The Health Care Financing System is Broken-Medicaid is not the problem 

Nearly every day the media report something about the "Medicaid Crisis" and the huge increases in Medicaid budgets. Medicaid is not the problem. In fact, Medicaid is outperforming every other health care financing system, public or private, in this country in the area of containing medical costs. This is so in spite of the fact that Medicaid serves the people too sick or disabled or elderly to work, and too poor to pay premiums, deductibles and co-pays. It covers services that the private sector generally will not cover such as long term care, and specialized supports for people with disabilities. Even so, when you compare cost increases for Medicaid to those for private insurance coverage on medical costs which they both cover, Medicaid is far better at cost containment. Reports of the Congressional Budget Office and the Kaiser Foundation both confirmed that from 2002 to 2004 Medicaid spending per person rose by 6.7% while private coverage costs rose 12.5% in the same period, almost twice as much. Medicaid is stuck with the lion's share of the rapidly rising demand for long term care which greatly contributes to the overall costs, but insurance and Medicare pay for very little of it. Private health insurance premiums for the same period increased by over 12% even while cutting benefits and increasing patient contributions dramatically. Medicaid costs are actually rising more slowly than health care costs generally. There is a crisis in health care in this country, and Medicaid is actually more likely to contribute to the solution than the problem.

If Medicaid is doing relatively well nationally, what about Idaho? Idaho Medicaid is doing even better at controlling costs. In every report on state Medicaid expenditures, Idaho is one of the lowest in per capita enrollment and in per capita expenditures.

Lawmakers (and reporters) often forget that many Medicaid services are deliberate expansions of the program to get federal funding for services which were previously paid for by pure Idaho tax dollars. One example of this is mental health care for indigent people with severe and persistent mental illness. The Department of Health and Welfare used to provide these services directly, or they were paid for by county indigent programs. After adding some "optional" mental health services to Idaho's Medicaid coverage, the federal government now picks up 70% of the bill for many people. Nevertheless, the whole cost shows up as an increase in the Medicaid budget. No one considers these savings to the state treasury when they calculate the rising costs of Medicaid.

It is the Medicaid system, not private insurance or Medicare, which has pioneered the most successful cost saving measures in long term care. The Home and Community Based Services Waivers (paying for services in the home instead of in care facilities) have revolutionized our approach to aging and disability supports. Client Directed Services for home care, which is still in its infancy, will take the revolution one positive step further, and likely save even more money as baby boomers move into the long term care system.

Improvements are still needed. Some of the recent cost saving measures will strain the system to its breaking point, or are penny wise and pound foolish. We can do much more to humanize and individualize the Medicaid system. We should eliminate the costly institutional care bias in Medicaid.

Medicaid costs cannot be controlled when health care costs are out of control, or when the uninsured and underinsured people in Idaho are forced into poverty and onto Medicaid rolls. Fix the health care system and Medicaid will be fixed.

James R. Baugh is the Executive Director of Comprehensive Advocacy, Inc. (Co-Ad), Idaho's Protection and Advocacy System for People with Disabilities.

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