Reform Medicaid, Make States Accountable

Reform Medicaid and make states accountable

Problem:

The Bush administration, the Government Accountability Office (GAO), the Centers for Medicare and Medicaid Services (CMS), and others have long maintained that the states have improperly shifted their Medicaid costs to the federal government. Medicaid was designed as a joint state-federal health care program for the poor. However, on average, the federal government pays about 57% of the cost (more than half) which will total roughly $204 billion in federal share and $357 billion combined. Constitutionally, the federal government has no obligation to provide a publicly funded health care program.

In North Carolina, the total expenditures for Medicaid in 2006 were $8.58 billion with the federal government contributing 60.69%.

The Bush administration and the GAO have said some states have used inappropriate state financial arrangements to draw more federal Medicaid payments than they were legally due, sometimes using the excess to pad their budgets. Medicaid accounts for one of the largest expenses for state governments similarly entitlements as a whole for the federal government. If states are spending too much on Medicaid then it should be addressed at the state level and that is where block grants come into play.

We must change the mentality within the Medicaid program that states largely determine what the federal spending levels for Medicaid will be. States generally receive open-ended funding as long as they operate their programs in compliance with federal law.

The answer rests in more state responsibility, accountability, and eventually block grants.

Solution:

(1) Targeting the areas of waste fraud and abuse within the Medicaid program. Ending reimbursement for transporting Medicaid-eligible children to school or administering Medicaid services at school or limiting reimbursement for "case management" aid that helps patients find other services as proposed by CMS.

 

(2) Block grants. This would allow Congress to control the amount of federal spending each year and take the ever-growing program off autopilot.

The GAO report from April 3, 2008 can be viewed at www.gao.gov/new.items/d08650t.pdf.