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NRO’s domestic-policy blog, by Reihan Salam.

Peter Suderman on the Future of Medicaid



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Peter Suderman of Reason has a post on how the block grants proposed in the House Republican budget proposal might impact the number of Americans covered by Medicaid, drawing on a 2011 analysis prepared by the Kaiser Family Foundation:

Estimates prepared by the Urban Institute for the Kaiser Family Foundation, for example, project that at least 14 million fewer people would have coverage—and, if the program’s administrators were not able to control per enrollee spending growth, as many as 27 million. That’s in addition to those who would not gain Medicaid coverage under ObamaCare.

This sounds dramatic, but the impact is actually relatively modest, especially when considered in the context of the program’s recent enrollment expansion.

Between 2007 and 2011, Medicaid grew from covering 42 million people to covering a little more than 52 million. It’s a countercyclical program, so as the recession took its toll and people lost employment, enrollment increased rapidly.

Block grants would roll that back somewhat, but would still leave tens of millions of beneficiaries. Under the cost-control scenario, more than 45 million people would remain covered by Medicaid in 2021, according to Urban Institute estimates. Under the cost-growth scenario, the program would continue to cover more than 32 million beneficiaries—still more than were covered in 2000, and still a large chunk of the country’s population.

Peter’s post is a useful corrective. But two potential problems come to mind. The first is that the House Republican budget proposal doesn’t adequately account for the business cycle. Paul Howard’s Medicaid reform proposal, in contrast, is explicitly countercyclical. The second is that while block grants might be a good solution for the component of Medicaid spending devoted to young low-income beneficiaries, they might not work as well for the aged and disabled components of the program, which account for a disproportionately large share of spending. Integrating the aged and disabled components of the Medicaid program with Medicare might make Medicaid block grants for the remaining population a more attractive solution. 



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