“Medicaid reform, the elephant in the room”

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The American Enterprise Institute recently published a thought-provoking and helpfully brief primer on how Medicaid funding works, what it means to shift to state block grants, and why politically such a move will be tremendously challenging.

Alas, something much more radical would actually give the poor better access and would drive the competition in the marketplace that would start to incent health care delivery systems and insurers to compete for their dollars. To wit, why not simply focus on an individual income basis and fund catastrophic insurance for unexpected events (what insurance is designed to do in every other industry save healthcare) complemented with funding for a flexible with annual rollover features Health Savings Account? This seems to me to be the ultimate path out of Medicaid and all of its challenges, such as those raised in this post. It would provide purchasing power directly to individuals, get them out of narrow networks defined by states, and remove the massive costs of administering programs through federal and state bureaucracies.



2 thoughts on ““Medicaid reform, the elephant in the room”

  1. Brandon Long

    Thanks for sharing the link. The Medicaid reform article suggests block grants based on needs of the state. There will be winners and losers based on the state’s per capita income. Imagine a day when grants are based on those states who perform better medicine, at known and controlled costs. What a radical idea, huh?


    1. Too radical for our government to contemplate. I would even advocate for something even more radical. Grant to everyone below a certain wage level a premium support package of a defined amount to purchase catastrophic coverage and allow them to buy any plan across state lines that suits that need. Then further give them a health savings account that is flexible to spend and portable and inheritable across time. Then provide individuals the same tax benefits that employers receive (or do away with them altogether and watch employers start compensating people with higher wages rather than through health benefits) and watch in wonder what people making decisions with real dollars forces new incented and competitive health system players to reveal about their costs and outcomes.


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