Get it Right on Medicaid
By: William D. Novelli, Chief Executive Officer Source: AARP Bulletin Today Date Posted: 2005-04-01
Congress and the states are wrestling with the high costs of Medicaid, the nation’s largest health insurance program. The administration’s budget calls for wide-ranging cost-control changes that would trim $60 billion from Medicaid over 10 years. And numerous governors of both parties are searching for ways to control state costs.
Their concerns are well founded. Medicaid spending grew to more than $300 billion last year. This was driven primarily by a surge in enrollment and by rising prescription drug and hospital costs.
What exactly is Medicaid? It is the federal-state safety net program that provides health services to one in every six Americans – children in poverty, older people needing long-term care (it covers about two-thirds of those in nursing homes), those with disabilities.
As we seek to contain Medicaid costs, we must be careful not to create more problems by putting millions of lower-income Americans at risk.
When employers drop employee health insurance – or coverage becomes too expensive for workers to pay – people turn to Medicaid as a last resort. Much of Medicaid’s rising cost reflects a shift from private to public spending on health care, not an increase in overall spending.
There are ways we can make Medicaid more efficient by, for example, buying prescription drugs at lower prices and spending more on home and community care and less on costly nursing homes.
But simply capping or cutting federal spending only sends the burden to the states and increases the amount of uncompensated care doctors and hospitals provide. These costs are inevitably shifted to employers and employees in the form of higher premiums. Funding cuts could also lead to unduly harsh eligibility requirements for Medicaid recipients.
As we grapple with Medicaid’s spiraling costs, we need a thoughtful and reasonable approach, not quick fixes that could hurt those most in need. The ultimate solution lies in taking a long-range view and attacking the problem at its source: our wasteful, dysfunctional health care system.
Until we can muster the political will to tackle that, let’s not make the problem worse by applying the wrong answers to Medicaid.
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