Medicaid Shift

The Bush administration has a fair point in its complaint that states misuse a Medicaid rule to tax hospitals and nursing homes in order to raise revenues that then are used to leverage more federal dollars for care. There’s no logic to such a system and it shifts more costs than intended to the federal government, but states can accurately say they have limited choices to behave otherwise.

Under the plan by the administration, Maine would feel a reduction of approximately $60 million a year, according to the governor’s office, including about $16 million from the reduction in nursing home taxes. Should the rules stand, the Legislature would return next year to face tough coverage questions, though the problem is clear enough: Neither states nor Washington have enough money to cover the rapidly growing costs of care.

That growth in Medicaid (and, for that matter, Medicare) has many causes but one of them surely is the insistence of the White House and Congress that a more comprehensive and unified health-care payment system is impossible. Such a reformed system would include, at different levels of coverage, the young and old, rich and poor, the working and unemployed. It would set as a standard universal coverage, strong incentives for staying healthy and a public-private partnership that maintained competition among insurance providers.

And such a system would avoid the helter-skelter scramble for dollars that states engage in now, just as it would avoid the hidden costs of the uninsured, the doughnut hole in prescription drug coverage for seniors, the uneven levels of mandates among states and the dependence on businesses to provide coverage. Instead of fighting over which level of government would pay for needed care, state capitals and Washington could focus on the quality of care and how efficiently it is delivered.

The Bush administration also intends to save money by limiting reimbursement rates to hospitals and nursing homes, which it claims are now receiving more than the cost of services. Representatives for these institutions say the cuts will lead to reductions in service. But because no branch of government knows the actual total of the many costs that go into services, the public also cannot know which side is correct. Instead, it is likely that some services are overpaid and some are underpaid or some geographic regions are improperly reimbursed.

This inefficient hide-and-seek with health-care dollars will continue while politicians reject the kinds of comprehensive solutions most advanced countries chose a generation ago. States are about to be punished for rising health-care costs, but the real culprit is one level of government up from there.