This election season has seen lots of talk (and demagoguery) about whether investors, entrepreneurs, and small business owners should be hit with class-warfare tax policy.
And there’s also been lots of sturm and drang about the best way of averting bankruptcy for Medicare, which is the federal government’s health care program for the elderly.
But there’s been surprisingly little discussion so far about the issue of Medicaid, which is the federal government’s health program for poor people.
I’m not prone to optimism, but I can’t help but wonder if this is because even statists grudgingly accept that the program needs to be reformed.
If so, the right approach is block-granting the program back to the states. Here’s some of what Paul Howard and Russell Sykes had to say about the issue in the Wall Street Journal.
Medicaid, America’s safety-net program for more than 62 million low-income uninsured Americans, is broken. It’s broken at the state level, where program costs are swamping state budgets. It’s broken for federal taxpayers, as Medicaid waste, fraud and abuse drain tens of billions of dollars from federal coffers every year. …The best hope for Medicaid reforms that can improve care for low-income enrollees, reduce fraud, and put the program on a sustainable trajectory is to cap federal spending to the states by using block grants. Block grants would offer states a predictable source of federal funding in return for broad state flexibility in Medicaid administration, benefits and copays.
Howard and Sykes explain that the federalism approach already has been tried with welfare reform, which was very successful.
We know that well-designed block grants can work and attract bipartisan support. The best example is the successful 1996 Temporary Assistance for Needy Families program for welfare reform, which helped move millions of women and children out of poverty and into the workforce. Critics of Medicaid block grants argue that they would leave insufficient funds to cover new state expenses, creating a “race to the bottom” as states slashed funding on services for the poor. But such objections were also raised about block-granting welfare, and they turned out to be wrong.
They also reveal some very useful and interesting information about a test program in Rhode Island that shows the benefits of shifting health care decisions to the state level.
In 2009, Rhode Island accepted a five-year cap on combined state and federal Medicaid spending as part of a waiver from the federal government. ..To date, Rhode Island projects that by various new measures—focusing on community-based care that keeps seniors out of expensive nursing homes, for instance, and medical supervision that can keep children and adults out of emergency rooms—the state has saved $100 million. The flexibility to plan care has also helped reduce its projected Medicaid spending rate to 3% from 8% annually.
It’s worth noting, by the way, that Rhode Island is a very left-leaning state. Indeed, one of the reasons why I’m semi-optimistic about Medicaid reform is that governors and state legislatures – regardless of partisan affiliation – know that the current Medicaid system is unsustainable.
For more information, here’s my video explaining why block grants and federalism are the right way of dealing with Medicaid.
Since I’m not used to being optimistic, let me also give you a nightmare scenario for how this issue could evolve. My greatest fear is that a future president (perhaps Romney!) will decide to impose a value-added tax. In normal circumstances, that might upset state politicians since it would complicate their efforts to impose sales taxes.
But if a future President promised to have the federal government take over 100 percent of Medicaid financing, I suspect state politicians would jump at the trade.
So we would get the worst of all worlds. A giant new tax and more centralization.
P.S. Here’s the full three-part video series on entitlement reform.
[…] an even better option would be complete decentralization. The federal portion of Medicaid spending should be turned into […]
[…] reform (block granting the program) is a very good idea to fix budget problems at the state level and to fix budget problems in Washington. And reduce […]
[…] reform (block granting the program) is a very good idea to fix budget problems at the state level and to fix budget problems in Washington. And reduce […]
[…] I frequently make the case for decentralization (on a wide range of issues, such as Medicaid, the pandemic, food stamps, infrastructure, […]
[…] I frequently make the case for decentralization (on a wide range of issues, such as Medicaid, the pandemic, food stamps, infrastructure, […]
[…] I frequently make the case for decentralization (on a wide range of issues, such as Medicaid, the pandemic, food stamps, infrastructure, […]
[…] wiped out and transferred back to state and local governments, including redistribution, health care, transportation, […]
[…] should be wiped out and transferred back to state and local governments, including redistribution, health care, transportation, and […]
[…] even proposed that Washington shouldn’t operate any social programs. No food stamps. No Medicaid. No redistribution programs of any […]
[…] P.P.S. Here’s my two cents on federalism in the context of issues such as welfare, natural disasters, transportation, coronavirus, infrastructure, and Medicaid, […]
[…] third-most important referendum is actually four different measures. There are proposals to expand Medicaid in Idaho, Montana, Nebraska, and […]
[…] da era Clinton , mas estendendo o princípio para todos os programas de redistribuição (Medicaid , food stamps , EITC , etc4 […]
[…] are left in place, it’s definitely true that Medicaid desperately needs reform, ideally by shifting the program to the states, thus replicating the success of welfare […]
[…] are left in place, it’s definitely true that Medicaid desperately needs reform, ideally by shifting the program to the states, thus replicating the success of welfare […]
[…] it’s a very good idea to slow down the growth of Medicaid […]
[…] of the Clinton-era welfare reform, but extending the principle to all redistribution programs (Medicaid, food stamps, EITC, […]
[…] of the Clinton-era welfare reform, but extending the principle to all redistribution programs (Medicaid, food stamps, EITC, […]
[…] of the Clinton-era welfare reform, but extending the principle to all redistribution programs (Medicaid, food stamps, EITC, […]
[…] of the Clinton-era welfare reform, but extending the principle to all redistribution programs (Medicaid, food stamps, EITC, […]
[…] There’s nothing in there about a Department of Housing and Urban Development. Nothing about Medicaid. […]
[…] I agree with the scholars from the Austrian School that decentralization is the right approach. We already did that for basic welfare payments during the Clinton years, and we should do it for all other forms of income redistribution, perhaps starting with food stamps and Medicaid. […]
[…] whether it’s Medicaid, education, transportation, welfare, or disasters, involvement from Washington makes things worse […]
[…] whether it’s Medicaid, education, transportation, welfare, or disasters, involvement from Washington makes things worse […]
[…] Just like they also deserve applause for working to block-grant the Medicaid program. […]
[…] restore a free market. That means not only repealing Obamacare, but also addressing all the other programs and policies which have caused the third-party payer […]
[…] This is yet another reason why we need to replace the federal Medicaid entitlement with a block grant. […]
[…] This is yet another reason why we need to replace the federal Medicaid entitlement with a block grant. […]
[…] to their credit, already have proposed that solution for Medicaid. But they need to expand that legislation to other means-tested […]
[…] to their credit, already have proposed that solution for Medicaid. But they need to expand that legislation to other means-tested […]
[…] is the best way of dealing with counterproductive income-redistribution policies such as welfare, Medicaid, and food […]
[…] is the best way of dealing with counterproductive income-redistribution policies such as welfare, Medicaid, and food […]
[…] that means not only repealing Obamacare, but also addressing all the other programs and policies which have caused the third-party payer […]
[…] that means not only repealing Obamacare, but also addressing all the other programs and policies which have caused the third-party payer […]
[…] So what’s the best way of dealing with the Medicaid mess? Fortunately, we have a simple answer. As I mentioned in the interview, the entire program should be block granted and turned over to the states. […]
Why “block grants” to states? Sorry, but that still means, in the best of all possible worlds, taking X amount of money out of the state in Federal taxes, laundering it through Washington, D.C, and then sending what remains back to the states. I fail to see how that is “federalist”. There’s a classic refrain in human relationships:
He who pays the piper calls the tune. Block grants don’t change that, it simply changes the Federal government from the DJ to the one determining the station format and picking what can be on the playlist. Still calling the tunes.
Reblogged this on Public Secrets and commented:
This looks like a reasonable solution that has the benefit of respecting our federalist traditions, while stabilizing Medicare.
I know Cato can’t come out and endorse candidates, but a word or two about Gary Johnson wouldn’t hurt. His platform and his record endorse exactly the policy you’re discussing in this post.
Here you go. They are a little dirty.