• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • HHS Initiatives Fail to Offer States Meaningful Flexibility

    Last week, the Department of Health and Human Services (HHS) announced new initiatives intended to provide states with increased flexibility to better manage their Medicaid programs. However, these initiatives do not seriously address states’ mounting Medicaid crises.

    The first HHS initiative is to improve coordination of care for individuals enrolled in both Medicare and Medicaid, the so-called dual eligibles. Under Obamacare, 15 states will receive up to $1 million through a new bureaucracy focused on duals. While reform should address the problem of coordinating care for the duals, HHS’s approach will likely fail because it ignores the root of the problem. Currently, incentives to coordinate care between Medicare and Medicaid are lacking, since taxpayer funds (and not private-sector profits) are at stake for poor management. Cost-effective care would occur naturally if incentives were properly aligned.

    The second initiative is to allow easier access to home health care so that Medicaid beneficiaries can receive care outside of institutions like nursing homes. Most states already have waivers to do this, so it is unclear how this initiative will create additional flexibility. In fact, the available data suggest that this initiative will not lower taxpayer costs. This is because states that have rebalanced their programs (transitioning individuals from institutions to the home or community) to a greater degree have experienced relatively large spending increases for Medicaid long-term care. When Medicaid begins to pay for services that individuals value highly, such as home-based care, more people want to be on the program. The result is that rebalancing does not simply remove one beneficiary from a nursing home and place him or her in the home or community—it actually causes more individuals to use the service. Many states consequently have lengthy waiting lists for Medicaid-financed home and community services.

    HHS also proposed a 90 percent federal reimbursement for state spending to revamp health IT systems for better processing of Medicaid enrollees. While upgrading IT may be advisable, using federal funding to cover such a large portion of the cost will reduce state incentives to invest wisely and will therefore waste valuable resources. This proposal is emblematic of larger issues related to the unsustainable growth in Medicaid spending, which occurs because states can pass on most of the cost of their program to taxpayers outside their state.

    These HHS initiatives will do virtually nothing to reverse the program’s significant problems. Real flexibility would allow states to make bold transformations, such as transitioning enrollees toward premium assistance, without seeking approval from the federal bureaucracy. The bureaucratic process responds too slowly and blunts state efforts to innovate. Real flexibility would allow states to target taxpayer benefits to truly deserving populations in ways that limit the crowd-out of private coverage (individuals replacing private insurance with Medicaid), which economists estimate at 60 percent for Medicaid expansions.

    Obamacare worsens the Medicaid crisis by adding up to 25 million non-disabled adults to the program through a one-size-fits-all mandate to states. In most cases, the health care law prohibits states from reducing program eligibility. This has resulted in states slashing provider payment rates as a way to save money. In January, all 29 Republican governors sent a letter to Congress and the White House pleading for the Obamacare maintenance of eligibility requirement to be lifted. While this would be a productive first step, sustainable Medicaid reform would eliminate the incentive for states to pass costs to federal taxpayers and would reduce or eliminate federal barriers that inhibit states from transforming their programs. These reforms are contained in House Budget Committee Chairman Paul Ryan’s (R–WI) budget proposal that passed the House last week, and the Senate should seriously consider them.

    Posted in Obamacare [slideshow_deploy]

    4 Responses to HHS Initiatives Fail to Offer States Meaningful Flexibility

    1. George Colgrove VA says:

      Considering that if there is any government involvment with health care – it shoudl be with the states.

      Privatize the National Institute of Health and end federal funding. I am sure if the NIH has value, hospitals, health centers, health insurance, healthcare providers and so on would purchase memberships and provide funding for research.

      As for Obamacare – just say no! Then the states have all the flexability they could ever need!

      Contract out Social Security to be administered by the privae sector until we are able to rid this country of it.

      Privatize MC/MC as soon as posible and make public funding at the state level.

      Overall – get the feds out of healthcare. Lets put healthcare back in the customers hands! Do we really want the mindset of the the TSA, NSA, FBI, DIA, DoD, CIA and so on managing our health? These federal workers often move around to move up. People in DHSS used to work for the other agencies and they all carry the same mindset around and "correct" the newbee's.

      It is time we start thinking about continuing to support this bottleneck of our civilization.

    2. Bobbie says:

      The states shouldn't have to say "no." This is a trap that needs to be removed from this country. Some states won't say "no!" Obamacare is unconstitutional and shouldn't continue to be implemented as it confuses the situation and everyone's current private health care while putting extensive increases ON private health care, receiving LESS HEALTH CARE!

    3. Diana Brown, Illinoi says:

      Obamacare needs to be repealed and let us leave it up to the states for medical challenges. All the feds want to do is control and regulate and ration care. This is just so disgusting…besides it is unconstitutional!!!!! Come On People and please Wake UP to the many challenges ahead of us. We need Obama out of the White House and tell him to take all of his czar's with him!!!!

    4. Pingback: Time to Make Cuts in the Department of Energy | The Foundry: Conservative Policy News.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×