How Medicaid Reform Could Benefit the Poor

One of the most significant proposals in the Republican budget drafted by Rep. Paul Ryan is a plan to block grant Medicaid. The idea is simple: Rather than give states an incentive extract endless amounts of money from the federal government through the program's system of matching funds, put states on a budget. Then give those states the flexibility to spend their Medicaid dollars however they'd like. 

Probably the most common criticism aimed at the plan is that it would decimate health care for the poor. In today's Wall Street Journal, Peter Ferrera and Phil Kerpen of Americans for Prosperity argue that just the opposite is true:

Medicaid reform would especially benefit the poor. In its current form, Medicaid underpays doctors and hospitals so badly that the poor face major difficulties gaining access to essential health care under the program, and they suffer worse health outcomes as a result. Under block-grant reform, states would be free to provide financing to the poor to purchase private health insurance. This would empower the poor to enjoy the same health insurance as the middle class. 

The other thing to keep in mind when thinking about Medicaid is that, while the costs are quite high (and rising), the value in terms of health outcomes is quite low. The poor are already served badly by the program, and restructuring it to give states more flexibility could be a way to provide somewhat better service while simultaneously holding down spending. 

I wrote about Medicaid reform in The Wall Street Journal here.