GOP Governors Point the Way Out of the Medicaid Mess

One of Obamacare's greatest mistakes is not turning to states for solutions on reform.


Everyone agrees that entitlement reform needs to be on the nation's political agenda. Few people can agree, however, on what needs to be done.

The facts are plain. The economic burden imposed on the federal budget by Social Security, Medicare and Medicaid is, at some point, going to become unsustainable under the current system. Without real reform, the only alternatives left will be benefit cuts, tax increases or some combination of the two.

It doesn't have to be that way—but to make real reforms now, while there is still time, requires the political class to confront this important issue head on, as the Republican Governors Public Policy Committee Health Care Task Force did Tuesday with its release of "A New Medicaid: A Flexible, Innovative and Accountable Future."

The report is "the culmination of the combined efforts of policymakers and health care administrators in the nation's Republican-led states," those who write it said, that is intended to serve "as the basis for dialogue during the upcoming RGPPC-sponsored Health Care Summit." [Check out our editorial cartoons on healthcare.]

The input from the nation's governors is an important part of addressing the coming entitlement implosion—just as their input was critical to the success of welfare reform back in the 1990s.

"One of the major mistakes of Obamacare is that it ignored input from the states," said RGA Policy Chairman Haley Barbour. "This report encompasses four months of substantive dialogue among the states about how to best reform Medicaid. It is a well thought out document that should be taken seriously by anyone in Congress or the White House who is interested in saving Medicaid."

Keying off the expansion of Medicaid that is anticipated as part of Obamacare (formally known as The Patient Protection and Affordable Care Act) which is "the largest expansion of the program in history" the governors said they were "deeply concerned the existing challenges Medicaid faces today will be exacerbated by the program's unprecedented growth over the next few years." [See photos of healthcare reform protests.]

Just looking at the numbers, "Annual state Medicaid rolls have swelled to more than 69.5 million enrollees, or more than one in five Americans, in 2011. Medicaid enrollment now exceeds Medicare enrollment by more than 8.1 million people on an average monthly basis," and, after Obamacare's mandated eligibility expansion goes into effect in 2014, says the report, the non-partisan Congressional Budget Office projects that "an additional 25.6 million people will enroll in Medicaid in the next decade, increasing state administrative costs by $12 billion. Overall, PPACA's new eligibility groups are expected to cost the states a total of more than $118 billion through 2023."

The 31 specific recommendations contained in the report flow from a set of seven principles for reform the RGA outlined in a June 2011 letter to congressional leaders:

  1. States and territories are best able to make decisions about the design of their healthcare systems based on the respective needs, culture and values of each state.
  2. States and territories should also have the opportunity to innovate by using flexible, accountable financing mechanisms that are transparent and that hold states accountable for efficiency and quality healthcare.  Such mechanisms may include a block grant, a capped allotment outside of a waiver, or other accountable and transparent financing approaches.
  3. Medicaid should be focused on quality, value-based and patient-centered programs that work in concert to improve the health of our states' citizens and drive value over volume, quality over quantity, at the same time containing costs.
  4. States and territories must be able to streamline and simplify the eligibility process to ensure coverage for those most in need, and states must be able to enforce reasonable cost sharing for those able to pay.
  5. States and territories can provide Medicaid recipients a choice in their healthcare coverage plans, just as many have in the private market, if they are able to leverage the existing insurance marketplace through innovative support mechanisms.
  6. Territories must be ensured full integration into the federal healthcare system so they can provide healthcare coverage to those in need with the flexibility afforded to the states.
  7. States must have greater flexibility in eligibility, financing and service delivery in order to provide long-term services and support that keep pace with the people Medicaid serves. New federal requirements threaten to stifle state innovation and investment.  In addition, since dual eligibles now constitute 39 percent of Medicaid spending, Medicare policies that shift costs to the states must be reversed and the innovative power of states should be rewarded by a shared-savings program that allows full flexibility to target and deliver services, which are cost-effective for both state and federal taxpayers.
  8. "Medicaid consumes an ever-increasing and frightening share of state budgets and the current pace of spending is unsustainable," said RGA Chairman Bob McDonnell. "Regardless of whether or not Obamacare is repealed or struck down, Medicaid is in dire need of reform. This report offers realistic ideas about how to fix Medicaid from the states' perspective." [Read: Orrin Hatch's Top 10 Reasons to Repeal Obamacare]

    The challenge moving forward, the governors said in the report, is to find a way to think about a new way to manage Medicaid, "one that more easily adjusts to the needs, ideas and culture of each state."

    • See a collection of political cartoons on the budget and deficit.
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