Medicaid is a program of health coverage that is jointly run by the federal-state, and is meant for the poor. Its rules and practices are different in all the states. Generally, however, it is open to those people who have low incomes, whether below or above the federal level of poverty. Additionally, it has additional compelling conditions of need, like having a serious disability or being a parent. With these kind of eligibility restrictions, Medicaid covers sixty million Americans, as well as accounting for 16 cents of each dollar that is spent on medical services in the US. It is one of the biggest items in the federal budget, consequently, the cost is rapidly growing in an unsustainable rate. The program needs to be overhauled so as to substantially reduce the burden on the taxpayer.
State governments administers the Medicaid program, but they mostly receive an open-ended funding from the federal government. Because the states have been over the years expanding the benefits, the federal taxpayers have been forced to pick up a good percentage of the additional cost. The funding structure as it is encourages the overexpansion as well as providing the states with little funding to control Medicaid fraud and waste. While still on it, the program’s top-down regulatory structure creates unnecessary distortions in the health care markets.
The 2010 Health Act (the ” Patient Protection and Affordable Care Act of 2010″) is posed to significantly increase the cost of Medicaid’s in the coming years, over and above the fact that it does not fix the fundamental problems of the program. When the law expanded the eligibility of Medicaid by around 16M people, it also added more to the health services that are covered, and increases also the federal share of Medicaid’s costs. The costs of such an expansion in Medicaid to the federal government will be around $100 billion per year by 2020.
The Policymakers need to make sure that the Medicaid control costs are reversed and restructured. One workable idea is to turn the whole program into a block grant. This should provide an amount of federal funding that is fixed, to each state. Block granting was successful when it was taken with the 1996 federal welfare reform. Using a block grant will provide strong incentives for the states to cut on their Medicaid programs, curb fraud and abuse, as well as pursue even more innovative health care solutions that are cost-effective.
Medicaid also covers individuals who have severe physical disabilities. This group has by far consumed some of the most expensive services, which does not only include only medical care, but also a variety of many other benefits, which includes caregiver assistance with the daily tasks and room as well as board. However, qualifying as a ramification of their eligibility to the Supplemental Security Income program, which is under Social Security, people with work-impairing disabilities in numbers have traditionally made up a very small share of the Medicaid recipients. Notably, Medicaid also covers the individuals suffering from mental illnesses or certain addictions. While technically these two groups of disabled people fall in the same boat when eligibility rules are applied, they together add up to about one-fifth of the entire Medicaid population, and consuming well over 40% of the entire Medicaid budget. It is, therefore, important to have in mind that those who are suffering from a mental illness or any kind of substance abuse pose problems for their case management, eligibility determination, and even willingness of the public to give long-term assistance. It is for this reason that some conditions and ailments added in the list of ailments under the Medicaid should be scrapped off completely. This will go a long way in reducing the load that the taxpayers carry, just to sustain this program.
Another idea would be to convert the Medicaid program into a system that offers direct aid to the recipients, by using either a voucher or a refundable tax credit. Low-income individuals will receive yearly payment from the federal government, payment that they will use to purchase a plan for their health insurance from the private insurance providers. Just like the reforms with block grants, this kind of reform approach will be helpful to the government in controlling programs spending, as well as reducing it over time.
Lastly, the government should work on converting the Medicaid program into a more specialized medical assistance program, to those suffering from chronic mental or physical infirmities. Ideally, this was after all the initial idea behind the setting up of the state-run relief programs which Medicaid was formed to bail out, almost half a century ago. Both practically and conceptually, it is sensible to distinguish between individuals who have chronic medical conditions (i.e. those who are likely to depend on the state on a long term basis) from the healthy people, who, because of the loss of their jobs or other emergencies that are short-term, somehow find themselves without any savings or health insurance. Medicaid should not then be concerned with the needs of the latter, but the former. The efforts to provide temporary safety nets to the people who are, working and are contributing members of the society, should take a completely different form. The congress have an obligation to rewrite the eligibility standards accordingly, and creating a totally separate program that subsidizes the health insurance premiums that are private for the poor in the society.
When we talk of reforming the Medicaid program, all that is in mind is the burden the people are forced to carry just to sustain it. Given the number of people that are dependent on Medicaid for whatever reason, it becomes very unsustainable to have all that costs shouldered to the citizenry of the country. Therefore, some pragmatic solutions should be taken to make sure that the cost involve in Medicaid is reduced, by whatever cost.
Fichtner, J. (2014). The economics of Medicaid: Assessing the costs and consequences.
Woshington: Mercatus Center at George Mason University.
How to Fix Medicaid Publications National Affairs. (n.d.). Retrieved October 16, 2015, from
Thompson, F. (2012). Medicaid politics federalism, policy durability, and health reform.
Washington, DC: Georgetown University Press.