Health Care Reform vs. Medicaid

How will we pay for health care reform when we can’t even cover the cost of Medicaid? Conservative estimates put the cost of health care reform at $1 trillion. Mr. Fixit has said he will not sign legislation expanding government intervention in health care unless it is deficit neutral.

Well then explain this.

A key provision of health care reform is expanding the roles of Medicaid. Providing free health care for the poor sounds great until you realize that Medicaid at the federal level is on life support. States aren’t any better off and some projections put Medicaid deficits at the state level in the $200 billion range over the next 3 years.

According to the AARP, Between 1988 and 1993 Medicaid spending grew from $26 billion to an estimated $139.8 billion. Between 1995 and 2002, Medicaid spending is projected to grow by $150.8 billion; this translates into an average annual growth rate of 10.1 percent. In order to reduce government spending, the federal government is now requiring states to try to recover some of the money they spend on Medicaid beneficiaries.

That is spending at the federal level. According to the Kaiser Foundation total Medicaid spending (federal and state) was $319 billion in 2007. Of that total, $110 billion came from state taxes.

Direct federal funds for Medicaid ballooned to $209 billion from 2002 to 2007.

Congress saw the problem in Medicaid deficits as far back as 1993 and decided to do something about it by taxing the poor.

Since passage of the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93), Congress has required states to try to recover the cost of Medicaid benefits from the estates of certain nursing home residents and older persons receiving home- and community-based services. This law applies to individuals who were age 55 or older when they received Medicaid.

OBRA only addresses estate recovery for those who receive nursing home and home based care but why stop there?

The estate recovery provision was voluntary and many states ignored it until the federal government threatened to withhold matching Medicaid funds unless the states started enforcing estate recovery. All 50 states have now enacted their own provisions for estate recovery.

If your nursing care was paid for by Medicaid when you die the state files a lien against your estates and becomes a first line creditor by filing a claim in probate court. Any money recovered by the state is to be returned to the federal government, so the state is just a bill collector.

If the federal government and states can’t afford Medicaid now, how will they afford it when health care reform expands the roll of Medicaid? Why isn’t anyone asking this question?

Smaller cars, bigger health insurance, Poppa Washington.

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