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Commentary

Medicaid's Untallied Costs
Michael Cannon, Cato Institute, 7-1-05

Cannon has written a thoughtful article cataloguing the parallels between welfare reform and Medicaid—and why Medicaid reform will also help empower the poor.

A significant body of research suggests that, as it exists today, Medicaid encourages recipients to become dependent on government; encourages people to behave in ways that increase the cost of government and of health care, which makes self-reliance more difficult for their neighbors; and encourages state policymakers to get more people to behave that way. A worthwhile attempt to cut Medicaid costs would look beyond state and federal budgets and seek to minimize other costs as well.

Fortunately, the federal government has a roadmap for doing just that. In 1996, it ended the entitlement to federal cash assistance; block-granted to the states funds that were previously given out in proportion to what each state spent; and gave states greater flexibility in setting eligibility and benefits. The idea was first to stop encouraging states to foster dependency, and then to give states the flexibility they needed to discourage dependency instead.



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