The biggest challenges come from the “dual eligibles,” those who qualify for Medicaid and Medicare. As I pointed out in a column more than a year ago, according to Janet Adamy in the Wall Street Journal, the almost 10 million dual eligibles account for 15 percent of Medicaid beneficiaries — but 39 percent of Medicaid spending (and 27 percent of Medicare outlays). Adamy noted that many of the costs come from the lack of coordination between the programs, which leads to waste and mismanagement. Reform to create coordination should clearly be a top priority. But turning Medicaid into a block grant, leaving each state to craft its own program without federal guidelines, would make coordination far more difficult.
And if states decided to drop dual eligibles — the most chronically ill people in the society — from the Medicaid program, it would not only drive up Medicare costs sharply but likely leave many of these cases in limbo. Medicare does not provide long-term care, much less the kinds of Medicaid-funded day programs for those with mental and physical disabilities that allow some to live with families while enabling relatives to work.
Romney did say that if states got into trouble the government could always find ways to help. But to do so would conflict with all the other promises of fiscal restraint. The money would have to come from somewhere, and he has ruled out defense and Medicare and promised deep cuts in discretionary spending.
Finding ways to restrain future growth in health care spending is an urgent priority. But Medicaid is already far more efficient than private health programs or Medicare, in large part because reimbursement rates to providers are ridiculously low. Cutting rates to providers would be counterproductive, and needs under the program, especially for the most sick among us, are likely to grow. Repealing the health care overhaul and making Medicaid a block grant are, at best, inadequate responses.
Norman Ornstein is a resident scholar at the American Enterprise Institute.