Medicare is an emotionally charged program because it provides health insurance coverage for the elderly. But Medicaid covers America’s poor and disabled—and no one wants to see them harmed, either.

However, like Medicare, Medicaid is also in desperate need of reform if it is to continue serving the people it was designed to serve. Nearly one-third of America’s doctors are already opting out of treating Medicaid patients—because their costs often outweigh what the program pays for care.

States—which already have budget crises of their own—share the cost of Medicaid with the federal government. They can’t afford to simply add more people to Medicaid, which is one of Obamacare’s main ways to insure more people. (The Supreme Court’s Obamacare decision gave states some breathing room when it ruled that Obamacare’s Medicaid expansion must be optional for states.)

The program already covers 62.5 million people—about 20 percent of America’s population—and federal spending on Medicaid has no limit. That’s right—there are no limits on federal spending for Medicaid. But there are limits on American taxpayers’ wallets.

Simply adding people to Medicaid should not be the goal. Instead, like other welfare reforms, the goal should be helping people while they’re down—and helping them get back up.

For those who are on Medicaid because of low incomes, the program should be reformed to empower them. Medicaid dollars should follow the individual, so that beneficiaries can choose the coverage they want and participate in the private market like the rest of their fellow citizens. They deserve to have more control over their health care and more personalized options. The Heritage Foundation has outlined such a reform in its Saving the American Dream plan.

The Saving the American Dream plan starts by transitioning non-disabled individuals out of government-run Medicaid and into premium support, where they would have the same private health care options as others. “Premium support” simply means that the health care payment goes with the individual to the plan of his or her choice. For a low-income individual trying to get ahead, the premium support amount could be used to pay the employee’s share of an employer plan or to purchase individual coverage.

For the low-income elderly, who are caught in a complex, bureaucratic combination of Medicare and Medicaid, the Saving the American Dream plan would provide a coordinated care model like Medicare Advantage, while allowing Medicaid to provide additional assistance as necessary. Again, the result would be more control for the individual over the health care dollars and decisions.

Finally, the plan would restore traditional Medicaid to a true safety net—intended to help those with disabilities—while providing greater flexibility to the states to address the complex needs of these populations.

Heritage’s Nina Owcharenko outlines three crucial steps to Medicaid reform:

  1. Repeal Obamacare. As noted, one of the health care law’s goals was significantly expanding Medicaid without offering any solid reforms to address its sustainability. Without repeal, the problems facing Medicaid and the rest of the health care system are extraordinary.
  2. Put Medicaid on a budget. Although states must balance their budgets, federal Medicaid spending has no limit. The more a state spends, the more federal taxpayers must pay out. Therefore, it is critical that federal Medicaid spending is put on a dependable and sustainable path. Block grants to the states, which would give them more flexibility in helping their populations, could be used for taking care of the disabled and elderly.
  3. Set core policy objectives. The policy objectives of Medicaid reform must be clear. It should establish patient-centered, market-based solutions that reduce dependence on government health care and improve care for the most vulnerable.

Medicaid needs reforms that will give America’s poor and disabled the health coverage they need, without bankrupting taxpayers. This type of reform is possible, and the sooner we get started, the better.

LEARN MORE:

Medicaid: More Than a Block Grant Is Needed by Nina Owcharenko

Don’t Expand Medicaid—One-Third of Doctors Are Already Opting Out of It by Alyene Senger

The Supreme Court’s Medicaid Decision: The Obamacare Mess Just Got Messier by Nina Owcharenko

Florida’s Medicaid Reform Shows the Way to Improve Health, Increase Satisfaction, and Control Costs by Tarren Bragdon

Quick Hits:

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