Rescuing the States from Medicaid

State Medicaid spending has increased four times faster than elementary and secondary education spending and nine times faster than transportation spending over the past two decades. In Pennsylvania, Medicaid spending grew from 12 percent of the General Fund in 1980 to 24 percent in the proposed budget. Such growth is wreaking havoc on Pennsylvania’s state budget and crowding out other priorities, like education.

The 2009 federal stimulus bill made the situation worse, by imposing new federal requirements that tied the hands of state officials and limited their ability to reform Medicaid. These regulations were set to expire in 2011, but the passage of Obamacare prolonged these mandates to 2013, leaving financially strapped states with two options, cut benefits or cut doctor reimbursements.

This is bad news for Medicaid patients who have a hard time finding a doctor. Half of all physicians refuse to accept new Medicaid patients. And when it comes to benefits, Medicaid claims are, on average, denied at three times the rate that of Medicare and private insurance.

Both houses of Congress have introduced a much needed remedy to this fiscal nightmare. The 2011 State Flexibility Act (SFA) is designed to give the states more autonomy over Medicaid spending. Last winter, Governor Corbett advocated for more Medicaid flexibility, writing, “The best ideas for improving Medicaid do not come from Washington – they come from the states.”

Representatives Joe Pitts (PA-16) and Glenn Thompson (PA-5) are cosponsors of the House version of the bill. Allowing Pennsylvania to customize Medicaid will improve both the efficiency and quality of care.