Policy Documents

Reforming Florida's Medicaid Program With Consumer Choice and Competition

Michael Bond –
February 1, 2005

In this Backgrounder, the author makes the case that Florida’s Medicaid Program is in serious trouble. It suffers from major quality issues as well as a rapid and unsustainable growth in spending. Although Medicaid is a needed program for those who otherwise would “fall between the cracks” in our health-care system, the current plan perversely encourages people to “fall between the cracks.”

At the heart of the problem is the lack of a free market in the payment for and delivery of health services to beneficiaries. The system is fundamentally flawed because it uses a centrally administered pricing scheme to pay providers. This payment framework ensures that reimbursements are not set at market levels, and it renders the program inherently inefficient in terms of both quality and cost. The quality issue is as crucialas cost because, in general, no one receives lower quality care than fee-for-service Medicaid patients.