NCPA - National Center for Policy Analysis

New Federal Initiatives Do Not Address State Medicaid Crises

April 25, 2011

Last week, the Department of Health and Human Services (HHS) announced new initiatives intended to provide states with increased flexibility to better manage their Medicaid programs.  However, these initiatives do not seriously address states' mounting Medicaid crises, says Brian Blase, a policy analyst at the Heritage Foundation.

The first HHS initiative is to improve coordination of care for individuals enrolled in both Medicare and Medicaid, the so-called dual eligibles:

  • Under the new health reform law, 15 states will receive up to $1 million through a new bureaucracy focused on duals.
  • While reform should address the problem of coordinating care for the duals, HHS's approach will likely fail because it ignores the root of the problem -- coordination incentives are not aligned.

The second initiative is to allow easier access to home health care so that Medicaid beneficiaries can receive care outside of institutions like nursing homes:

  • Most states already have waivers to do this, so it is unclear how this initiative will create additional flexibility.
  • The available data suggest that this initiative will not lower taxpayer costs.
  • This is because states that have rebalanced their programs to a greater degree have experienced relatively large spending increases for Medicaid long-term care.
  • When Medicaid begins to pay for services that individuals value highly, such as home-based care, more people want to be on the program.
  • The result is that rebalancing does not simply remove one beneficiary from a nursing home and place him or her in the home or community -- it actually causes more individuals to use the service.

Source: Brian Blase, "HHS Initiatives Fail to Offer States Meaningful Flexibility," Heritage Foundation, April 20, 2011.

For text:


Browse more articles on Health Issues