated care and better managed care — a big difference from the typical understanding of "managed care" — through a program primarily run by the states. Our recommendations also would create new incentives for the states to better manage Medicaid funds and to stop gaming the system by creating new payment mechanisms. Bob Helms also developed an excellent paper on the many problems with the current Federal Medical Assistance Percentage (FMAP) payment system. Unfortunately, addressing FMAP was outside the charter of our commission, and we were prohibited from including specific recommendations for FMAP reform in the report. But the report does acknowledge the urgent need for this issue to be addressed. Bob is finishing his own paper on FMAP, which AEI will publish soon. Developing consensus on a commission that includes 30 people is not easy. But I think we did remarkably well in offering recommendations that create new incentives and ideas for the specific Medicaid issues we were charged with addressing. Our report calls for promoting individual responsibility and contains many other ideas that would move toward a better set of incentives to govern the Medicaid program. I would be happy to provide you with more detailed information on the commission's work. Grace-Marie Turner President Galen Institute