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Commentary

Medicaid needs Surgery
David Gratzer, The Weekly Standard, 2-14-05

Gratzer, a senior fellow at the Manhattan Institute, notes that President Bush is facing a steep uphill climb in his drive to limit federal contributions to Medicaid. Although the administration is floating the idea of giving more flexibility to the states in return for a hard cap on federal contributions, state governors and even some Republican Senators are aghast at the idea that the flood of federal funding might slow even a little.

Why? “The basic problem with Medicaid is that Washington foots the bulk of the bill, yet most of the administrative decisions are made at the state level…For every three dollars worth of new service [the states] provided their residents, Washington has picked up two.”

The states have been all too happy to take a program originally designed only to offer bare-bones medical coverage to America’s neediest and transform it into Cadillac coverage for huge numbers of the near-poor and middle class.

Example: Vermont. Under Howard Dean’s watch families with up to $51,000 in income were allowed to quality for Medicaid benefits, and roughly 1 in 5 Vermonters are now on the Medicaid rolls. But Vermont is far from the only state that acts as if it is playing with house money when it comes to Medicaid benefits.

As a solution Gratzer touts Governor Jeb Bush’s plan to give all Medicaid recipients a need-based voucher to buy health insurance. Any money left over could go into a flexible spending account for out-of-pocket health expenses. Under Jeb’s plan Florida’s role would be to “ensure transparency of the private plans and counsel Medicaid recipients about their choices.”



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