Making Medicaid Sustainable
Medicare, Medicaid, and Social Security have long been third rails in American politics. Any effort to reform or change these programs has long been seen as political suicide by elected officials in both parties. But the Medicaid program in particular needs reform, and badly.
Passed into law by Congress in 1965 alongside Medicare, Medicaid is a joint federal-state program that provides healthcare coverage to people with low incomes. Medicaid provides a variety of mandatory and optional benefits for its beneficiaries, including coverage for doctor visits, hospital stays, laboratory services, and prescription drugs.
Since its inception in 1965, Medicaid has gone from a specialized program for poor pregnant women, kids, the aged, blind, and disabled, to one of America’s largest and most expensive healthcare programs. According to the Kaiser Family Foundation (KFF), as of 2019, Medicaid provided health coverage to one in five Americans, is responsible for 50 percent of long term care spending, and covers a larger population than it originally did in 1965. According to a chart with data from the Urban Institute on the KFF website, total Medicaid spending as of September 2021 totaled more than $661 billion.
Some of the most contentious debates about Medicaid are connected to the Affordable Care Act.
The ACA required states to expand Medicaid coverage to adults whose incomes fall below 138 percent of the federal poverty level. The expansion was originally mandatory, but in 2012, the Supreme Court ruled that state-level expansion was optional. Since then, all but 12 states have expanded the Medicaid program.
Medicaid expansion was billed as a way to expand coverage for low-income Americans, with the federal government paying up to 90 percent of the costs (with a recent bump for new expansion states in the American Rescue Plan). Traditional Medicaid populations, like people with disabilities, generally only have federal matching rates ranging from 50 to 77 percent.
Medicaid expansion increasingly has resulted in states favoring coverage of able-bodied adults rather than people with disabilities who need long term care services in the community. This funding bias has led to these individuals being placed on waiting lists for these services.
Home- and community-based services (HCBS) are an optional program under Medicaid. HCBS services allow people who qualify for institutional care to access that care in a less restrictive setting. While all states offer HCBS services to varying degrees, states are limited on what they can spend and often place disabled individuals on waiting lists until more funding is available to provide services. Many progressive states also oppose institutional care, and place even those needier patients who want or need institutional services on HCBS waiting lists alongside individuals with lower support needs, lengthening waiting lists.
The number of disabled people on waiting lists was an acute problem before the Covid-19 pandemic. A report from the Foundation for Government Accountability found that in 2018, there were roughly 650,000 individuals waiting for services. Tragically, 21,904 of these individuals passed away before even getting access to services.
While the 90-10 federal match for Medicaid expansion sounds like a good deal for the states, the 10 percent that a state spends on the expansion adds up, and takes state funds that could be put towards reducing or eliminating Medicaid waiting lists for people with disabilities and expand access to both HCBS and institutional settings.
It’s time America has a conversation about the Medicaid program and what its future is. Is it a vehicle for endless coverage expansions, or a safety-net program for the least among us?
As a person with a disability, Medicaid has been a lifesaving program. It has helped me get the care and services I needed as a person who is autistic and has severe depression. At the same time, though, when progressives talk of Medicaid as vehicle for coverage expansion, or libertarians suggest block-granting Medicaid funds to the states, I begin to wonder whether it will still be around for me in the future.
A fix is possible. Medicaid should be returned to its original role as a safety net for pregnant women, poor kids, the aged, blind, and disabled. This reform need not involve changes to the funding structure of the traditional program.
Congress could wind down Medicaid expansion by zeroing out the enhanced matching rate for the Medicaid expansion population. They could then amend the ACA to allow people with incomes under 138 percent of the poverty level to purchase ACA plans from the health marketplace with a premium tax credit.
In 2019, the KFF found that the Medicaid-expansion population accounted for $93.8 billion of the program’s total expenses. Phasing out Medicaid expansion could save roughly $100 billion annually. While some of these of the savings may be muted by shifting the Medicaid expansion population into the Obamacare marketplace, it will still be a net savings to the taxpayer.
Both Congress and the states would then be free to improve the Medicaid program for its traditional populations. Any number of approaches could be taken by Congress and the states to improve health outcomes, fiscal accountability, or increase state waiver authority without necessitating a national block grant.
Medicaid is no doubt an important program for people with disabilities. Yet there is a need to clarify the future of the program. We need to return Medicaid to its original role. That may be the only way to save it.
Michael R. Lado is a writer and healthcare professional who lives in Pennsylvania. His writings have appeared in the Mighty, the Republican-Herald, the South Schuylkill News, and Yahoo News.