Partisan rhetoric over the federal budget has intensified with Democrat politicians claiming Republicans will cut Medicaid benefits.
Illinois Gov. J. B. Pritzker, a Democrat, argued it will be impossible for Republicans to find $880 billion in spending cuts without touching Medicaid. The House budget reconciliation bill instructs the House Energy & Commerce Committee to cut $880 billion over the next 10 years. The bill does not mention Medicaid cuts. The House and Senate are currently reconciling the two chambers’ versions.
“Medicaid is where most of us think they will go after because Republicans have been attacking Medicaid for years and years,” said Pritzker on Fox News Sunday on April 13. “Where will you find $880 billion? That’s the big question, and the rest of us can see through it.”
“I’m not for cuts in Medicaid,” said Rep. Vern Buchanan (R-FL), chair of the House Ways and Means Health Subcommittee, in a public forum on April 2. “There are a lot of inefficiencies [in the federal government]. We’ve got to find a way to be able to … do things better for less.”
Kickback Scheme
A source of contention is so-called “provider taxes,” where a state will impose a tax on Medicaid hospitals and clinics to boost federal reimbursements and then give the “tax” back to the hospitals as a rebate. This gives those states more federal tax money without providing more or better services for recipients. Republicans say disallowing these taxes could save $600 billion over a decade.
Hospitals are pushing back, calling the idea “devastating.”
“It would certainly create a financial strain on the ability to continue to provide [Medicaid] services,” American Hospital Association Executive Vice President Stacy Hughes told The Wall Street Journal.
Reform Call
The only way to save Medicaid and stop the political blowback is to reform the program in a big way, says John C. Goodman, president of the Goodman Institute for Public Policy Research and co-publisher of Health Care News.
“The rhetoric is getting stronger,” said Goodman. “You have conservatives saying they won’t vote for any bill that cuts benefits. It is puzzling why Republicans are resistant to reform the program altogether.”
Health Care ‘Stamps’
Goodman says three reforms would give Medicaid enrollees access to the same kind of care middle-income patients receive, while saving several hundred billion dollars.
To start, lawmakers should allow needy people to buy health care the way they use food stamps to buy food, Goodman says.
“If they go to a community health center or an ER, they pay Medicaid rates,” said Goodman. “But if they go to a MinuteClinic, or a freestanding ER, or any private practice doctor, they can add to the Medicaid rate with cash and pay the market price. This gives them access to the same type of care that is now only available to other patients. This practice is currently illegal.”
Roth-Style HSA
Congress should also allow Medicaid enrollees access to a Roth-style health savings account (HSA), says Goodman.
“Medicaid managed care insurers should be able to make deposits to these accounts, which can be designated for numerous purposes, including purchasing all primary care,” said Goodman. “Any money not spent can be withdrawn for other purposes without taxes or penalties.
“This arrangement would be voluntary,” said Goodman. “It would be an opportunity, not a requirement.”
DPC Access
In addition, Medicaid enrollees should have access to direct primary care, membership-style care that works outside the insurance reimbursement system for an affordable monthly flat fee, says Goodman.
“This is 24/7 access along with a doctor’s phone number,” said Goodman. “Medicaid could supply the funds, or let enrollees make monthly payments from their Roth HSA. In all cases, they should be able to pay the market price, so that doctors will compete for their business. The cost in Wichita is $50 a month for a mother and $10 for a child.”
Abundant Waste
Republicans can help taxpayers and the needy alike by “prioritizing efficiency, accountability, and smarter resource allocation,” says Gary Alexander, who leads the Medicaid and Health Safety Net Initiative at the Paragon Health Institute.
“Medicaid’s annual cost exceeds $900 billion, and inefficiencies—like the $1.1 trillion in improper payments over a decade—highlight clear opportunities for reform,” said Alexander. “Tightening eligibility to focus on the truly needy, reducing administrative bloat, and strengthening oversight can generate savings without harming essential services. Also, implementing Paragon Institute’s recommendation on the federal match rate for able-bodied working age adults would be highly effective.” (See related commentary, April 23, HCN)
AnneMarie Schieber ([email protected]) is the managing editor of Health Care News.
