It is crunch time on Capitol Hill for Republicans trying to finish President Donald Trump’s “Big Beautiful Bill” before they recess for August. If the final legislation is to be fiscally sound, it must slow the growth of federal spending. There is no way to do that without reforming Medicaid. Nowhere is the problem with Medicaid made clearer than in New York, where out-of-control spending now finances more than 620,000 home healthcare jobs, making it the most common profession in the state.
Social Security and Medicare make up larger components of federal spending, but Medicaid is growing far faster than either of those programs. The urgent problem is in the way Medicaid is administered and financed.
Unlike Medicare, which is run by the federal government, Medicaid eligibility is set by the state, which also determines which benefits are covered. The federal government requires all states to cover certain vulnerable populations, such as children, pregnant women, the elderly, and the disabled, and to provide them with core benefits such as doctor services and hospital visits. However, states can use Medicaid to fund other populations, including able-bodied adults and poor families. They can also expand the benefits covered, and have in various places covered rehabilitation, dental care, and home health services.
Letting one set of people decide on what to spend but not obliging them to find the money is a recipe for abuse and ballooning bills. This is what has happened with Medicaid. States expand the Medicaid population and the services covered, but the federal government, which means all taxpayers, foot the bill. Bizarrely, the federal government actually pays states more to cover the non-vulnerable than they do to cover the vulnerable. In many communities, the state only gets a 50% reimbursement for covering children but a 90% reimbursement for covering a fully able adult.
States have no incentive to control spending or prevent fraud, which accounts for as much as 25% of all Medicaid payments.
In some states, Medicaid spending is so out of control that it pays for more “private” sector jobs than any other industry. In New York, according to the latest Bureau of Labor Statistics data, 623,000 people work as home health aides, mostly paid for through Medicaid. The next most popular profession in the state, retail sales, employs only 233,000 people.
The surge in home health aides is not caused by a predominantly older population. There are 171 home health aides for every 1,000 New York residents over 65. The national average is 68, and in Florida, the number is 18.
States controlled by the Democratic Party bleed federal taxpayers in this way and others. California leads the league in taxing Medicaid providers, who bill the state government, which is then reimbursed for the cost of the taxes from the federal government. New York allows doctors who provide emergency services to Medicaid patients to be reimbursed at private insurance levels, often thousands of dollars higher than the standard Medicaid reimbursement rate for each procedure.
Fiscally responsible Republicans in the House want to end the grifting by Democratic states without harming Medicaid’s core beneficiaries. As Trump said this week in Michigan, “We want to preserve Medicaid for the most vulnerable, for our kids, our pregnant women, the poor and disabled.”
DEMOCRATS HAVE A PATRIOTISM PROBLEM
That is the right message. Some proposals during reconciliation negotiations include equalizing the Medicaid reimbursement rates for each population. This would mean more money for pregnant women and children and less for able-bodied, working-age adults. Other ideas include capping federal funding per enrollee, eliminating reimbursements for illegal immigrants, and ending the provider-tax loophole.
If Republicans are unable to slow the growth of Medicaid, which is set to grow 25% over the next decade even under Republican reconciliation targets, the tax cuts will either fail to pass, or this Congress will become the most fiscally irresponsible ever.
This article was originally published at www.washingtonexaminer.com
