With the patients in charge of the available resources, those providing services to them would be forced to improve the quality and efficiency of what they do, lest they get pushed aside in favor of a higher-value competitor. Funding left unused in one month would automatically be available for a beneficiary’s use in future months.
This change would keep many patients out of the nursing home. But states could cut costs for nursing home care, too, by creating a preferred network with competitive bidding. Quality of care would improve as well.
These changes would take time to show results. Other changes, such as broader use of managed-care arrangements and closer evaluation of each family’s ability to pay, could cut costs in the short term. But stabilizing Medicaid permanently will require more fundamental changes. By embracing a long-term-care overhaul, states could demonstrate to Congress that fundamental change is well within reach.
James C. Capretta is a visiting fellow at the American Enterprise Institute and a senior fellow at the Ethics and Public Policy Center.