Politics & Policy

The Biggest Welfare Crisis You’ve Never Heard Of

(Photo: Believeinme/Dreamstime)
Medicaid is out of control and unsustainable. Work requirements could help.

It’s not the lead story on the nightly news, and it’s not generating millions of clicks online. It may be one of the most underreported, underappreciated public-policy crises of our time. That’s a terrifying reality because, left unaddressed, this crisis will come at great cost to America’s most vulnerable.

The Medicaid program is at its breaking point. Even before Obamacare lured some states into expanding the program to non-disabled, working-age adults, Medicaid was growing at an alarming rate. Now, in the Obamacare era, the program is growing even faster, siphoning more and more resources away from folks who truly depend on Medicaid for survival.

A new report, released this week by the Foundation for Government Accountability, gives a glimpse of just how serious the problem is.

For starters, overall Medicaid enrollment has more than doubled since 2000. The number of able-bodied adults in the program has more than quadrupled over that same period.

This enrollment explosion has generated an unprecedented spending surge. Since 2000, total Medicaid spending has more than tripled, rising from $206 billion to more than $600 billion this fiscal year. Medicaid spending on able-bodied adults alone has skyrocketed by more than 700 percent.

Every one of these dollars is a dollar that cannot be spent on truly needy individuals who depend on Medicaid to survive — children, seniors, and individuals with disabilities. And with Medicaid now consuming roughly one out of every three dollars in state budgets, fewer dollars are left not only for the truly needy but for education, infrastructure, and public safety.

That’s a lot of numbers, but the bottom line is simple: Medicaid is nearing the end of an unsustainable path.

With nearly 650,000 individuals on waiting lists nationwide, the program is already failing to provide needed services to the individuals Medicaid was designed to help. Without significant reform, the truly needy may face even more dire prospects in the near future.

So what can be done to stop the bleeding and protect the Medicaid program for those who truly need it?

First and foremost, policymakers — in states and in Washington, D.C. — should pursue work requirements for able-bodied adults in Medicaid.

Work requirements are a proven, effective way not only to reduce welfare enrollment but to help individuals get back to work and increase their incomes. States that have implemented work requirements have seen these results time and time again.

Work requirements are a proven, effective way not only to reduce welfare enrollment but to help individuals get back to work and increase their incomes.

Several states are already moving in this direction. Arkansas, Arizona, Indiana, Kentucky, Maine, and Ohio, to name just a few, have all taken significant steps towards Medicaid work requirements. Medicaid work requirements have also been included in multiple Obamacare-repeal bills in Congress. This momentum, coupled with the Trump administration’s announcement last week, has made Medicaid work requirements imminent.

Second, the Trump administration should immediately approve Medicaid-work-requirement requests that are currently pending.

Numerous states — Arkansas, Kentucky, Indiana, Maine, and Wisconsin — have formally submitted applications for Medicaid work requirements. Some of these requests have been pending for more than a year. In order to help as many able-bodied adults as possible back into self-sufficiency as quickly as possible and free up limited resources for the truly needy, the Trump administration should fast-track these common-sense requests.

Finally, Congress should give states more flexibility in their Medicaid programs.

Currently, states have to file complicated waiver requests and endure a lengthy approval process to make even small changes to their Medicaid programs. It shouldn’t be this way. States, which administer the program and finance close to half of it, deserve more discretion.

This flexibility could (and should) take several different forms; work requirements are certainly one example. But states also need the authority to lower income eligibility and limit enrollment for able-bodied adults in order to preserve resources for the truly needy.

When Congress revisits health-care reform, additional state flexibility should be at the top of their agenda.

Out-of-control enrollment and spending growth has been ignored for far too long. Medicaid is long overdue for an overhaul. Policymakers should embrace this challenge, not shy away from it. Food-stamp and cash-assistance reform have given them a blueprint for how to fix it. All they have to do now is act.


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Three Things President Trump Can Do to Reduce Dependency

— Nicholas Horton is the research director for the Foundation for Government Accountability and a co-author of the new report “The Future of Medicaid Reform: Empowering Individuals through Work.”

Nicholas Horton — Nicholas Horton is the research director for the Foundation for Government Accountability.

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