Son of Sanford
WSJ.com - August 23, 2005; Page A10
No worthwhile reform occurs without predictions that the sky will fall, so Mark Sanford must be on to something. The South Carolina Republican is the latest Governor to be portrayed as the moral equivalent of Terrell Owens for attempting to make Medicaid both available to the poor and affordable to taxpayers.
Medicaid already claims 19% of the Palmetto State's budget, and is growing so fast it is expected to hit 29% in a decade. About a million people make use of the entitlement each year, or one of every four state residents. Many recipients are non-poor elderly whose assets are sheltered for heirs while the government pays the costs of long-term care. So something's got to give.
And not just in South Carolina. Medicaid -- a state-federal partnership -- now costs some $300 billion nationwide and according to the Congressional Budget Office is growing at an estimated 8% a year. The increases are weighing down every state budget, which is one reason the federal Medicaid Commission has just approved six recommendations for how to save $10 billion over the next five years.
The most hotly contested proposal approved last Thursday would allow states to charge higher co-payments for certain prescriptions -- for example, if a patient preferred a non-generic drug. The aim is to make Medicaid operate more like private plans, which already do this. The estimated savings is $2 billion. The panel also recommends changing the drug-reimbursement formula ($4.3 billion) and making it harder for middle-class seniors to transfer assets so that they can qualify for Medicaid ($1.6 billion). The latter is a huge, and underreported, scandal that essentially lets heirs pocket Mom's assets while taxpayers finance her long-term care.
Incredibly, a proposal to increase co-pays for all Medicaid services to $5 from $3 for adults (an amount that hasn't been changed since the 1980s) and to introduce a $3 co-pay for children was deemed too controversial. It may show up in the commission's blueprint for broader reform, which isn't due until the end of next year.
The weakness of these ideas is that they play around the edges of a program that needs much more fundamental reform. Enter Mr. Sanford, who wants to take the $4 billion spent each year in his state on Medicaid and create "personal health accounts" that would be used to buy private health insurance. The details are still being worked out, and the amount each individual would receive would vary by age and other factors. But in rough outline individuals would receive about what Medicaid spends on them now -- $4,000 for most adults. Anyone who buys insurance for less would be able to pocket the difference for other health-care needs.
For patients, the advantages include the ability to shop around and buy insurance that best fits their needs. Single people need less coverage than heads of households, and young people might prefer higher deductibles than parents with young children. The accounts would force Medicaid users to become more responsible for their own health care, which is one more step toward economic self-sufficiency.
Meanwhile, South Carolina would get a better handle on total Medicaid costs, since it is responsible only for the one-time grant. The open-ended nature of the Medicaid entitlement would also cease, though all residents who qualify would still be eligible for the subsidy.
All of this is earning Mr. Sanford's proposals the usual hazing as cruel and heartless. Those who favor the entitlement status quo -- led by the Beltway's Center for Budget and Policy Priorities -- are warning that "children would lose access to needed health services" and that the accounts wouldn't pay for all the care adults need. It's true that Mr. Sanford wants to lower the age -- to 18 from 21 -- at which eligibility ends for childhood benefits. But last we checked a 20-year-old wasn't a child. And the reform would also mandate that any health insurance purchased with Medicaid money provide at least the benefits that are currently offered. The health care for many is likely to improve.
Rachel Klein of Families USA, another liberal advocacy group, probably gave the real game away when she called the Sanford proposals part of a "dangerous trend." What these liberals really fear is that the South Carolina experiment will succeed, that personal health accounts will prove to be popular among the poor themselves and that the constituency for government health care will decline.
Thus the scare stories designed to block reform before it ever becomes law. This is the same strategy that was used to block welfare reform before it finally passed in 1996, a reform that has since been a historic success. Medicaid is the next great welfare reform, and we hope Mr. Sanford and his fellow governors persevere. |
