Medicaid Reforms Needed as Welfare Spending Surpasses Education

Under Gov. Corbett’s budget proposal, Pennsylvania would spend more on welfare than education for first time. A large chunk of that welfare spending is in Medicaid, a joint state-federal program that provides low quality health care. In some cases, Medicaid patients receive worse care than those with no health coverage.

Medicaid consumes 31 percent of the state budget—the largest share of any state, according to acting Department of Public Welfare Secretary Gary Alexander. Additional mandates under Obamacare are estimated to increase Medicaid costs by $841.2 million, on top of this growth. At the same time, Congress and the Obama administration tie the hands of state officials to make much needed reforms.

Pennsylvania is not alone; Texas is experiencing a 9 percent growth in Medicaid costs annually, only to be accelerated as Obamacare comes into full fruition. Our friends at the Texas Public Policy Foundation have outlined a complete revamping of Texas’ Medicaid program called TexHealth. The reforms mirror successful pilot programs in Florida.

TexHealth would give beneficiaries control over limited Medicaid dollars to spend on the doctors and services they value. The amount of the subsidy would be tied to a sliding scale based on income and assets. TPPF estimates the program could serve more Texans than are served now, for less money.

Under a defined contribution plan, TexHealth will provide better access to health care services and be available to potentially 4 million more individuals than currently served, for less money… Initially, the state would spend $22.26 billion per biennium in subsidies to low-income Texans, $12.4 billion on long-term services and support, and $9.22 billion for implementation and administration. This would total 5 percent less than the state spent on Medicaid in the 2008-2009 biennium.

The tricky part is convincing Washington to untie the hands of state officials to implement reform. TPPF suggests three possible methods to restore state control over the Medicaid budget:

  • Joining an interstate compact.
  • Requiring a health insurance exchange to put Medicaid clients into a subsidized, private insurance market.
  • Applying for a 1115 waiver from the feds.

Pennsylvania should consider similar reforms and submit a waiver to put all Pennsylvanians in charge of their health care dollars—not bureaucrats. Encouraging more personal responsibility is the only way to improve the quality of care and keep health care costs from consuming state budgets.