NCPA - National Center for Policy Analysis

Bush Medicaid Initiative Would Give Governors More Control

February 14, 2003

To enable state governors to get their Medicaid programs under control, President Bush has suggested an optional 10-year plan employing a carrot-and-stick approach.

Medicaid now accounts for more than one-fifth of state outlays. State Medicaid spending now totals $258 billion a year and the Congressional Budget Office anticipates that will more than double to $578 billion by 2012.

  • The carrot is that states receive an extra $3.25 billion in 2004 and $12.7 billion over seven years -- which they can use to maintain the nonmandatory benefits they now provide, such as prenatal care and childhood vaccines.
  • The stick is that federal spending will be reduced over the final three years -- by which time states will be expected to have learned to live within their means.
  • That might be accomplished if states started prioritizing, eliminating waste and developing models akin to those of professional insurers.
  • Critics say that as things stand now, states which want to depart from rigid federal rules must apply for a waiver from Washington -- a slow and costly process.

Supporters of the Bush plan see it as Welfare Reform, Part 2. Liberal defenders of the status quo fear that is exactly what it is.

Source: Editorial, "Medicaid's Real Friends," Wall Street Journal, February 10, 2003.

For text (WSJ subscription required),,SB1044842721120200663-search,00.html


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