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Policy Solutions

Quick Facts

  1. In times of budgetary strain, states must have the flexibility to serve the sick people who need Medicaid’s support the most.
  2. Governors of both parties are demanding common sense reforms to create the flexibility which the Medicaid system desperately needs.
  3. According to the non-partisan Congressional Budget Office, steps like block-granting Medicaid would increase state flexibility while cutting the federal deficit.

Legislation and Innovative Ideas

  • American Action Forum’s FLEX Solution: Douglas Holtz-Eakin and Michael Ramlet write: “At its core the flawed federal-state matching formula has fueled runaway spending. Medicaid’s current payment structure gives states a perverse incentive to spend with little incentive to save or innovate.” They recommend: “Adopting the FLEX strategy would establish a long-term commitment to improving the Medicaid program and put in place the type of aligned incentives for states that encourage savings and innovation through coordinated care delivery.”
  • Rhode Island’s Success Story: Gary Alexander, most recently secretary of health in Rhode Island, writes about the model he applied, through a global waiver, which dramatically improved Medicaid’s costs and outcomes in his state: “Through fiscal year 2011, the Global Waiver has saved approximately $100 million and is one of the reasons why Rhode Island possessed a state budget surplus in state fiscal year 2010. … Rhode Island is showing that more money is not the solution. Comprehensive reform and freedom from federal mandates and burdensome regulations work. Further, all of this work has been accomplished without reducing patient eligibility.”
  • Rhode Island’s Medicaid Waiver Shows How States Can Save Their Budgets: John Graham of the Pacific Research Institute outlines the success in Rhode Island. “Remarkably, through the first six quarters of the waiver (January 1, 2009 through June 30, 2010) actual spending was $2.7 billion versus $3.8 billion budgeted—savings of almost one-third. Research has not yet identified exactly how much each reform contributed to the savings, but one expects that many of the changes Rhode Island introduced would be significant contributors. For instance, the state was exempted from Any-Willing-Provider (AWP) rules, which meant that it had more power to incentivize quality from medical providers. It also ‘rebalanced’ Medicaid Long-Term Care (LTC), reducing abuse of this program along the lines recommended in a report recently published by PRI. Critically, it empowered Medicaid beneficiaries to make better choices about their care by giving them more direct control of the dollars spent on their health care.”
  • Coburn’s FAST Act: “Coburn’s legislation includes several key antifraud proposals, which he says can make a significant difference in preventing fraud. The bill increases requirements for Medicare Administrative Contractors, calls for a pilot program using universal product numbers on Medicare claim forms, bolsters penalties for illegally distributing beneficiary identification, and prevents providers convicted of fraud from discharging their debts by going into bankruptcy.”
  • How to Stop Medicaid Fraud: Steven Malanga writes for the City Journal on the challenge faced by states in dealing with Medicaid fraud.
  • Stop Paying the Crooks: In a book written for the Center for Health Transformation, James Frogue writes on the challenge of stopping the millions of dollars in Medicaid fraud stolen from the taxpayers each year.
  • Governors Write to White House Requesting Flexibility: In a letter from 33 of the nation’s governors to President Barack Obama and Health and Human Services Secretary Kathleen Sebelius, the state chief executives demanded that the Administration reconsider requirements which prevent states from managing their Medicaid programs.
  • Ten Steps to Reforming Medicaid: John C. Goodman of the National Center for Policy Analysis writes: “Typically, Medicaid enrollees face restricted treatment options and limited access to health care. At the same time, they are sheltered from health care costs because they pay nothing out of their own pockets when they receive care. This disconnection between patients and costs has led to a dramatic increase in public health care spending. All this could change, however, if the government were to implement the 10 Medicaid reforms discussed below.”