Reforming Medicaid Is a Moral Imperative

Note: This op-ed was originally published in the Lancaster LNP.

Do you know someone who desperately needs medical care but can’t access it? Few things are more heartbreaking. Helping people stuck in this circumstance was one of Obamacare’s biggest promises. But, it turns out, Obamacare itself diverted resources away from those in need by expanding Medicaid to millions of able-bodied adults.

Seven years later, the results are discouraging—there’s scant evidence this Medicaid expansion improved health outcomes, and costs continue to rise.

To pay for expanding Medicaid to able-bodied, childless adults, for example, Arizona eliminated Medicaid coverage for heart, liver, lung, pancreas, and bone marrow transplants. Patients died as a result.

Across Pennsylvania, almost 14,000 people are on the waiting list for home and community based care for intellectual disabilities. But instead of receiving help, they’re being passed over.

The reason? Medicaid is broken.

After Congress failed to agree on an Obamacare replacement, fixing Medicaid is not simply an option; it’s a moral imperative.  

A recent New England Journal of Medicine study revealed some of Medicaid expansion’s negative effects. Patients in expansion states reported no improvement in health status yet faced longer wait times for appointments compared to patients in non-expansion states. Similarly, an earlier study showed gaining Medicaid coverage led to more health care use, but this did not necessarily lead to improved health outcomes.

Doctors willing to accept new Medicaid patients are also difficult to find. After a Harrisburg pediatric practice lost doctors and cut hundreds of Medicaid patients, one mom was forced to call six different offices before finding a pediatrician willing to see her autistic children.

Here’s the startling fiscal reality: Almost half the state’s $80 billion operating budget funds human services. Medicaid alone takes $26.9 billion—more than education, transportation, and debt service combined.

Elizabeth Stelle

To make matters worse, Medicaid’s matching funding system encourages states to spend more in order to receive “free” federal tax dollars. The federal government pays 95 percent of the costs for healthy expansion adults versus 52 percent for others, creating a perverse incentive to push the most needy to the back of the line. The situation is critical in Pennsylvania, where limited resources will soon force government to choose between the healthy and those in need.

Here’s the startling fiscal reality: Almost half the state’s $80 billion operating budget funds human services. Medicaid alone takes $26.9 billion—more than education, transportation, and debt service combined—and increases are on the way. Medical Assistance and Long Term Living costs are projected to rise by another $844 million next year, according to the Independent Fiscal Office. Yet, these dollars aren’t always getting to people who truly need them.

As Health and Human Services Secretary Tom Price rightly said, “We ought not be measuring programs by how much money we put into it, we ought to be measuring them by whether or not they work.”

Medicaid simply isn’t working for Pennsylvanians. But a funding change called “block granting” would make a world of difference. 

Under a block grant, federal Medicaid dollars would flow to the state via a lump sum or per-capita amount. In exchange for a set amount of funding, states would be free of onerous regulations and able to design programs and allocate resources based on residents’ needs—not on Washington’s dictates.

Take the example of Rhode Island. In 2009, the state secured a waiver from Medicaid regulations in return for five years of fixed funding. This system replaced dozens of separate programs that lacked coordination. The proof of success was undeniable. By 2013, the Providence Journal reported a $28 million Medicaid surplus. In today’s era of spending overruns, this is unheard of.

Gov. Wolf and lawmakers should ask, “If we could redesign Medicaid and create the best program for Pennsylvanians, what would that look like?” The truth is, no one would propose the costly, ineffective system we have today.

Elizabeth Stelle

Arizona and Florida likewise improved the quality of their Medicaid programs without breaking the bank when given flexibility.

In considering how best to serve Pennsylvanians, Gov. Wolf and lawmakers should ask, “If we could redesign Medicaid and create the best program for Pennsylvanians, what would that look like?”

The truth is, no one would propose the costly, ineffective system we have today.

Block granting Medicaid would enable Wolf and lawmakers to make Medicaid truly work for Pennsylvanians. We can do better than the status quo—and for the sake of Pennsylvanians waiting desperately for health care, we must.

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Elizabeth Stelle is director of policy analysis for the Commonwealth Foundation, Pennsylvania’s free-market think tank.