Medicaid is easier to fix than entitlement programs

Congress remains gridlocked on many important issues but not every politician is afraid to challenge the unsustainable growth of Medicaid. Consider S. 1031, by Sen. Tom Coburn.

This measure would increase local control over Medicaid spending and improve the incentives that have led politicians to trap ever more low-income citizens in poverty and the poor access to care that characterizes this top-heavy system.

Medicaid is often described as an “entitlement,” but that is wrongheaded. Medicaid is welfare, targeted at low-income Americans. And Medicaid should be easier to fix, politically, than two other troublesome programs.

The politicians who invented Social Security and Medicare asserted that these programs would be funded by payroll taxes in order to foster the illusion of entitlement. We pay for the benefits in our working years, and the benefits arrive after we’ve retired. But it’s all nonsense.

The taxes we pay do not go into accounts that belong to us. Rather, they pay current retirees and fund other government programs. Nevertheless, it is exceedingly difficult to convince people of the truth that we have not paid for our Social Security or Medicare. Yet Medicaid spending, to which nobody is “entitled,” is now greater than Medicare spending.

This has occurred because Medicaid’s funding formula incentivizes the political class to overspend. For every dollar a state politician spends on Medicaid, the federal government pitches in at least one dollar — or even more, as a result of the misnamed “stimulus” of 2009 — via the Federal Medical Assistance Percentage. The federal government actually rewards states for making more residents dependent on Medicaid.

S. 1031 would transform the federal government’s funding for Medicaid, transforming it into a “capped allotment.” This was the model of the successful welfare reform of 1996, which reformed Aid to Families with Dependent Children into Temporary Assistance to Needy Families.

The number of average monthly welfare recipients dropped from more than 12 million in 1996 to fewer than 4 million in 2008 — and low-income Americans faced better incentives to seek productive work. We have recently experienced a successful example of a reform in this direction.

Rhode Island received a waiver on the last day of the Bush administration that capped its total state and federal Medicaid spending at $12.075 billion through 2013. At the current rate, it looks as if the actual spending will be about $9.3 billion — with no evidence of reduced access to care.

Coburn’s S. 1031 introduces even better incentives, from which all states and taxpayers will benefit. It gives states more control over their program dollars to get rid of waste, fraud and abuse. It encourages states to make Medicaid providers accountable to the neediest patients in their communities, instead of remote federal bureaucracies. Finally, it will protect taxpayers from politicians’ worst impulses to spend unaccountably.

It is generally recognized that welfare reform, which passed with bipartisan support, produced positive outcomes.

It is long past time to introduce similar reforms to Medicaid. The current stalemate on the debt limit should not prevent Congress from taking up S. 1031 at the earliest convenience.

John R. Graham is Director of Health Care Studies at the Pacific Research Institute.

MedicaidOp Edsop-edOpinion

Just Posted

Cabernet Sauvignon grapes sit in a container after being crushed at Smith-Madrone Winery in St. Helena, Calif. on Thursday, Sept. 9, 2021. (Courtesy Smith-Madrone Winery)
‘Champagne problems’ and supply chain nightmares: San Francisco’s wine industry is suffering

‘Everywhere you turn, things that were easy are no longer easy’

A Giants fans hangs his head in disbelief after the Dodgers won the NLDS in a controversial finish to a tight Game 5. (Chris Victorio/Special to The Examiner)
Giants dream season ends at the hands of the Dodgers, 2-1

A masterful game comes down to the bottom of the ninth, and San Francisco came up short

<strong>Workers with Urban Alchemy and the Downtown Streets Team clean at Seventh and Market streets on Oct. 12. <ins>(Kevin N. Hume/The Examiner)</ins> </strong>
Why is it so hard to keep San Francisco’s streets clean?

Some blame bureaucracy, others say it’s the residents’ fault

Speaker of the House Nancy Pelosi — seen in Washington, D.C., on Tuesday — touted Congressional Democrats’ infrastructure bill in San Francisco on Thursday. (Stefani Reynolds/The New York Times)
Pelosi touts infrastructure bill as it nears finish line

Climate change, social safety net among major priorities of Democrats’ 10-year funding measure

<strong>A lion from Cambodia at the Asian Art Museum, which was acquired from a private collector and dates back to between 1150 and 1225, is one of two pieces identified as a potential stolen artifact in the leaked Pandora Papers.<ins> (Kevin N. Hume/The Examiner)</ins> </strong>
Asian Art Museum reckons with Cambodian antiquities of disputed provenance

Pandora Papers revelations accelerate culture shift at museums near and far

Most Read