Don't Wait for Congress to Fix Health Care

09/27/2017 10:43

by Matthew Glans



Medicaid is a controversial and troubled entitlement program providing health coverage to lowincome adults, children, pregnant women, and people with disabilities. The quality of care received by Medicaid beneficiaries is below that received by people with no health insurance at all. Costs have soared along with waste and fraud.

Rather than reform Medicaid, the Patient Protection and Affordable Care Act (ACA, also known as Obamacare) offered large federal subsidies to states
that would expand their Medicaid programs to provide coverage to individuals with incomes up to 133 percent of the federal poverty level.To date, 31 states and the District of Columbia have expanded their programs to qualify for more federal aid.

The cost of Medicaid is shared by states and the national government. While the national government promised to cover the immediate cost of the expansion of state programs, its share of funding will decline over time and may fall back to pre-expansion levels if Congress acts to repeal or “repeal and replace” Obamacare. Medicaid rolls have been expanding faster than predicted, and recent surveys show the costs for new enrollees are higher than for those covered by the existing program. This means new costs could be significant.

A federal provision called “Maintenance of Effort” requires states to fund a program at the initially agreed-upon level, regardless of the amount of federal funding received. This will leave state taxpayers on the hook for the new liabilities.


What should state legislators do? This Policy Brief offers the following guidance:

■ Part 1 provides some background on how Medicaid works, how Obamacare changed the program, and how the program is now
unsustainable. Keeping the status quo is not an option.

■ Part 2 documents how two states—Arkansas and Oregon—expanded their Medicaid programs and produced falling health care quality and rising costs. Expanding an already failing program is also not an option.

■ Part 3 describes how states can apply to the Health and Human Services (HHS) Secretary for waivers to Medicaid and to Obamacare. HHS Secretary Tom Price has encouraged states to be bold and ambitious in their waiver requests, reversing the attitude and policy of his predecessor.

■ Part 4 describes how two states— Florida and Rhode Island—used waivers during the Obama administration to dramatically improve their Medicaid programs by introducing competition and choice.

■ Part 5 describes the “Medicaid Fix,” a proposal to have federal dollars earmarked for Medicaid go directly into health savings accounts created for the indigent.

■ Part 6 describes other reforms states can initiate without waiting for Congress to repeal Obamacare or even for Secretary Price to act on their waiver requests. These reforms have been part of a market-based health care reform agenda for many years


The failure of Congress so far to repeal and replace Obamacare presents the states with opportunities to develop their own programs offering aid to the poor and disabled in more costefficient and -effective ways. Already, several states have had success with this approach. It is time for the other states to take up the interests of their own citizens—those in need as well as the taxpayers who foot the bills—who have been failed by the national government.


Read the Full Report Here.


Matthew Glans
joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst. Full Bio