Giving Medicaid a Checkup
In 2015, for the first time in history, the federal government spent more on health care than on anything else. And while this is a first, it will continue to be the case in perpetuity under current law.
How much does the federal government spend on health care? In 2015, it spent $936 billion on Medicare, Medicaid, the President’s health law, and the Children’s Health Insurance Program (CHIP). While Congress and the President argued over some minor tweaks to defense spending and other discretionary spending, health care costs alone nearly cost more than all of those programs combined.
Not only is health spending already the largest item on the ledger, it is also the fastest-growing. Spending on health care skyrocketed by $105 billion (11 percent) in just one year. Medicare now spends more per year than it did in its first 20 years of existence.
Medicaid is the largest health insurance program on Earth. Last year, more than 83 million Americans were covered by Medicaid — that’s more than six times as many people as live in Pennsylvania, and 25 million more than are covered by Medicare. About half of births in the United States each year are paid for by Medicaid.
Medicaid has now been law for 50 years, and so it is an appropriate time to ask if it is working. In the next decade, Medicaid spending is set to double, and Medicaid is already the fastest growing spending item in most state budgets.
According to the Congressional Budget Office, by 2030, the entire federal budget will go toward entitlements (this health care spending plus Social Security) and service on the debt, leaving no funding for scientific research, roads and bridges, or anything else. We will have to keep borrowing more money.
Millions of poor people are relying on this program. We have an obligation to make sure that it is working. As Democrat Senator Richard Durbin put it, “We know that come ten years from now, Medicare is not sustainable financially. We’ve got to do something. Why wait ten years to see that reality? We know that Social Security has 20 years or perhaps less. What are we going to do about it today, in a small way, that will give it this longevity.”
Senator Durbin makes a good point about these other programs, and it is because of this same principle — making manageable changes now so that we don’t have to make drastic changes later — that the House Energy and Commerce Committee’s Health Subcommittee, which I chair, is taking to Medicaid.
This week, I chaired a hearing on long-term care, which now costs the American people about $340 billion annually. It is estimated that about half of seniors need help with multiple daily activities. As our population continues to get older on average, the cost of this need will only grow more expensive and burdensome, straining the finances of Medicare and Medicaid alike. Medicare pays for acute and post-acute care, including skilled nursing facility services and limited home health services, and Medicaid is the largest payer of long-term care in the country.
We know for a fact that a lot of this money is wasted. According to a Government Accountability Office report, last year $17 billion of Medicaid money was improperly paid, an error rate of 6.7%. That means that nearly seven out of every hundred dollars spent by Medicaid is wasted. Every dollar of waste is a dollar that is not spent helping someone in need. Just imagine what we could do with $17 billion, how much better you or the private sector could spend it.
With that thought in mind, the House passed a bill to improve Medicaid and eliminate waste. The bill would do that by ensuring that Medicaid no longer pays providers who have been terminated by the program for fraud or poor quality. This will not only save taxpayers millions of dollars, but ensure that some of the most vulnerable patients are protected from fraudulent providers. The bill will also help Medicaid recipients find doctors who can help them by making states publish an online directory of Medicaid-participating doctors.
Improving Medicaid helps the taxpayer, helps the poor, and helps the senior in need of long-term care. The status quo threatens not only for our other spending priorities, like roads and bridges, but the well-being of the 83 million of our friends and neighbors who rely on Medicaid. We owe it to them to keep Medicaid healthy.