NCPA - National Center for Policy Analysis

Medicaid Needs Reform

January 9, 1996

As governor of Arkansas, Bill Clinton led the fight to reform the Medicaid program. Yet as president he has vowed to veto any fundamental reform of the program, such as giving the states block grants. Reform is desperately needed:

  • Medicaid is so clogged with federal regulations and mandates that it fails to meet the health care needs of low-income Americans.
  • The president's budget proposes to increase federal spending on Medicaid by 74 percent between 1996 and 2002.
  • It also continues to require the states match the federal funds, which means the states will have to provide an additional $50 billion annually for Medicaid.

On the other hand, block-granting the program would give the states flexibility in administering Medicaid, resulting in a level of innovation and effectiveness never achieved by the federal government.

Under the current system governors must beg the federal government to deviate from the rigid Medicaid structure. Despite that, the states are leading the way to improving service delivery. In Virginia, for example,

  • More than 300,000 Medicaid family members are enrolled in the state's managed care program, which uses primary care physicians and quality controls to improve preventive care and contain costs.
  • In January 1995, the state began offering the option of voluntary enrollment in a health maintenance organization (HMO) and 77,000 are now participating.
  • The state is pursuing a Medicaid waiver to help low-income uninsured workers obtain low-cost health insurance.
  • And state agencies are developing a Medical Savings Account plan to provide primary and acute care to the working poor as well as those now eligible for medical assistance.

Congress and state governors recognize that the program doesn't work well. The states are already making the program more effective and expanding coverage, and Medicaid reform offers an opportunity not only to save taxpayers money, but also to improve the quality of care.

Source: George Allen (Governor of Virginia), "States Have Answers on Medicaid," Washington Times, January 9, 1996.


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