June 14, 2017 at 5:00 am ET
With the House of Representatives’ vote to repeal the Affordable Care Act and replace it with a slimmed down version of the American Health Care Act that was filed earlier this year, all eyes are now on the Senate to see what will emerge from that chamber.
Regardless of the outcome, one thing is certain: Medicaid costs are ballooning for states that broadened eligibility under the Affordable Care Act, and the Trump administration and Congress are going to look for ways to rein in federal spending on Medicaid.
The Trump administration has made clear its vision for Medicaid, the massive federal-state program that serves those with low incomes, people with disabilities, and the elderly: Limit the federal government’s investment in the program on a per member basis and give the states the ability to manage the program the way they want.
This federalist approach is consistent with the way the administration is addressing other major policy areas: reduce regulation, limit federal investment, and let responsibility for managing the programs devolve to the states.
The significant growth in federal Medicaid spending results from the growth in people covered by the program. In Massachusetts, for example, more than 1 in 4 residents is covered by Medicaid.
Reforming Medicaid does not have to be an all-or-nothing approach, where millions of people are thrown off of the program to reduce the budget. The states, which administer Medicaid, are closest to the problem and also are in the best position to develop solutions for Medicaid. With leeway to innovate and the pressure to achieve savings, the circumstances are ideal for change.
Since the program’s inception, the federal government has had regulations in place that mandate certain services be provided and that also set rules around eligibility. Those states seeking to innovate have had to secure a waiver from those rules. Governors historically have not liked the waiver process, which can be time-consuming and subject to political considerations.
With a clean slate, here are four things that states could do to improve the care that is provided to Medicaid recipients leading to better health outcomes and healthier communities, while also creating cost savings.
Medicaid needs to be fairly funded and we must take a compassionate approach in the administration of the program. Cutting eligibility for families, seniors, and people with disabilities will create needless harm. Whatever happens in Washington, the dollars are never going to be large enough. In fact, they haven’t been large enough for many years, and that is why Medicaid underpays providers like hospitals and nursing homes for the cost of care.
Governors and their Medicaid directors need to be thinking now about what they can do differently when freed of federal constraints. The dramatic growth in the program and its cost is surely a problem. It also, however, creates the opportunity for true innovation.
We are about to witness the creation of 50 state laboratories for improving health care. With shared learning and collaboration, we can do things better than they are done now.
Gerard A. Vitti is the founder and CEO of Healthcare Financial Inc., a company that works with managed care organizations by assisting individuals in obtaining health care benefits.
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