As we inch towards the state budget deadline, welfare spending reductions in Pennsylvania continue to be contentious. The reductions that are proposed concentrate on 20 percent of spending, since 80 percent is tied to Medicaid and state officials are barred by the feds from improving the quality or efficiency of the program.
Welfare spending is already outpacing personal income and state revenues; without changes, welfare spending is projected to grow 8 percent per year. How can we ensure sustainable welfare spending without harming those in need? By reforming the program driving the majority of the spending: Medicaid.
There is an effort to give states some control over Medicaid. Legislation recently introduced in the US House of Representatives, HR 4160, would create a Medicaid block grant, allowing states the freedom to design eligibility, benefits and coordinated care around the unique needs of their population. In exchange for this regulatory flexibility, Medicaid funding would be frozen at 2012 levels.
Getting rid of the current matching formula that rewards increases in state spending with additional federal funding (all from taxpayers) will go a long way in refocusing Medicaid benefits.