Celebrating programs that protect us from healthcare risks
The 50th anniversary of Medicare and Medicaid enactment calls for a celebration. Medicare provides health insurance protection to virtually all older Americans and many workers who become disabled. Medicaid is the nation’s invaluable long-term-care safety net, helping anyone who can’t afford services and support. Under the Affordable Care Act, states can rely on Medicaid to make healthcare available to all low-income Americans.
So what’s not to celebrate? To those philosophically opposed to government, program expenditures are fiscally daunting. But that spending growth now and for the foreseeable future is extraordinarily low, largely driven by growth in their eligible populations.
Critics propose to reduce government’s role and spending by radically restructuring both programs. They would replace Medicare’s public insurance with vouchers to buy private plans. They would replace federal Medicaid funding grants that match state spending with fixed-dollar block grants. Both “reforms” would shift healthcare and cost risks from taxpayers to beneficiaries.
Traditional Medicare has enormous clout in pricing services. And it avoids the risk selection that occurs when multiple private insurers compete to enroll the healthy and avoid the sick. Even in the regulated Medicare Advantage market, health plans benefit financially from serving less costly patients, and chronically ill patients report problems with access to and quality of care. With vouchers and less regulation, sicker patients would pay more or receive less care. Over time, all beneficiaries would bear the risk if voucher amounts failed to keep pace with healthcare costs.
Medicaid block grants would shift risks first to states, then to beneficiaries. Proponents say freeing states from federal rules would lead to efficiencies and savings. But recessions happen and health costs rise. With block grants, that risk would shift to the states. Then they would limit eligibility and benefits, and beneficiaries would bear the brunt.
Changes could be made in Medicare and Medicaid to better protect us—including a Medicare cap on out-ofpocket spending, Medicaid expansion in all states, better long-term-care protection, and better management of costs and overpayments. But that means managing the risk, not shifting it. That’s what government is supposed to do.