Medicaid challenge requires creativity

When our government is $15 trillion in debt, a program that will spend nearly $4.5 trillion over the next decade is ripe for review. 

The $4.5 trillion that will be spent on Medicaid over the next decade is only the federal government’s share — state governments spend significant amounts of money on Medicaid, too. States are deeply concerned about the stress the Medicaid program creates on their budgets and how Medicaid spending is crowding out funding for education, roads and bridges and law enforcement. Of course, both of Medicaid’s funding sources, federal and state, are the taxpayers.

The Medicaid program’s challenges to provide access and achieve quality of care for beneficiaries are well documented. Medicaid constantly lands on the Government Accountability Office’s list of programs at risk for fraud. Issues of questionable management and control are frequent. Recently, my office surveyed all 50 states regarding high-frequency prescribers and found one state where the top prescriber of the antipsychotic drug Abilify wrote 13,825 prescriptions in 2009 — about 54 prescriptions per weekday. That seems more than is humanly possible, and it’s difficult getting to the bottom of what’s happening there. That’s only one example of the challenge of determining the best practice of medicine, in the most efficient way, doctor by doctor, in an enormous program that does so much for so many people. 

That raises another important point: Even with the great amount of money Medicaid spends, it’s not necessarily out of line. A 2009 Health Affairs article showed that physicians treating Medicaid beneficiaries are paid 72 percent on average when compared to what the same physician receives for services provided to a Medicare beneficiary. With comparatively low administrative costs, the Medicaid program is a very efficient mechanism for pooling federal and state dollars and passing them through to providers to deliver services for beneficiaries. If a program that pays 72 percent of Medicare rates for providers is paying too much, then the congressional justification for preventing Medicare cuts to doctors every year is wrong. I doubt anyone will argue that to be the case. 

What is clear is that the Medicaid program spends a lot because it does a lot. Medicaid is the only health program in America that looks at a healthy 5-year-old; a profoundly autistic 14-year-old; a 19-year-old just aged out of foster care; a pregnant 28-year-old; a healthy, below-poverty 37-year-old; a 43-year-old quadriplegic; a 59-year-old with multiple sclerosis; a 66-year-old recent retiree; and an 86-year-old with severe dementia in a nursing home and says, “Yes, we will cover all of you under one umbrella.” While the goal of providing coverage for all those individuals is laudable, it makes finding creative solutions for the future of Medicaid more complex, as creating comprehensive policy solutions for all of those individuals as a group is daunting. 

The Medicaid program needs the same level of creative energy devoted to structurally re-creating the program that is currently being devoted to the Medicare program. We should look for more creative solutions than just handing programmatic control over to the states with a strict federal cap in spending growth. A simple cap in spending growth for the Medicaid program that covers the poor and especially the disabled is certainly not the ideal solution, any more than using a simple growth cap is a solution for the growth of costs in Medicare that covers seniors or for the growth of costs in the private market. We must take structural reform into account simultaneously.

A significant debate is coming about ways to reduce Medicaid spending. The challenge is to protect the safety net while finding savings that do not threaten the access and quality of care provided. The pathway to Medicaid reform lies in looking at Medicaid’s constituent populations separately rather than looking at them as a whole, subject to blunt instrument. It’s only when you take Medicaid populations apart that you can truly examine real cost-containment techniques that are similar to what works with other payers, emphasizing primary care targeted to the needs of specific populations, integrating with other programs — most specifically Medicare — and designing a financial structure that pushes states away from the unsavory revenue-maximization techniques, such as intergovernmental transfers, we’ve seen in the past, while providing states with the predictability they so desperately need.

Whatever we do, the safety net must survive for the most vulnerable in our society who need it. 

Grassley is a senior member and former chairman of the Senate Finance Committee, with exclusive Senate jurisdiction over Medicaid.