Medicaid: Bankrupting the States

August 17, 1993

Providing medical care for the nation's poor is bankrupting the states. Don't take our word for it: those are President Clinton's words to the nation's governors yesterday.

"We know that state governments are literally being bankrupted by the rising costs of Medicaid," Mr. Clinton told the governors, "money that used to go to education, money that used to go for economic development, money that could have gone to law enforcement, just shoveling out the door. . . . Not for new health, [but] more money for the same health care."

The president did not underestimate the scope of the problem. Medicaid is gobbling up giant chunks of state revenue: For the first time ever, state aid for Medicaid ($32 billion) exceeded spending for state colleges and universities. This current year, states will spend a whopping 24 percent more on Medicaid than on higher education.

That's an intolerable burden. It illustrates quite graphically that our health-care expenses are running wild. In Maryland alone, costs for the Medical Assistance program have soared 60 percent in three years, a jump of three-quarters of a billion dollars. And in the next three years, that total is expected to rise by another $400 million.

Clearly, something has to be done to stem this rampant spending. When the president addressed the governors yesterday, he faced a polite but skeptical crowd. They are rightly worried that any federal health-insurance plan will short-circuit promising state experiments to reform health care and will impose a huge new financial burden on state governments, too.

These are valid concerns. A number of states -- including Maryland -- have recently embarked on ambitious reforms. These experiments ought to be warmly encouraged by Washington, including freeing states of restrictive federal regulations that obstruct new approaches to health care. Yesterday, the president said he wanted to give states broad flexibility in this area, but that's a long way from getting Congress' blessing.

As for the financial burden, that remains pivotal. Paying for a health-care overhaul won't be cheap. Dissension was evident on how to achieve this even among the governors, who split along party lines -- an ominous sign for future congressional action. It underscores the urgent necessity for Mr. Clinton to reach out for bi-partisan support on health-care reform, as he must do as well as on the North American Free Trade Agreement.

Starting next month when the Clinton health-care plan is announced, the national focus will be on finding ways to adopt a leaner but broader medical insurance system. Mr. Clinton must make this a true partnership effort if he is to succeed. He really has no other option.

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