Medicaid Reforms Start with the States

Medicaid spending threatens to consume the entire Pennsylvania state budget, and we aren’t alone. Without greater flexibility, states will be forced to cut services, raise taxes or drop out of Medicaid entirely.

Gov. Tom Corbett gets it, and writes in Monday’s USA Today about the need for states to have flexibility in Medicaid. He emphasizes how the federal government makes it difficult for states to serve their disadvantaged populations, especially in the midst of large budget deficits and Obamacare eligibility expansions.

Congress has made the states increasingly dependent on federal dollars and then left them with a Hobson’s choice between accepting heavy-handed federal mandates or relinquishing key support for vulnerable populations.

When states are denied the flexibility that brings innovation and value to Medicaid, it is the consumers and taxpayers who lose. Policymakers are left with few options beyond cutting benefits to those in need or reducing provider reimbursements. Neither is a preferred option, and both are avoidable.

Tuesday’s U.S. House Energy and Commerce Committee hearing addressed the same subject, giving examples of how the federal government’s incompetence has prevented states from implementing Medicaid reforms.

Gov.Gary Herbert of Utah explained how the Center for Medicare and Medicaid Services is requiring the state to use paper to communicate with enrollees despite the electronic technology they’ve developed, which is estimated to reduce costs by as much as $6 million a year. Utah’s request to use electronic communication last July remains unanswered by the CMS.

Gov. Haley Barbour told a similar story, focused on the problems with required CMS approval for every innovation.

We want to . . . develop[ing] a nursing home program specifically for these medically fragile children; however, we are required to get CMS approval. This process can take months, as CMS will refer our request to a team who will provide technical assistance. We know what we need, and we have a plan to get these very special children out of a hospital into a more homelike setting. We work with the parents to eventually allow them to go to their home. The steps CMS is requiring us to take are delaying our efforts to do just what they say they want us to do.

The Senate Finance and House Energy and Commerce committees estimate Obamacare will increase state’s Medicaid costs by $118 billion in the first decade of full implementation (2023). That’s almost twice what the CBO predicted.

It’s clear states are going need all the flexibility they can get to sustain Medicaid and balance their budgets.