This week, the House is preparing to vote on the Senate-passed health care bill, which depends on a massive expansion of Medicaid to reduce the number of uninsured.
However, as has become apparent in the months of debate surrounding Democrats’ health care proposals, all that glitters is not gold—especially in the case of expanding Medicaid, a low-quality, poorly-functioning federal-state program which fails to meet the needs of its beneficiaries. Increasing the number of citizens dependent on this program fails to address its numerous shortcomings, and instead applies them to millions more.
A recent article in the New York Times portrays the plights of current Medicaid beneficiaries which are slowly becoming the norm. Since Medicaid reimburses doctors significantly below the cost of providing care, more and more doctors are being forced to turn patients away. According to Dr. Saed J. Sahouri, “…we’re really losing money on seeing those patients, not even breaking even. We were starting to lose more and more money, month after month.”
As it becomes harder for Medicaid beneficiaries to find providers, more and more rely on emergency room care—in fact, Medicaid enrollees are more likely than even the uninsured to end up in emergency rooms in lieu of primary care.
As former Heritage analyst Dennis Smith points out, Medicaid spending is demanding a larger portion of state budgets, squeezing out other state priorities from education to transportation. This is a trend which is expected to continue in the years ahead.
If the federal government is serious about health care reform, expanding Medicaid is the worst way to go. Making more Americans dependent on this program may decrease the number of uninsured, but will do nothing to improve the access and quality issues plaguing the program. Moreover, federal funding to cover the expansion only offers states temporary relief and simply shifts these costs to federal taxpayers. Eventually states (and state taxpayers) will be left to pick up the cost, only intensifying the problems in the future.
Washington can do better by reforming Medicaid so that it works for those who currently use it. Heritage analyst Nina Owcharenko outlines what states legislators and Congress can do to improve the quality of Medicaid:
States … should mainstream some Medicaid enrollees into private coverage and adopt consumer-directed models to promote personal responsibility and enable individuals to take control of their health care decisions… federal policymakers should look for ways to make this process easier and remove obstacles to change.
…Congress should enact key health care initiatives, such as health care tax credits, and private long-term care incentives that complement Medicaid reform and relieve the increasing pressures on state Medicaid budgets.
Millions of Americans currently struggle to receive adequate care due to Medicaid’s inadequacies. Adding more families to these poor performing programs will make these problems worse.
As President Obama’s recently-released budget for 2011 reveals, with or without a health care reform bill, Medicaid stands to receive a big, taxpayer-funded bailout. Again. The 2011 Budget includes $25 billion in additional funding for state Medicaid programs as an extension of the bailout that was included in the 2009 economic stimulus bill.
As Heritage analysts Dennis Smith and Nina Owcharenko argued then, depending on federal bailouts to carry Medicaid through economic hardships is bad policy.
The stimulus bill provided increased federal matching rates for Medicaid programs in all fifty states. This splurge in spending was accompanied by no caveats or strings attached to require true Medicaid reform, which is sorely needed. Instead, the federal government succeeded only in propping up the failed policies behind the broken government program, encouraging continued sluggishness in actual improvements to the system.
What is more, federal bailouts of state Medicaid programs set states up for short-term dependency on federal dollars which will lead to long-term budgetary problems when these funds expire. Nothing could make this clearer than the Medicaid bailout extension included in President Obama’s 2011 budget.
In a recent article in the Wall Street Journal, Janet Adamy explains that additional Medicaid funding was included to respond to Congress’ stalled efforts to achieve comprehensive health care reform. Both of the health care bills would have expanded Medicaid and increased federal matching rates. According to Adamy, “Some states were so confident Congress would pass a health bill that they included the extra Medicaid funds in their state budgets.” Thus the need for additional bailout money: state fiscal irresponsibility, encouraged by Washington.
If Congress had structured the previous bailouts correctly in the first place, this additional bailout may not have been necessary. Smith and Owcharenko outline how this should have been done. Of course, the economic stimulus should not have included increased government spending in the first place. Rather, tax cuts should have been used to invigorate the economy.
That aside, a Medicaid bailout should have established criteria to ensure that states accepting more funding took the necessary steps to improve their programs. States should have also been required to submit plans for long-term reform. Medicaid beneficiaries currently suffer from lack of access to care due to outdated reimbursement systems. Addressing this would improve the quality of care for enrollees. Lastly, both state and federal governments should have made a commitment to achieving serious entitlement reform as a part of the bailouts, assuring they would not be needed in the future.
But none of this happened. Instead, once the extra federal funding expires, states will be left to deal with balancing their budgets and footing the bill for the same low-performing Medicaid programs.