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Commentary

Medicaid on the Mend
USA Today, 11-28-06

USA Today praises the states for finding innovative ways to control Medicaid spending—and perhaps improving the quality of care along the way.

"For the first time, Medicaid spending has declined—by 1.4% in the first nine months of the year, USA TODAY's Dennis Cauchon reported Monday. That frees up billions of dollars in state budgets. Indeed, more than half of the states intend to restore previous cuts, according to an October study by the Kaiser Commission on Medicaid and the Uninsured.

What went right?

The strong economy gets a large share of credit. Fewer people turn to Medicaid for assistance when unemployment rates are low. Some savings are the result of shifting costs to the federal government under the Medicare prescription drug program. But that's only part of the answer.

States faced with skyrocketing costs realized they couldn't afford to wait for a solution from Washington, where political gridlock has prevented serious health reform. So, as with welfare a decade ago, states are acting as laboratories to test approaches to control spending without hurting deserving recipients. A federal law signed in February gives states greater flexibility to try ideas without jumping through years of bureaucratic hurdles. Some examples:

  • Two-thirds of the states now help patients avoid expensive institutional care in favor of home and community–based programs.
  • Because 4% of ailing enrollees account for half of Medicaid spending, two–thirds of the states have programs to coordinate care for the sickest.
  • West Virginia requires enrollees to promise to keep physician appointments and comply with medical instructions or face reduced benefits.

Some patient advocacy groups worry that the new state plans restrict enrollment, force people into managed care plans and demand more cost–sharing through co–payments and premiums. That could deter some patients from seeking care, but it's too soon to calculate the impact because the plans are so new.

It's also too soon to celebrate this first dip in Medicaid spending. An economic downturn could have a big impact, and fledgling state programs may prove harsher than advertised. Even so, it's encouraging that there are new ideas for controlling medical costs without reverting to pre–1965 privations.



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