Medicaid experiments

March 04, 2005

NO ONE HAS to encourage the states to try to hold down the cost of Medicaid. Experiments are under way all over the country to find more efficient ways of providing health care to a ballooning population of low-income children, adults and elderly and disabled Americans.

Florida Gov. Jeb Bush wants to create a voucher-type program covering typical medical expenses and a separate catastrophic fund for the very ill. Iowa Gov. Tom Vilsack is proposing to charge Medicaid recipients fees or co-pays according to their ability to pay. In Maryland, officials are setting up a managed care program for the elderly and disabled that would include long-term care.

But President Bush's gambit to try to grab the savings in the joint federal-state program before they are achieved won't advance the cause. Instead, it would force the states to apply the bluntest of instruments to accommodate Medicaid within their budget constraints - chop all optional beneficiaries off the rolls.

In order to reduce his own yawning budget gap, Mr. Bush is seeking to shift the economic and political burden of coping with Medicaid to the states, which don't have the option of deficit spending. What the states need instead is his help and leadership in redesigning a program that is unsustainable in its current form but too vital to be junked.

Created in 1965 to cover medical costs for welfare recipients, Medicaid has mushroomed into the nation's largest health program, paying medical and nursing home expenses for 53 million Americans - most of whom are not on welfare but are considered medically needy.

Medicaid enrollment has grown 40 percent in the past five years. Meanwhile, per capita medical costs have also grown rapidly, due in part to pharmaceutical prices and the use of expensive new technologies.

Thus, state budgets are being consumed by Medicaid, which in some states outpaces education and all other funding categories. The burden will quickly become intolerable without some relief.

President Bush proposes to give states greater flexibility to experiment with cost-saving measures, which is long overdue. He's also pushing to tighten access to Medicaid nursing home coverage for middle- and higher-income patients who could afford to finance some of their own care but instead transfer assets to heirs. That may help some.

An extra $16.5 billion over 10 years for Medicaid programs that Mr. Bush included in his budget would certainly come in handy. But his plan to crack down on bookkeeping gimmicks states use to boost their federal Medicaid money would leave the states with a net loss of $40.5 billion over the decade. That's no help at all.

Mr. Bush should let the states experiment, and see what works and where the bottom line lands, before he grabs his take.

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