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The Problem

Public option plans, health care rationing, and new surtaxes and fines – health care “reform” is receiving significant attention from a concerned public.

Yet one major aspect of health care plans being developed on Capitol Hill has received relatively scant attention. House and Senate Democrats are planning on significantly expanding Medicaid to help decrease the rolls of the uninsured. In fact, about 30 percent of the people newly covered by the leading House bill – about 11 million individuals – would receive coverage via Medicaid.

Ongoing Medicaid expansion negotiations in Congress will determine at what level benefits are set, when they take effect and whether the federal government or the states will shoulder the cost. In the meantime, it is possible to get a sense of what an expansion could cost and by how much Illinois’s Medicaid enrollment could grow. The numbers are not comforting.

According to a report from the Federal Funds Information for States, the additional “state share” cost to Illinois for immediately expanding Medicaid to uninsured individuals who earn up to 133 percent of poverty level would cost $1.391 billion (FY 2009 numbers, at regular Medicaid reimbursement rates). It would take Illinois’s Medicaid enrollment from 2.4 million enrollees to 3 million enrollees, a 25 percent increase.

However it’s fashioned, a large-scale expansion of Medicaid will come with a significant price tag, which will be difficult to reconcile with the looming deficits in the federal government’s budget and Illinois’s state budget. 

Our Solution

Illinois is already having a hard time paying for its current Medicaid obligations – the state’s significant payment backlog is clear proof of this. An expansion – even one partially or temporarily funded by the federal government – would make the outlook for balancing Illinois’s budget and honoring current commitments much more gloomy than it already is. This doesn’t bode well for taxpayers or current Medicaid recipients and providers.

Congress should instead focus on a patient-centered approach to health care reform that empowers the patient and the doctor to make effective and economical health policy choices. Patient-centered reforms include increasing competition among health care insurers by allowing the purchase of health insurance plans across state lines, expanding the adoption of Health Savings Accounts, ending the tax penalization of individually-purchased insurance plans, reducing the number of costly benefit coverage mandates, pursuing tort reform, encouraging medical price transparency, and rethinking licensing laws to encourage greater competition among providers.

Why This Works

Congress should encourage a robust health care market where insurers and providers compete for consumers on the basis of affordability and quality care. Ending regulations that use the tax code to favor employer-provided health insurance and allowing the purchase across state lines will help more families get the coverage they desire. Putting individuals in greater control of their health care dollars through Health Savings Accounts and medical price transparency will help control costs. Empowering individuals and doctors to make the health care decisions that are right for them will provide greater care choices than whatever rationed care the government sees fit to provide.

 

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