Medicaid spending grew 97.8 % over the past 10 years; the program will cost taxpayers $338 billion this year alone. This joint state and federally funded program will soon force states between handouts to the poor and education or law enforcement. Medicaid has already surpassed education in consuming the largest piece of states’ budgets nationally (22%). Unequivocally, a financial crisis is looming. Instead of cutting services, beneficiaries, or substantially raising taxes, South Carolina has creatively proposed the use of marketplace principles in Medicaid. Medicaid beneficiaries will be given the option to escape the Medicaid ghetto and enroll in private health insurance.
Perhaps the most powerful tool for Medicaid reform, the Section 1115 of the Social Security Act provides the Secretary of HHS with broad authority to authorize experimental, pilot, or demonstration projects, which are likely, in the judgment of the Secretary, to promote the objectives of the Medicaid statute.
Nationally, Medicaid spending grew 97.8 % between 1995 and 2004 (an average of 7.9 % annually). The program will cost taxpayers $338 billion this year.
One in four South Carolinians receive Medicaid benefits--consuming more than $4 billion annually (19% of the state’s budget—projected to be 50% by 2035).
South Carolina ranks near the bottom in overall health outcomes, including rates of diabetes, stroke, and lung cancer. Fewer physicians will accept Medicaid patients due to low reimbursement. There must be a way to derive more value from healthcare dollars.
The current Medicaid system forces States to shrink budgets for other critical State functions, e.g. Medicaid has surpassed education in consuming the largest piece of states’ budgets nationally (22%).
Given the traditional options of cutting services, beneficiaries, or substantially raising taxes—South Carolina should be allowed to use marketplace principles in Medicaid.
Impact on Taxpayers:
As providers flee the Medicaid program, benefits shrink, and eligibility restricts, the safety net serving the weakest, sickest and oldest members of our society is being eroded.
The patient-provider relationship is in jeopardy: patients have to wait for providers, see sub-standard providers, travel longer distances (at cost to their health), and spend less time with their providers.
Taxpayers see their quality of life eroded as states have to shift more funds to Medicaid and away from roads, police, and schools.
Future generations of Americans bear the debt-load that out-of-control growth in the Medicaid program will cost in unfunded future liabilities.
Market-based reform would increase competition in the health care market, attract more insurers to state markets and lower prices for those in the public and the private markets.
These Findings Demand a Response:
The Center for Medicare and Medicaid Services should grant South Carolina its Section 1115 Waiver to implement their innovation, and encourage other states to follow suit.
Begin work on legislation to redesign the burdensome Medicaid bureaucracy: block grants to states for Medicaid would give states the flexibility to decide what is best for their own citizens, while limiting the unfettered growth of the program.
