NOTE: This article originally appeared in The Houston Chronicle on February 23, 2012.
The Houston Chronicle’s Sunday’s editorial on Medicaid accurately described the hope that the new 1115 waiver will help hospitals and other health care providers achieve better health outcomes by reforming the way they are paid.
But that reform’s anticipated savings in the next budget are insignificant compared to the $10.5 billion in new state revenue that will be required to pay for Medicaid.
This exemplifies the state’s dilemma. The innovation allowed under today’s Medicaid program will never come close to closing the gap for the demands on state tax dollars for this federal health care program for the poor. Medicaid is in desperate need of overhaul.
Much like welfare before the 1990s overhaul, Medicaid is poorly designed, with counterproductive incentives and replete with waste, fraud, and abuse. But unlike welfare, the state pays a large share of Medicaid’s skyrocketing costs. It is time for Texas to push back against Medicaid’s oppressive requirements.
Nationwide, Medicaid has replaced K-12 education as the largest item in many state budgets. In Texas, Medicaid has grown 113 percent in the last decade alone and is on track to double costs every 10 years through 2040. For years, governors have begged for relief from the federal government, to no avail.
The Texas Legislature took a bold step last year, voting to request a block grant from the government that would give Texas the flexibility to completely redesign the program. Our research demonstrated the potential benefit that both Texas taxpayers and Medicaid recipients could receive.
For example, the state could provide or help provide insurance coverage for more than twice as many Texans as in the current program for 95 percent of the money spent four years ago by simply providing a subsidy, based on a sliding scale, to purchase an individual insurance policy. That plan made no changes to services for the currently aged, blind or disabled, but allowed for changes to be made for future enrollees, giving them choices in care.
The block grant proposal also provided an additional $2 billion for administration. The point is that there is more than enough money in the system, if only it were spent more wisely.
When the Legislature returns in January, its first order of business will be to find $3.9 billion in state revenue to pay for the rest of its share of Medicaid for 2013. Then, assuming Obamacare remains in effect, it will have to figure out how to pay for the $10.5 billion increase in the state’s share for the next two years. The tab would still be $6.2 billion if Obamacare winds up being discarded by Congress or the U.S. Supreme Court.
Decision time for continued participation in Medicaid may occur as early as January 2013, and will almost certainly happen by the following legislative session. What remains to be seen is whether the Legislature will leverage this brief window of opportunity. Block grants were discussed in Congress several years ago, but the talk died down when no action was taken. U.S. Rep. Paul Ryan, R-Wis., recently revived the discussion, throwing a lifeline of hope to the states.
Texas has the opportunity to lead the reform movement by pursuing the waiver for an aggressive block grant as envisioned in the legislation. There is much at stake, and one cannot overstate the importance of the outcome from the Legislative Oversight Committee, which will be meeting soon to discuss the block grant. This is an opportunity to push for change that will not only rescue taxpayers but also provide better care for recipients. Committee members must accept the challenge to think outside the box of 1960s-era Medicaid and develop an alternative that recognizes the evolution and advances in health care over the last five decades and charts a new course for the future.
The block grant should not be crafted as a waiver request acceptable to the entrenched bureaucracy in Washington, but rather as an opportunity to write a blueprint for Congress to fundamentally reform the Medicaid program.
Visionaries are needed. If Texas will not define the vision and fight for it, who will?
Arlene Wohlgemuth is the executive director of the Center for Health Care Policy at the Texas Public Policy Foundation. She served 10 years in the Texas House of Representatives, specializing in health care issues.