The big headache with Medicaid
The Obama administration's deal with three hospital groups will save $155 billion in Medicare and Medicaid spending. But commentator David Frum says there's a bigger problem with Medicaid.
David Frum (David Frum)
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TEXT OF STORY
Kai Ryssdal: Vice President Joe Biden made yesterday's health-care news official this morning. He announced a deal with three hospital groups that's supposed to save $155 billion in Medicare and Medicaid spending. The hospitals will take less from the government for providing services to the poor and elderly. Commentator David Frum says that's a fine start. But Medicaid's got bigger problems.
DAVID FRUM: Virtually every American state is projecting a budget deficit for this coming year, and most expect a deficit in fiscal 2011 as well: perhaps $350 billion altogether over the next 24 months.
President Obama's chief of staff has advised "never let a crisis go to waste." Let's use this crisis to fix a glaring problem: the catastrophically perverse financing of Medicaid, for almost all states their fastest-growing budget expense.
The federal government pays at least half the cost of Medicaid, more in states with lower average incomes. In other words, rich states with a lot of poor people -- California or New York -- will receive less for each Medicaid recipient than a state with a lower average income but fewer poor. Wyoming, say.
In good times, this arrangement means that states can buy a dollar's worth of extra health coverage for no more than 50 cents, and often much less.
In bad times, it means that most of the savings from cutting Medicaid budgets reverts to the federal government. For the state politicians who have to do the cutting, a dollar's worth of political pain saves less than 50 cents of state money.
In good times and in bad, states are prevented from innovating and adapting because the federal dollars come attached with strict conditions.
No wonder that Medicaid has become America's fastest-growing major social program but also one of the most rigid and scandal-prone.
The people who make the spending decisions should also bear the responsibility for the cost of those decisions. If the states continue to administer Medicaid, the federal contribution must be capped and redirected away from poor states to poor people.
Otherwise, this program designed in the 1960s will drag American states into their worst collapse since the 1930s.
Ryssdal:David Frum is a resident fellow at the American Enterprise Institute.
Comments
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From Richmond, TX, 07/09/2009
I continue to believe that Marketplace's airing of "Frum's" spots is and will continue to be a practical joke on the listeners.
I will continue to yield that occasionally examining a "left field screw ball" idea proves the validity (or not) of what we are doing...
Once again though Mr Frum list "no hard facts"... just generallized statements that appear to resemble facts.
Following though on his thought, you'd have to believe that poorer states have fewer poor which rich states have more poor.... and that somehow the administration policy for Medicare directly generates the fraud... hmmmmmm... I thought bad people commit fraud, not policy....
Marketplace... You present Mr Frum as an expert in "everything".... there is a saying... "an expert in everything is no expert at all"..
Stop wasting valuable air time on Mr Frum.
From Washington, DC, 07/08/2009
Studies have consistently shown that Medicaid is a most efficient health insurance program and costs far less than private insurance, saving money both for the government and for low-income patients.
It is true that Medicaid is costly, but is that a surprise when there are record numbers of poor and unemployed people and health care costs in both the private and public sector are soaring?
While governors often complain about the costs of Medicaid for states, they are not clamoring to see the program capped, because the loss of federal funds would cause them to go broke faster.
No, Mr. Frum, this is not the time to weaken Medicaid, but to strengthen it as part of our commitment to reform the health care system in an efficient and fair fashion.
Leighton Ku
Professor of Health Policy
George Washington University
From Oakland, CA, 07/08/2009
Uh, could you Marketplace folks get somebody from something other than the right wing usual organizations like American Enterprise et al to give you commentaries here? I am so so SO tired of this kind of scare tactic focused on innovation. SOooo tiresome. Especially since almost all innovation ACTUALLY takes place in universities and is funded by the NIH.
Please find others besides the American Enterprise Institute to weigh in on such topics. The right wing has plenty of money to buy media without your help.
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