NCPA - National Center for Policy Analysis

REFORMING MEDICAID

May 13, 2009

Medicaid costs will double by 2017 without dramatic reform, yet Washington state lawmakers continue push to expand eligibility for nation's fastest growing entitlement program.  A new study released by the Washington Policy Center raises a number of concerns about the Medicaid program and offers solutions for reform. Structural problems and an open-ended program budget are combining to create a rising tide that threatens to swamp all other government expenditures. At the same time, the entitlement has not demonstrably improved the health of the poor.

Key findings:

  • Medicaid is an open-ended entitlement with no defined limit on the number of beneficiaries or cost.
  • Medicaid is a state/federal partnership which encourages states to spend more on the program to receive the federal match.
  • Unless rates of spending slow down, Medicaid spending will double by 2017; at an average growth rate of eight percent a year, Medicaid is the fastest growing federal entitlement program.
  • The total spent on Medicaid in Washington in fiscal year 2008 was $4.13 billion, with a projected 4.7 percent increase to $4.32 billion in 2009.

Other findings:

  • Medicaid has expanded from covering children and their families who earn up to 133 percent of the Federal Poverty Level to, in some states, families who earn up to 300 percent of the FPL.
  • Medicaid has never been subjected to meaningful national reform, although several states have new plans with potentially successful reforms.
  • Medicaid has encouraged overutilization of health care resources without real evidence of improving health of the poor.

Recommendations:

  • Allow health savings accounts for Medicaid recipients.
  • Pursue fraud aggressively.
  • Tighten eligibility requirements (at least back to the original 133 percent of the FPL).
  • Provide block grants to the states.
  • Freeze funding at 2005 or even 2007 levels.

Source: Dr. Roger Stark, "A Review of the Medicaid Program: Its Impact in Washington State and Efforts at Reform in Other States," Washington Policy Center, May 12, 2009.

 

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