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Commentary

Congress Should Get Serious About Medicaid
Nina Owcharenko, Heritage Foundation, 3-30-05

Owcharenko notes that the U.S. Senate has excised the very modest Medicaid reforms proposed by President Bush in his budget. The Senate’s refusal to trim Medicaid even at the margins bodes ill for future Congressional efforts to bring entitlement spending under control.

Medicaid, the joint federal-state program for the poor and indigent, is a fiscal disaster. Like Social Security and Medicare, Medicaid consumes an ever-growing portion of the federal budget: Today, these three programs account for 44 percent of all federal spending, and Medicaid alone accounted for 13 percent of mandatory spending in 2004. In future years, Medicaid and other entitlement costs will explode.

The President’s budget contains two very modest proposals for containing Medicaid costs: reducing state financial gimmicks to leverage increased federal payments, and tightening rules for asset transfers whereby individuals can give their assets to their heirs and declare bankruptcy, thereby triggering Medicaid enrollment. The President’s reforms are far from severe. All told, they would only slow future Medicaid growth from a full gallop to a fast trot (7.4 percent down to 7.2 percent). The President is asking for Congress to take a few baby steps today—and if Congress ignores the President’s call for reform it is sure to stumble when more serious measures are needed later on.



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