Is Medicaid Sustainable?
Spending Projections For The Program’s Second Forty Years
By Richard Kronick and David Rousseau
Health Affairs
February 23, 2007
Medicaid is a special program in many ways—serving parts of the population that are ill served by the voluntary employer-based financing system. But despite fears about declines in employer-
sponsored insurance, increases in the number of disabled people, and the LTC needs of the baby boomers, it appears that there is little that is special about Medicaid spending: It is likely to increase with health spending more generally, neither much more quickly nor much more slowly.
Short of pushing beneficiaries into the ranks of the uninsured or greatly reducing Medicaid benefits, there is likely little that can be done to greatly reduce Medicaid spending growth in the medium term except to do something about reducing overall health spending growth. Medicaid is one purchaser in a larger health care market, and with payment rates already much lower than those of other payers and with an overall population far more costly than that covered by private insurance, the most effective way to control Medicaid spending growth is to pursue strategies to control overall health care cost growth. This is a problem much larger than Medicaid, and beyond the scope of our work here.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.2.w271v1
Comment:
By Don McCanne, MD
This study indicates that growth in government revenues will be adequate to sustain the Medicaid program for the coming decades. The immediate policy implication is that current political attacks on Medicaid as an “unsustainable” program are not warranted. Until we are ready to adopt a more efficient and effective health care financing system, it is important to protect Medicaid from efforts to further underfund the program.
The much more important policy implication is that Medicaid cannot serve as a vehicle for reform. Neither can any other segment of our fragmented system of health care funding. Instead, we must “pursue strategies to control overall health care cost growth.”
The reform options that build on our fragmented financing system fail to provide adequate mechanisms that would improve spending value. A single payer national health insurance program would. Once enacted, we could get rid of the chronically underfunded, high cost Medicaid risk pool, and have higher quality, affordable care for all of us.