BEYOND MEDICAID

Can the many disagreements among politicians about the rising costs of Medicaid be taken seriously? The debates among the Bush administration, members of Congress, governors and state legislators focus on the rising costs of this program as if there were something unusual about it. But unless these leaders begin looking at its costs in the context of much broader health care trends, the best the public can expect is a patched-together system that will serve neither well nor for long.

Of course Medicaid costs (and Medicare costs, for that matter) are rising faster than the government soon will be able to pay. Business leaders have been telling politicians for years that this was exactly what was happening in the private-insurance market. Why wouldn’t public coverage also rise and, considering the public insurance-pool demographics, rise even more steeply than the private market? The unaffordable costs are what too many political leaders have said in one tired speech after another someone must do something about. Now a crisis has arrived and the answers so far make duct tape look like a sophisti-cated response.

The Medicaid debate is turning on the president’s idea to change the system from a defined benefit plan to a defined contribution – meaning instead of deciding whether to cover specific treatments, recipients are covered until the federal money runs out, then states can decide for themselves how badly they want to continue to cover their citizens.

Roughly, the president would provide states with an added $12.7 billion in Medicaid money to help with short-term problems, then cut the budget to states by that much over the three following years. States would gain flexibility over the kinds of coverage and issues like cop-pays for the one-third of Medicaid recipients whom states are not mandated to cover but do anyway. This solution postpones the problem nicely, but leaves states with enormous bills after seven years.

The administration’s reform plan has been called the boldest overhaul of Medicaid in decades, but its shortcoming is that it does not go nearly far enough. The imperative must be to offer access to health care to all Americans by wringing every wasted dollar out of the system. A methodical, painstaking step-by-step examination of where money is wasted is a first step. In addition to giving the states even more room to experiment with universal-access systems, a congressional committee is needed to look not just at public-health coverage but in the entire system, which is filled with red tape, redundancy and middlemen, defensive medicine, overutilization and cost-shifting. A combination of state trials and federal investigation may be the only way to identify savings, reduce costs and extend coverage for everyone.

Some are convinced single-payer is the answer; others insist competition in the private market will bring down cost. A congressional committee with broad oversight should ask merely what system delivers the most effective care at the lowest cost for all Americans, rich and poor, covered (for now) or lacking any sort of coverage. Dr. Bill Frist, the Senate majority leader, seems eager to explore exactly that question, and given the pounding President Bush took from his own party on recent Medicare proposals, he might be ready as well to enlist congressional support on reducing costs while extending coverage.

Governors meeting in Washington this week were ambivalent at best about the president’s Medicaid plan, perhaps because while they know it could help short-term, it will solve little over the long term. The crisis in health care coverage is far enough along for the federal government to stop trying to patch up the old system and quickly begin imagining a new, more comprehensive, more effective one.