Medicaid: A Philosophy of Healthcare

Democrats and Republicans in Congress are once again battling over Medicaid, the joint federal and state program that has provided healthcare to low-income citizens since 1966. 

Democrats want to postpone Bush administration regulations that would end federal reimbursements for some Medicaid services and lessen reimbursement for others. Republicans want the new regulations in order to cut spending.  

The debate over Medicaid highlights the parties’ competing philosophies of healthcare, and shows how each party is using the system to turn philosophy into policy. 

Medicaid spending & party philosophy

The parties’ differences over Medicaid are products of their respective philosophies about healthcare, government, and responsibility. 

The Democratic philosophy emphasizes collective responsibility - all Americans are entitled to health care and the costs should be spread widely as possible. According to this line of thinking, the federal government can and should use tax dollars, which are our dollars, to ensure basic benefits to everyone.

By contrast, the Republican philosophy emphasizes individual accountability - individuals should be responsible for their health and make good use of their resources. According to this reasoning, a free-market approach is the most effective way to increase quality and lower costs and the federal government should have limited involvement in providing or paying for healthcare.

The Bush cuts to Medicaid support the Republican philosophy but fly in the face of Democratic ideals.  

The regulations would: 

• Prevent states from using Medicaid funds to help pay for physician training
• Place new limits on Medicaid reimbursements to hospitals and nursing homes operated by state and local governments. 
• Limit coverage of rehabilitation services for individuals with disabilities and mental illnesses.

 In essence, the cuts would lessen federal participation in Medicaid. 

To prevent this from happening, Democrats created a bill that would postpone them until April 2009, when a new president will be in office.  And to prevent a Republican filibuster, Democrats attached the bill to a must-pass supplemental spending bill for the wars in Iraq and Afghanistan. 

Medicaid and the states 

Medicaid has been a long-standing source of tension between states and the federal government.

States are responsible for deciding who is eligible for Medicaid, how much money to spend on the program, and how it will be structured. The federal government then matches state funds.

All in all, the federal government picks up about 57 percent of the costs, and the federal share is estimated at $204 billion in fiscal 2008.

The Bush administration regulations would ban accounting practices used by the states to funnel more federal money than state money to Medicaid. States, which are bound by their constitutions to run balanced budgets, complain that shifting these costs would create a budget crunch, placing important state-run programs in jeopardy.

Indeed, the Congressional Budget Office estimates that the changes would reduce federal spending by about $17.8 billion over five years, a Republican goal. Democrats, however, fear that the long-term costs of these cuts may be much greater if states cut services due to budget restraints- especially in the midst of an economic downturn, when demand for these services is greatest. When state governments are forced to cut programs that employ citizens and stimulate the local economy, the result is likely to be more unemployed citizens and less tax revenue.

For more on the states and the national economy, click here.

For more on Medicaid, listen to our radio show “Healthcare and Whose Job?”

And write to your Congressperson with your philosophies on Medicaid!

 

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