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Health Care Reform From the Bottom Up

September 3, 2015

By James Capretta

For many years, Republican politicians, both nationally and in the states, have called for converting the federal Medicaid program, or at least portions of it, into a block grant. The latest example is the well-conceived health-care-reform plan proposed by Wisconsin governor and GOP candidate for president Scott Walker.

There are good reasons for supporting a Medicaid block grant. The current method by which Medicaid's costs are split between the federal government and the states — the federal government automatically covers a certain percentage of each state's costs, based on a formula that takes into account the state's average income — is the cause of much dysfunction and waste. The federal government pays, on average, 57 cents of every dollar spent by the states, no matter how much a state spends. This is an important reason for rapid Medicaid spending growth. It is much easier than it otherwise would be for state policymakers to approve higher Medicaid spending, because much of the added expense will be paid for by taxpayers located in other states. The current approach also undermines political accountability, because neither level of government is fully in charge. A block grant would force the states to take responsibility for all aspects of Medicaid because any spending beyond the federal block grant would come entirely out of state funds.

As important as it is to push for changing how Medicaid is financed, it is just as important for state leaders, especially those who have been opposed to the Affordable Care Act and its expansion of Medicaid, to focus on what they would do differently if they were given the opportunity to run the program without federal interference. In fact, the best way to promote a Medicaid block grant is to demonstrate how it would help improve the program's performance. Governors and other states leaders who have resisted the ACA should feel a special sense of urgency to articulate — and demonstrate — what they would do differently if they were given the authority to implement reform plans based on markets and consumer choice rather than federal control.

Read the full article at Real Clear Policy: Health Care Reform From the Bottom Up

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