Medicaid Reform Bill Introduced in Congress

Published May 31, 2016

In response to continued demands from state officials for more flexibility for the Medicaid system, Republican Senators Tom Coburn of Oklahoma, Richard Burr of North Carolina, and Saxby Chambliss of Georgia have introduced the Medicaid Improvement and State Empowerment Act. The legislation includes several reforms designed to give states greater leeway to prioritize and manage care.

“States have a proven track record of being able to adopt innovative solutions to improve patient care. By giving them more control over their own Medicaid programs, we are allowing states to innovate and better meet their needs and, most importantly, the health care needs of their patients,” Burr said in a press conference announcing the legislation.

Medicaid is already the largest budget expense for the states, accounting for nearly 22 percent of total state spending in FY 2010, according to a study by the bipartisan National Governors Association. The system’s costs, already expanded as a result of economic downturns, are expected to increase dramatically under President Obama’s health care law, a fact cited by 33 governors in a letter to the Department of Health and Human Services in January.

“The effect of the federal requirements is unconscionable; the federal requirements force governors to cut other critical state programs, such as education, in order to fund a ‘one-size-fits-all’ approach to Medicaid,” the governors wrote.


Conversion to Health Grants

The legislation would convert most of Medicaid’s federal funding into “health grants,” which would be passed through to individuals according to state priorities. It would also allow states more flexibility in determining eligibility and payment levels, particularly when it comes to the more predictable and stable costs of long-term care services.

The legislation leaves Medicaid’s acute care program almost entirely untouched, however, exempting short term care and hospitalization costs for those with disabilities and the elderly—so-called dual-eligibles—designed to protect patients with the most severe needs.


States Facing Cost Upsurge

The Coburn-Burr-Chambliss bill comes at a time when states are only beginning to recognize the enormous burdens of Medicaid costs looming on the horizon. According to a 2010 study by Cato Institute senior fellow Jagadeesh Gokhale, the budgetary impact of Obama’s law goes far beyond the previously expected increase in Medicaid enrollment after the imposition of the federal individual mandate in 2014.

Basing his calculations on Medicaid enrollment expectations, population growth, and out-year federal matching rates, Gokhale found the 10-year post-2014 Medicaid costs represent as much as a 39 percent cost increase for Illinois, a 36.3 percent increase for New York, a 50 percent increase for Florida, and a 59.5 percent increase for Texas.


Medicaid’s Outcome Problems

The cost increase comes as recent studies have revealed Medicaid badly fails to serve its target population. A comprehensive 2010 study by the University of Virginia published in the Annals of Surgery found being a Medicaid patient correlates with the longest adjusted length of stay and the largest total costs for any category of patient. According to researchers, Medicaid patients who require surgery are 13 percent more likely to die than those who are uninsured, and they are 97 percent more likely to die than patients with private insurance.

In addition, a 2005 study published in the Journal of the American Medical Association found Medicaid patients have such profound difficulty accessing care that it is easier to get a doctor’s appointment if they claim to be uninsured. Researchers in Denver, Colorado found only 8.3 percent of their calls when they claimed to be covered by Medicaid resulted in a doctor’s appointment, compared with 36.8 percent when they claimed to be uninsured.

Coburn, a physician, notes Medicaid’s dramatically below-market payments to providers mean a Medicaid card badly fails its intended purpose of guaranteeing access to care.

“Our broken Medicaid program shows that access to a government health care program does not guarantee access to health care. Our bill will help fix a program that denies patients access to 40 percent of doctors,” Coburn said.


Benjamin Domenech ([email protected]) is managing editor of Health Care News.


Internet Info:

“Insurance Status and Access to Urgent Ambulatory Care Follow-up Appointments,” Journal of the American Medical Association:

“Primary Payer Status Affects Mortality for Major Surgical Operations,” Annals of Surgery:

“Final Notice: Medicaid Crisis,” Texas Public Policy Foundation: