Heartland Policy Brief: Liberating the Poor from the Medicaid Ghetto

'The current Medicaid system is so disastrous that those who support it cannot realistically be seen as caring about the poor'

Peter Ferrara

CHICAGO – Medicaid is a massive federal-state entitlement program desperately in need of reform. Its mission is to provide health care to the poorest of the nation's poor ... and thus the poor have the most to gain from positive reform efforts, says Peter Ferrara, a senior fellow for The Heartland Institute and author of a new Heartland Policy Brief, "Liberating the Poor from the Medicaid Ghetto."

According to the Centers for Medicare and Medicaid Services, which administers Medicaid, federal and state government spending for the program will total $6.56 trillion between 2013 and 2022. Medicaid is already the biggest line item in state budgets, and Medicaid spending will continue to grow, especially in the states that extended the reach of their programs under the Patient Protection and Affordable Care Act. (About half the states enacted the Medicaid expansion provided for under Obamacare, while half did not.)

Ferrara notes the absurdly high-cost Medicaid program delivers tragically low-quality care. Hospitals and physicians resist taking Medicaid patients because the program reimburses providers only about 60 percent of their costs associated with delivering care. "Medicaid patients face difficulties in obtaining timely, essential health care, suffering from adverse health as a result," Ferrara writes.

Click here to read a free PDF version of "Liberating the Poor from the Medicaid Ghetto."

As he has done in previous installments of his entitlement reform series of Policy Briefs, Ferrara urges modernizing Medicaid by block-granting the federal government's share of funding to the states. He writes:
The unwillingness of health care providers to accept Medicaid patients because of the program's shamefully low reimbursement rates could be addressed by extending to Medicaid the 1996 reforms of the Aid to Families with Dependent Children (AFDC) program. ... Each state would be free to use the funds for its own redesigned health care safety net program for the poor in return for work from the able-bodied.

Ferrara notes Congressman Paul Ryan (R-WI) included Medicaid block grants in his 2012 and 2013 budgets, and generally "[s]upport for such fundamental entitlement reform is now mainstream within the Republican Party." He writes, "The current Medicaid system is so disastrous that those who support it cannot realistically be seen as caring about the poor. Their opposition to reform exposes a radical, impractical, counterproductive ideology to which they are wedded because it maximizes their power."

"Liberating the Poor from the Medicaid Ghetto" is the sixth in a multi-part series Ferrara is writing on entitlement reform for The Heartland Institute.

Earlier installments in The Heartland Institute series on entitlement reform are linked below:

"A Winning Plan for Entitlement Reform," Peter Ferrara, The Heartland Institute, December 13, 2012

"The Foundation for Entitlement Reform: Get America Booming Again," Peter Ferrara, The Heartland Institute, March 11, 2013

"Social Security Personal Accounts: Prosperity for All," Peter Ferrara, The Heartland Institute, June 14, 2013

"A Better Medicare for Seniors and Taxpayers," Peter Ferrara, The Heartland Institute, February 12, 2014

"Block Grants for All: Liberating the Poor and Taxpayers Alike," Peter Ferrara, The Heartland Institute, May 5, 2014

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The Heartland Institute is a 30-year-old national nonprofit organization headquartered in Chicago, Illinois. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.