Health Care

WomenMatter will continuously post updates on all this and other issues as we monitor the continuing philosophical and practical debates nationwide. Please check back often for updates. Past updates are available for reference on the Healthcare Archives page.

Bobbing and Weaving Through Medicaid Reform

Jump to a section:

What is Medicaid?
Why is the Cost Increasing so Drastically?
Trying to Cut Spending
Short-Run versus Long-Run
Governors Draft New Plan
The Long and the Short of it

About 34 million Americans get health insurance through Medicaid, many of them elderly and/or disabled, all of them low-income.

The cost of Medicaid has increased dramatically in recent years, causing a strain on state and federal budgets. The Bush Administration (and the Clinton Administration before it) have proposed reforms to Medicaid in hopes of cutting costs and increasing efficiency.

We the people can help to determine if these reforms will do us harm or good and then let our representatives know what we think before the proposal becomes law.

The trouble is keeping track of all of the twists and turns of the proposed reforms; but it can be done. Read on. We here at WomenMatter have waded through lots of information on Medicaid reform in order to understand it ourselves, and then to present that understanding to you.

return to top

Medicaid is a joint federal and state program that has provided healthcare to low-income citizens since Lyndon Johnson’s day in 1966.

Currently, states determine the structure of their Medicaid programs, which have to serve anyone who is eligible. All citizens who meet eligibility requirements are entitled to services.

States help to decide who is eligible for Medicaid, how much money to spend on the program, and how that program will be organized. The federal government matches the funds that the states pay for Medicaid.

return to top

• The cost of healthcare increases or inflates more rapidly than the cost of other things. This is mainly because the healthcare industry incorporates new (and expensive) technologies often. Since the healthcare industry prices rise faster than other industries, healthcare is quickly becoming more and more expensive in comparison with other services.
• People on Medicaid often require the most costly care available. Many recipients are disabled or in a nursing home. Nursing homes in particular are a huge expense, since they provide round-the-clock care.
• In the late 1980s, Congress passed several pieces of legislation to increase the quality of Medicaid healthcare and the number of people eligible for that care. This legislation primarily benefited the elderly and pregnant women. In 1990, the eligibility criteria for children changed, doubling the number of children covered. These improvements increased the overall cost of the program substantially.
• With the development of new medical technologies, the number of elderly Americans increases. More and more people are now living beyond eighty, and this population is often eligible for Medicaid.
• Economic crisis results in more people on Medicaid. When people lose their jobs and employers cut benefits, more people go on Medicaid, which increases state and federal spending on the program.

return to top

In hopes of relieving the budget crisis, the federal government is trying to cut spending. So, the Bush administration has proposed to reform the Medicaid system to make it more efficient and less costly.

In February 2003, Bush proposed to change the way that Medicaid is funded. Instead of matching states’ spending, the federal government would give the state a large lump sum to distribute as it pleases (within Medicaid). The states would not be allowed to ask for further assistance and therefore would be forced to manage and budget the funds accordingly.

Proponents of this plan say that states will no longer have to meet strict federal guidelines; they will create their own guidelines to make the program work with the given amount of money. The key words for supporters of the Bush policy are an increase in both the flexibility and accountability of states.

return to top

Many state governors were concerned about the long-term implications of Bush’s plan because, although states would have a large amount of money to work with at first, they would be likely to run out later and would be forced to drastically cut services.

Some governors were also concerned that further economic hardship could send the program into crisis; more people would become eligible for Medicaid but states would not be able to ask the federal government to support them. A block grant is often a fixed amount no matter what crisis happens later.

In addition, this plan may cause severe inequalities among states. Since this plan allows a lot of state control, care will vary substantially from state to state. Some fear that this will drive down the quality of care overall because states do not want to have drastically better Medicaid programs than their neighbors. This is because people will move to the more generous state in order to receive better benefits, thus increasing the number of people on Medicaid and the population of poor people in that state.

return to top

The nation’s governors convened to draft their own Medicaid reform. The draft is almost finished and may go to Bush by June 2-6, 2003. The governors’ version is actually not that different than Bush’s proposal (this may be because George Bush’s brother, Governor Jeb Bush of Florida, was a key author of the draft), but does have one major departure. In this plan, the federal government will pay about $40 billion a year for the elderly and disabled who are eligible for both Medicaid and Medicare. The states currently pay this bill. This shifts many low income people from the Medicaid budget to the Medicare government insurance plan that has no cap.

Some congressional Democrats and two Democratic governors are entirely opposed to both the administration’s and the National Governors Association (NGA) reforms. They say that these reforms do not allot enough money long term, nor do they account for healthcare inflation and thus will result in needy and eligible people going without healthcare.

return to top

The issue comes down to a matter of federal spending versus healthcare for the poor. The Bush administration hopes to cut federal spending in order to cut taxes, putting more money in more American’s pockets and (they hope) stimulating the economy. A stronger economy would result in fewer people needing Medicaid.

However, most of the people who need Medicaid are elderly, disabled or/and children, people who will not pay for their own healthcare even if the economy booms. These people will always need government assistance, and with the baby boomers getting older, Medicaid will need to be expanded.

Negotiations continue and remind us that philosophy of governing controls policy about standards. And policy turns into action when the legislature deals for a majority of the votes and the president agrees to sign it. Stay tuned.

Posted on: 6/6/2003

click here to go to next section

return to top