Medicaid is now the largest health insurance program in the United State, covering about 74 million Americans with low incomes and disabilities, along with participants in the Children’s Health Insurance Program. Medicaid is costing our federal and state governments enormous amounts of money and the costs are growing – rising from $553 billion in the 2016 federal fiscal year to $565 billion in 2017. That’s about $1 out of every $6 spent on health care in the U.S.
It’s hard to comprehend such large amounts. But it’s easy to understand that if Medicaid spending keeps growing it will gobble up larger and larger chunks of federal and state spending. If nothing is done, rising costs will eventually force governments to make massive budget cuts to other programs, raise taxes, cut coverage under Medicaid – or do some combination of all three.
And under ObamaCare, Medicaid has expanded, providing increased coverage to lower income families in 33 states and Washington, D.C., with Virginia just recently signing on. This expansion costs money and will continue to drive Medicaid costs ever higher – unless something changes.
You don’t need to be a physician, an accountant or a health care expert to understand that Medicaid reform with an eye towards cost savings is now crucial. But coming up with reforms that save money without depriving millions of Americans of health care they need is an extraordinarily difficult challenge.
Luckily, the search for ways to reform Medicaid is led by a very capable and dedicated public servant – Seema Verma, administrator of the federal Centers for Medicare and Medicaid Services.
Before she joined the Trump administration, Verma was a health policy consultant who worked on Medicaid reform programs in Indiana with then-Governors Mitch Daniels and Mike Pence, as well as in Ohio and Kentucky. Now vice president, Pence knows from firsthand experience that if anyone can tackle the Medicaid challenge, it is Seema Verma.
Medicaid has hidden far too long under a smokescreen of undisclosed costs and supposed states’ rights. It is time for this massive federally subsidized program to step out into the light.
President Trump signed an executive order in April designed to help rein in public assistance spending – including Medicaid – for able-bodied people with low incomes. The order calls for allowing states to give such able-bodied people incentives and helping them get the training and education they need to get good jobs and climb up the economic ladder so they no longer need government assistance.
In other words, instead of simply cutting Medicaid and other programs for poor people, help poor people work their way out of poverty.
I interviewed Verma for Fox News recently. I was impressed with her vision for ways to enact President Trump’s plan to help able-bodied Medicaid recipients gain skills and self-esteem, and ultimately get off Medicaid. She emphasized that these programs are not simply work programs, but include community service and education and job training options.
“The Medicaid program was designed for aged or blind or people living with disabilities, pregnant women and children,” Verma told me. “But now that we've put all these able-bodied individuals (on Medicaid), the program needs to be changed to be more flexible. People that are living in poverty want a pathway out of poverty. They don't want to be in that situation. And so what we're trying to do with the Medicaid program, with allowing states to develop programs that give people an opportunity for job training, for community service … and giving them the skills that they need.”
So what is the effect of the Trump administration’s push for a path to rise out of poverty through service, education, or work? The answer is that it is too early to know. According to the Kaiser Family Foundation, multiple states have applied for Medicaid waivers to join Kentucky, Indiana, Arkansas and New Hampshire, which are already developing programs to help people escape poverty.
Efforts by Verma and others in the Trump administration at reform go beyond work requirements. Earlier this month, the Centers for Medicare and Medicaid Services unveiled a new Medicaid Scorecard, which compiles and publicizes data from states for both Medicaid and the Children’s Health Insurance Program.
The first scorecard reveals alarming variances from state to state and major deficiencies in prenatal, postnatal and child care. And though this kind of transparency doesn’t automatically solve problems, it is a huge first step in getting there. It has always been a difficult negotiation between federal oversight and state autonomy when it comes to Medicaid.
The scorecard also reveals an across-the-board paucity of proper follow-up for mental illness as well as addiction. This problem causes neglect (from dental care to prevention to overall hygiene), which mushrooms into expensive physical health problems as well.
When I interviewed Seema Verma she emphasized the need for transparency, both in terms of prices as well as actual health care delivery. The new drug dashboard is another transparency tool that tells a Medicaid recipient how much his or her drug is costing, how much the price has increased, and which manufacturers are responsible.
Knowing the actual price can help patients learn to be more judicious consumers, whether they are footing part of the bill or not. Verma pointed out to me that transparency is only the first step.
The next step is federal intervention and negotiation to maintain flexibility, while imposing basic standards and at the same time combating rising costs. Medicaid has hidden far too long under a smokescreen of undisclosed costs and supposed states’ rights. It is time for this massive federally subsidized program to step out into the light.