Reforming Medicaid to Stabilize Medicare
National Medicaid expenditures increased from $75 billion in 1990* to $427 billion in 2010**. This runaway growth is driven by a system of open-ended federal matches for state spending. The more a state spends on Medicaid, the more federal matching funds it receives. Because Washington supplements state Medicaid budgets, states do not demand a full dollar’s value for each dollar spent. Even more, states can actually augment their revenue by increasing their Medicaid spending. These two forces work synergistically to fuel the skyrocketing cost of Medicaid.
State block grants give states both the incentive and the ability to run lean, efficient programs designed to cover those who truly need assistance. Physicians for Reform outlines a series of reforms that would reduce federal Medicaid spending by $30 to $35 billion annually while improving patient outcomes.
The Sustainable Growth Rate Formula (SGR) calls for a devastating $300 billion cut (over ten years) to Medicare physician reimbursement. No physician could afford caring for our nations seniors if this cut takes place. Physicians for Reform recommends using the savings generated by Medicaid block grants to stabilize Medicare for seniors.
1) Let businesses and individuals purchase health insurance across state lines. Choice and competition drive innovation and efficiency. However, we can achieve both of these without a public option and without government regulated exchanges. Letting businesses and individuals purchase insurance across state lines does several things:
• This model allows 50 different congressional bodies to compete against one another in their attempt to craft the most efficient and effective policies.
2) Encourage lower cost / higher deductible policies combined with Health Savings Accounts. This type of health insurance places patients in control of their own healthcare dollars encouraging them to ask two questions:
• How much does this cost?
When implemented by businesses, this strategy can decrease healthcare sending by 13% without compromising access to care. If America can reduce even one fourth of its healthcare spending by even 10%, this will save $50 billion every year.
Make health insurance and Health Savings Accounts tax deductable for Americans who purchase individual policies. This gives individuals the ability to purchase health insurance of their choosing if they are not happy with their employer-based policy. Again, this empowers the individual and increases choice and competition.
A 2007 study done by the Pacific Research Institute found physicians spend approximately $124 billion every year in defensive medicine. Much of this is driven by the unpredictable results of our medical legal system. Significant tort reform in all 50 states would decrease healthcare spending by an estimated $50 to $70 billion annually.***
Covering the Uninsured
Insurance Reform, Tax Reform, and Tort Reform could save Americans approximately $100 to $120 billion every year. We can then use $80 billion of these dollars to subsidize tax credits for 13 million Americans without healthcare. The net result? Not only does every American gain access to healthcare, we save approximately $20 to $40 billion every year.
* National Association of State Budget Officers, State Expenditure Report – 1991, September, 1991, p. 46.
**Center for Medicare & Medicaid Services, “National Health Expenditure Projections 2009 – 2019,” September, 2010. https://www.cms.gov/NationalHealthExpendData/downloads/NHEProjections2009to2019.pdf
***Pacific Research Institute, “Jackpot Justice: The True Cost of America’s Tort System,” 2007. www.legalreforminthenews.com/2007PDFS/PRI_2007JackpotJusticeFinal.pdf