This commentary originally appeared in The Hill on February 28, 2017.
All 50 states, the District of Columbia, and Congress are all having the same nightmare. It is called Medicaid. Now there is a chance to turn bad dreams into great, big happy ones. Texas is in a unique position to lead.
Though most people think Medicaid is a federal program for the poor, it was originally created as medical assistance for those unable to support themselves, listed in the original law as the physically disabled, mentally incompetent, pregnant women and those with chronic kidney disease.
Medicaid is the largest single costitem in the Texas state budget. Yet, spending decisions in Texas are made 1,523 miles away in Washington, D.C. Furthermore, the original Medicaid law said the programs would be under state, not federal, administration.
The 82nd Texas Legislature passed Chapter 537 into the Texas Government Code. This was a Sect. 1115 waiver request to the Centers for Medicare and Medicaid Service (CMS) to allow Texas to administer and regulate all aspects of Texas Medicaid.
After a year of study, an ad hoc Texas Medicaid Reform Legislative Oversight Committee decided in 2012 not to advance the waiver request on to CMS, in part because the members felt the Obama administration would view it unfavorably.
For six years, Chapter 537 has been sitting in Texas law, waiting for its chance. Today is the day. It is time for Texas Medicaid to dream big and lead the way for the other 49.
President Trump’s first executive order, Proclamation No. 13,765, on Jan. 20 instructed [federal] “executive departments and agencies … to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act” [ObamaCare]. It seems likely that with such presidential advice, CMS would grant Texas and any other state a full waiver.
If a state like Texas could control its own Medicaid program, what should it do?
Start with eligibility. Though Medicaid was intended to provide medical needs of the unable, ObamaCare mandated health insurance for able-bodied adults. This diverts resources away from medically vulnerable populations. With a full waiver, Texas could enroll only those who truly need state help. This would reduce Medicaid enrollment; save large sums of money; and expand Medicaid dollars more effectively.
With freedom from federal mandates, Texas could reduce fraud and abuse. A report on welfare abuse from Arkansas Medicaid (no comparable data is available for Texas) showed that 43,000 people enrolled in the state's Medicaid did not live in Arkansas.
With tighter and more frequent verification procedures, Texas could enroll only those who are truly eligible. Extrapolating from the Arkansas experience, Texas could discontinue 171,000 improper payments — 3.9 percent of 4.4 million Texas Medicaid enrollees — and save $1.19 billion a year.
Without federal micromanagement and liberated from Washington’s oppressive process for control, oversight and compliance review, Texas could radically streamline its Medicaid administration.
Studies suggest that 31 to 40 percent of all healthcare spending is consumed by federal bureaucracy, administration, rules, regulations and compliance (BARRC.)
If Texas could recoup just half of the money wasted on BARRC, $5.3 billion a year could be made available to ameliorate the multibillion-dollar expense of uncompensated care and to address the physician shortage.
Before ObamaCare, more than 30 percent of U.S. physicians could not afford to accept Medicaid-covered patients because of low reimbursement schedules to physicians. ObamaCare lowered them even further. Many Medicaid-covered patients cannot find a doctor who will see them.
The lucky ones face very long wait times. As a result, Medicaid patients end up in emergency rooms — the most expensive way to care for a child with a fever or an adult with a rash.
With an official waiver from federal control of the insurance market, a state could restore free market forces. ObamaCare’s massive administrative costs would be eliminated.
Sellers of insurance would compete and offer policies that buyers (patients) want instead of unaffordable ones they are required to buy by federal law. Premium prices would plummet along with co-pays.
The history of charitable activities in America shows the need for personal responsibility. An incentive to economize requires the buyer/consumer to spend at least some money out-of-pocket. In other words, people need “skin in the game.”
With a full waiver, a state could initiate various forms of cost-sharing; volunteer obligations as proposed by Indiana in its 2016 Medicaid waiver request; and/or Montana’s “Medicaid work requirement.”
Using Chapter 537, Texas could release its Medicaid program from federal lock-up. With freedom to administer Medicaid, any state could realize these benefits:
Lower insurance costs
Truly affordable health insurance
Less money wasted on bureaucracy
More money available to pay for care
Ready access to the care you need when you need it
With less money taken by Medicaid, more state funds to spend on other public needs.
All 50 states should consider a Chapter 537 approach to solve their Medicaid nightmare. Congress should love these waivers. By giving Medicaid to the states, the federal government can honestly say, “Look to your state government. Medicaid’s not our problem any more.”
Dr. Deane Waldman, MD MBA, is Emeritus Professor of Pediatrics, Pathology and Decision Science, and Director of the Center for Health Care Policy at the Texas Public Policy Foundation as well as the author of The Cancer in the American Healthcare System.