Lawmakers, pick up the ball on health care and reform Medicaid

Lawmakers, pick up the ball on health care and reform Medicaid
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Two decades ago in July, America launched a new approach to welfare. Passed by a Republican Congress and signed by President Bill ClintonWilliam (Bill) Jefferson ClintonClintons send pizza to NY hospital staff treating coronavirus Budowsky: President Trump, meet with all former living presidents Why Klobuchar should be Biden's vice presidential pick MORE in 1996, welfare reform began in 1997 as a way to shift our premier anti-poverty strategy away from giving low-income people cash and towards help to find employment.

This new vision for fighting poverty came to be largely as a result of experimentation at the state level. Two months ago in July, a Republican Congress and administration had a chance to reform our nation’s low-income health care program, Medicaid, but fumbled the ball in their inability to agree on the larger goals of health care reform.

Congressional leaders may want to leave the wreckage of this year’s health care reform debacle behind them as they move on to other issues, but the latest Census Bureau report on poverty and health insurance is a good reminder of why Medicaid reform should still be a priority. Legislators may well want to look at individual states again for possible solutions.

According to the Census Bureau, one in five Americans with insurance coverage is on Medicaid, a program that has been on the Government Accountability Office’s list of high-risk programs since 2003. That’s more than 60 million low-income Americans served by a program well-known among doctors for its bureaucratically inefficient repayment systems, and among lawmakers for consuming increasingly massive shares of state budgets, not to mention the federal budget.

Only employer-based health insurance covers more people than Medicaid. Medicaid covers millions more people than the ObamaCare health insurance exchanges. It also covers more people than Medicare and costs more than half a trillion dollars in federal and state funding every year. Because Medicaid is a troubled program, states take advantage of a provision in federal law that allows them to apply for permission to experiment with alternative approaches to low-income health care.

Arkansas, for instance, uses Medicaid funds as insurance premium assistance so that low-income people can access health care through private insurance. Indiana has converted most of its traditional Medicaid program into a consumer-driven program based on health savings accounts and free preventive care (full disclosure: I was former Gov. Mike PenceMichael (Mike) Richard PenceTrump digs in on criticism of Democratic governors Trump signs T coronavirus relief package Arizona lawmaker warns Pence state may end coronavirus testing due to shortage MORE’s policy director when Indiana negotiated this reform with the Obama administration). Kentucky has a waiver request that proposes to include employment activities in its Medicaid program as a way to help beneficiaries eventually move off the program and into private insurance.

But unlike welfare reform in the 1990s, this state-level innovation has had no impact on health care reform debates in Washington. Congressional Republicans turned the debate over Medicaid into a technical discussion about per capita funding levels and block grants. They never articulated why these reforms would be beneficial for low-income people.

Contrast this with welfare reform in the 1990s, which was based on a new vision for fighting poverty at the state level. Before the 1996 welfare reform law, a majority of states had been experimenting with innovations centered on preparing welfare recipients for work and a life free of public assistance. These innovations were possible, as was Medicaid, because states could request waivers from federal requirements.

Why were states experimenting with alternatives to the federal welfare program? As with Medicaid, there was a growing awareness among governors that the welfare program was not serving low-income people as well as it could. States became seedbeds of welfare innovation in their efforts to fight poverty through employment and other means of reducing welfare dependency. Even Arkansas obtained a welfare waiver under Gov. Bill Clinton. Federal welfare reform was not only the result of the Republican revolution of 1994. It was also the culmination of more than a decade of state-led welfare reform innovation that showed what could work.

Going forward, lawmakers in Washington should revisit the welfare reform playbook as they think about Medicaid reform. This could start by studying state-level reforms. The 1981 law allowing states to apply for exemptions from federal welfare law required an evaluation of the welfare experiments conducted by states. Collectively, the assessments provided evidence that work-based welfare was better than cash assistance alone.

Congress should require evaluations of state Medicaid innovations over the next several years. Only then will we know whether premium assistance, health savings accounts, work requirements and other innovations control costs and improve health care among low-income Americans. And only then will a bipartisan consensus emerge about how to reform Medicaid for the future.

Ryan Streeter is director of domestic policy studies at the American Enterprise Institute. He served as deputy chief of staff for policy for Indiana Governor Mike Pence, special assistant for domestic policy to President George W. Bush and policy adviser to Indianapolis Mayor Stephen Goldsmith. You can follow him on Twitter @StreeterRyan.