Table 1 shows the results of the CBO’s projection of the total for mandatory outlays and our estimates for each growth cap scenario for the upcoming 10-year window. ​

​Overall, the only approach to a balanced budget by 2034 is the 1% growth cap, but faster economic growth would help the other two spending restraint approaches reach a balanced budget in about a decade. All three spending restraint approaches would improve the budget picture substantially compared with the CBO’s baseline budget. Also, we have kept the CBO’s projections for tax revenues or used the President’s latest estimates with faster economic growth, so our approach is very conservative. The results would most likely be substantially higher tax revenues by limiting government spending in the productive private sector and not hurting economic activity by raising taxes, as noted above, but rather providing pro-growth tax reform.

Fiscal Reform Initiatives and Their Outcomes
Various fiscal reform initiatives have been proposed and implemented over the years, with varying degrees of success. The most effective have combined spending restraint with pro-growth economic policies.
​
Sustainable Budgeting Practices
Adopting sustainable budgeting practices involves setting strict limits on spending growth and focusing on essential services. This approach helps to stabilize debt levels and create a more predictable fiscal environment. The federal government's enactment of a sustainable budget would assist these reforms. This would be a fiscal rule of spending limit similar to the Swiss debt brake or Colorado’s TABOR, whereby federal spending would be capped at no more than the rate of population growth plus inflation. Of course, federal spending should be much lower than this rate to correct for past excesses and bloated national debt. However, the spending limit will force Congress to reform mandatory programs and reduce the national debt. Had this spending limit been in place from 2004 to 2023, the federal debt would have increased by $700 billion instead of the actual increase of $20.2 trillion (Figure 3).

Because the CBO projects that spending on income security programs will decline in 2026 and 2027 and then increase again, its average growth rate is 1.1%. Hence, the primary savings from our approach is on Medicaid spending.

Discretionary Spending
Capping Medicaid and other safety net programs will help provide some fiscal relief but not much over time. We also consider our approach with discretionary spending, which is expected to be $1.7 trillion or about 27% of $6.4 trillion in total outlays in FY 2024.  Figure 6 shows what this looks like under these caps. ​

​Table 6 shows the results of the CBO’s projection of the total for discretionary outlays and our estimates for each growth cap scenario for the upcoming 10-year window.

The only scenario that reduces discretionary outlays compared with the CBO’s baseline is the 1% growth approach. Of course, this is less than 30% of total outlays, so major cuts would be needed to improve the unsustainable fiscal trajectory. 

Mandatory Spending
Capping discretionary spending alone will not solve the long-term fiscal problem. While we understand this will be politically challenging, evaluating what else must be done to provide a sustainable fiscal path is important. We consider our approach for mandatory outlays, which includes Social Security, Medicare, and other programs. The CBO expects mandatory outlays to be $3.8 trillion, or about 73% of $6.4 trillion in total outlays in FY 2024. Figure 7 shows what this looks like under these caps. ​

​Table 9 shows the results of the CBO’s projection of Medicare's total and our estimates for each growth cap scenario for the upcoming 10-year window.

Originally published at Kansas Policy Institute. 

​Medicaid Expansion: The Wrong Prescription for Kansas
Should Kansas pass Medicaid expansion? That is the question. 

Proponents argue that expansion will bring more Kansans under healthcare coverage and boost the state’s economy. However, a closer examination reveals a troubling picture. Medicaid expansion would saddle Kansas with unsustainable costs, strain the healthcare system, and hinder future economic growth—all without significantly improving healthcare quality.

Financial Burden and Inefficiency
Kansas already spends over $4 billion annually on Medicaid, with the federal government covering about 62% of the costs and the state covering the remaining share. Although proponents of Medicaid expansion highlight that the federal government would cover 90% of the expansion costs, Kansas would still face an additional burden—about 10% of the total cost. While this may seem manageable, Medicaid expansion could increase Kansas’ annual spending by $1 billion or more.

Expanding Medicaid increases overall costs and diverts funding from critical areas like education, infrastructure, and tax relief—investments that drive economic growth and job creation. Medicaid expansion has consistently failed to deliver meaningful improvements in healthcare quality, creating a vicious cycle of inefficiency and waste.

Poor Access and Quality of Care
Medicaid’s existing system is already straining to provide quality care, and expanding it would only worsen the situation. Low reimbursement rates to healthcare providers mean fewer doctors are willing to accept Medicaid patients, leading to longer wait times and reduced access to quality care. Medicaid recipients often experience delays in receiving medical attention, sometimes waiting months to see a specialist.

Rural healthcare is especially vulnerable. Many rural hospitals struggle with declining patient volumes and financial pressure, and Medicaid’s low payments exacerbate these issues. While expansion advocates claim that more funding will solve rural healthcare challenges, this strategy will unlikely reverse trends like population decline in rural areas.

A better solution would be to tackle these issues with targeted reforms. Kansas could reduce barriers for healthcare providers by reforming Certificate of Need laws to allow more facilities to be built. Additionally, expanding the scope of practice for nurse practitioners and occupational licensing reform that recognizes out-of-state clinician licenses would increase the availability of doctors and other medical professionals. Encouraging virtual healthcare services like telehealth would also improve access to care in underserved areas.

The Hidden Costs of Medicaid Expansion
Kansas should also be wary of the unintended consequences of Medicaid expansion. Nationwide, the cost per enrollee for Medicaid expansion was 64% higher than originally projected as of 2022. Moreover, Medicaid’s fiscal inefficiencies are staggering: in 2020, one in five dollars spent on Medicaid was an improper payment, amounting to $86 billion in waste nationwide that year. This figure remained high in fiscal year 2023, with $31.2 billion in improper payments. These inefficiencies raise concerns that Kansas could face a growing fiscal burden if expansion moves forward.

Medicaid expansion has consistently failed to meet enrollment projections, leading to higher state costs. In Montana, for example, initial enrollment projections for expansion were far lower than the actual outcome, leading to significant cost overruns. Kansas should be wary of falling into the same trap.

Economic Downside of Medicaid Expansion
Beyond the direct costs, the broader economic implications of Medicaid expansion are equally concerning. Expansion advocates argue that it will create jobs and stimulate the economy, but such benefits are temporary and pale compared to the long-term consequences of higher taxes and increased dependence on federal dollars.

As the federal government faces its fiscal challenges, Kansas risks being left to shoulder a greater share of Medicaid costs in the future. This could lead to higher state taxes, stifling private-sector growth, and deter investment in Kansas. Expansion would merely create a larger, costlier system without addressing the underlying problems that plague healthcare access and affordability in the state.

A Better Path Forward: Reform, Not Expansion
Kansas can address its healthcare challenges without expanding Medicaid. Reforms should focus on tightening eligibility requirements and instituting work incentives for work-capable adults. This would ensure that resources are targeted to those who genuinely need assistance while reducing the program’s financial strain on the state.

The state should also look to market-driven solutions to reduce healthcare costs. Expanding the use of Health Savings Accounts (HSAs), enhancing price transparency, and encouraging competition among healthcare providers are proven strategies to make healthcare more affordable while maintaining high-quality care.

Reforms that reduce unnecessary regulation will also have a positive impact. Easing restrictions on short-term, limited-duration insurance plans would provide Kansans with more affordable coverage options that better meet their needs.

Conclusion
Medicaid expansion is not the answer to Kansas’ healthcare challenges. The state is already spending billions of dollars on a system that delivers subpar outcomes and inefficient care. Expansion would only exacerbate these issues while putting Kansas on a fiscally unsustainable path. Instead of expanding a broken system, Kansas should focus on reforms that reduce costs, improve access, and ensure long-term healthcare sustainability. Market-based solutions that encourage competition and innovation hold the key to a healthier Kansas—both financially and medically.

​Watch this interview that I did with Dr. Deane Waldman on the costs and benefits of mandating price transparency by hospitals and whether it will result in anything productive at the Third National Health Care Transparency & No Surprise Act Summit, This interview was aired at https://www.hctransparencysummit.com/.

In this episode, we discuss:

​1) How Arkansas continues to grapple with the same issues decade after decade, including a broken foster care system, high poverty rates, and poor K-12 reading scores;
2) Why safety net reforms are key to Arkansas' flourishing, specifically concerning Medicaid; and
3) How more school choice would put Arkansas on the map, and why Arkansas has the potential to be the next go-to state like Texas, Florida, and Tennessee.

​Nic’s bio:

• Nic Horton is the founder and CEO of Opportunity Arkansas.
• A lifelong Arkansan, Nic has done political and policy work in roughly half the country, ranging from Maine to Montana. His original research and analysis has been highlighted in The Wall Street Journal, Fox News, Forbes, National Review Online, the Washington Examiner, and Townhall, among other national outlets. Nic has also appeared on numerous talk radio shows across the country.
• Starting in the political world volunteering for local in Arkansas campaigns, Nic eventually founded and led The Arkansas Patriot, one of the leading conservative news sites in the South. Much of Nic’s work focused on holding local governments and elected officials accountable on wasteful spending, lack of transparency, and tax hikes. Partnering with local concerned citizens, Nic played an instrumental role in defeating numerous local tax increases at the ballot.
• Nic later became the editor of The Arkansas Project, the largest policy news site in Arkansas, where he covered state issues ranging from criminal justice policy and tax reform to Medicaid expansion and occupational licensing.
• Nic’s early career as a journalist and Medicaid policy enthusiast led him to the Foundation for Government Accountability (FGA). Starting as the lone research fellow at FGA, focusing on Obamacare and Medicaid, Nic was quickly promoted to Research Director. Over the next five years, he built the department from the ground up by recruiting, training, and developing top-notch talent. Nic’s team members regularly were recruited and promoted by other departments in the organization which was openly recognized as a key asset for the company and an indication of his high ability to develop talent. During his tenure, he published more than 50 major research studies.
• During his tenure at FGA, Nic also served as an on-the-ground lobbyist in Arkansas where he was directly responsible for nearly 100 policy wins in the state (Previously, the organization had never achieved any policy wins in Arkansas). These wins range from implementing Medicaid work requirements—which made Arkansas the first and only state in the country to do so—to reforming the state’s archaic independent contractor rules to make it easier for Arkansans to find flexible work.
• Nic has testified before legislative committees in nearly a dozen states, including in Arkansas and bigger states like Pennsylvania.
• Spurred by his passion for Arkansas and solving his home state’s generational problems, Nic took a giant leap of faith in 2022 to pursue his decades-old dream of running his own policy organization. In August of 2022, Opportunity Arkansas was officially incorporated with the state of Arkansas. OA works to solve generational problems—like poverty, dependency, crime, and failing schools—by simplifying government.
• Nic also launched his for-profit research firm, Red Truck Strategies, in 2022 to allow him to continue utilizing his multi-state and federal policy expertise. The firm provides research, data, and strategic consulting services, primarily for national conservative non-profits.
• Nic resides in Conway, Arkansas, with his wife Leah and two children Clark and Clara. The Hortons are active members of The Summit Church.
• When he is not writing a policy piece or chasing his kids, Nic enjoys gardening, any good home improvement project, and storytelling. He holds a Bachelor of Science in Public Administration and a Master of Business Administration, both from Harding University.

You can watch this episode and others along with my Let People Prosper Show on YouTube or listen to it on Apple Podcast, Spotify, Google Podcast, or Anchor. Please share, subscribe, like, and leave a 5-star rating!
For show notes, thoughtful insights, media interviews, speeches, blog posts, research, and more, check out my website (https://www.vanceginn.com/) and please subscribe to my newsletter (www.vanceginn.substack.com), share this post, and leave a comment.

This commentary was originally featured in RealClear Health on June 14, 2017. 

Progressives and conservatives actually agree on health care: A crazy idea? Perhaps not.  

California, the West Coast bastion of progressivism, is pushing to create a single-payer health care system for its 39 million citizens. State Sens. Toni Atkins and Ricardo Lara have introduced Senate Bill 562 called the Healthy California Act, or HCA, which seeks to “establish a comprehensive universal single-payer health care coverage program and a health care cost control system for the benefit of all residents of the state.” After the California Senate passed the HCA on June 1, the state Assembly and Gov. Jerry Brown are the only barriers from realizing this progressive dream.

The HCA would provide all needed medical services from prenatal to nursing homes for all residents of the Golden State regardless of immigration status or financial condition. It would establish a California government insurance monopoly, as it would prohibit competition from private insurance carriers.

Among a host of contentious issues about such a bill, one immediately stands out: cost.
Clearly, such a cradle-to-grave, soup-to-nuts health care-giveaway to everyone would be very expensive. Even Gov. Brown was skeptical, musing, “Where do you get the extra money?”

In California’s proposed FY 2018 budget that begins July 1, the combined general fund and special funds amount is $180 billion. The Senate Committee on Appropriations’ cost estimate of the HCA is roughly double that part of the budget at $400 billion per year, which they note could be offset by $200 billion in existing state, local, and federal funds. 

It is highly doubtful that California could squeeze any more money out of Washington.

Therefore, unless major cost savings are found elsewhere, California’s government would have to rely on taxpayers to fund an additional $200 billion per year.

Given that California legislators must balance their budget every year, Californians would bear the full brunt of this cost via dramatic increases in their tax burden. This inevitable higher tax burden would be detrimental to an already over-taxed, excessively regulated economy.

These facts detract from any initial enthusiasm for single-payer in California. It may well reduce economic activity with no assurance of improved patient care, which is (or should be) the primary focus of any health care plan. And yet, California should be allowed to try.

At a rally in support of the HCA, Sen. Lara said, “Given this picture of increasing costs, health care inefficiencies, and the uncertainty created by Congress, it is critical that California chart our own path.”

Texas, on the other hand, could be viewed as a stronghold of conservatism, in many ways the polar opposite of California on the political spectrum. Although 30 percent of 28 million Texans are insured through Medicare or Medicaid, many Texans want to replace federally empowered Obamacare with something else. Considering the ample evidence that patients on Medicaid have poorer outcomes than those without insurance, government-provided insurance often fails to achieve the goal of improved patient care.

Texans have reason to be suspicious of California’s path when choosing a health care system. However, neither state, nor any state, can choose.

One might quickly conclude that conservative Texans vehemently disagree with progressive Californians about health care. Not necessarily.

Conservatives believe first and foremost in states’ rights and that decisions made closer to the people are better for the people. If California wants single payer, and Texas wants free market, and Oregonians want their idea of universal health care, each should be allowed to determine their own health care system. Conservatives would say, “we all have a constitutional right.”

Those who strongly oppose the Affordable Care Act but believe in state rights should support another state’s choice to have Obamacare within its state borders.

Apparently, conservatives and progressives agree on health care. They concur that Washington should not force federal choices on California, Texas, Oregon, or any of the other 47 member states of our republic. What Senator Lara advised California—let us “chart our own path”—applies with equal force to every other state. 

https://www.texaspolicy.com/blog/detail/california-and-texas-agree-on-health-care

Originally published at Real Clear Health.

​By Deane Waldman & Vance Ginn
February 20, 2017

Most people have heard the aphorism, “if it sounds too good to be true, it probably is.” Referring to the GOP’s cure for Medicaid, “If it sounds too good to be true, it might be true; but guaranteed, it won’t be good.”

A Feb. 6, 2017 report on Medicaid makes this point perfectly. The GOP commissioned a study by Avalere Health, a health care consulting group, to assess the fiscal impact of federal block grants to state Medicaid programs. They evaluated two funding approaches: a lump sum to be negotiated and a per capita, i.e., per enrollee, formula.

Their study showed that block grants could save Washington between $110 billion and $150 billion over five years depending on which formula was used. Roughly half the states would get a small increase in their federal contribution and half would get less, sometimes a lot less. The biggest loser, Arizona Medicaid, would receive 62 percent less than it is currently receiving from Washington.

With the present Medicaid state-federal matching scheme, the more a state spends, the more money it gets from Washington. This produces a classic perverse incentive: rewarding the outcome you don’t want. We want states to reduce spending, yet Washington rewards them—with federal dollars—when they spend more! With a block grant, this perverse incentive goes away. This is a good thing.

Medicaid block grants could save $110-150 billion and would eliminate the perverse incentive. Sounds like a great idea. It makes wonderful sound bytes, and the GOP seems to want to run with it.

There is just one teeny, tiny problem with block grants as proposed: no health care.

The federal government can, and in recent years does, spend more than it takes in as tax revenue. The federal government is able to do this because Washington has the option to issue debt and finance it by printing dollars through the Federal Reserve’s open market operations. States cannot, print money that is. Because states must live within their means, Medicaid programs will have to cut services to patients in order to balance their budgets.

For a specific example, simple financial arithmetic shows that the GOP plan for block grants to Medicaid will reduce access to care.

Whether a lump sum or per capita contribution, the block grant approach gives a fixed amount to the state. That is the state’s Medicaid income from Washington. Federally mandated spending—the state’s Medicaid cost—is constantly increasing and exceeds available funds.

Between 2011 and 2015, spending on Texas Medicaid increased from $27.7 billion to $30.4 billion. That is a 13.5 percent increase in the state’s cost compared with only an 11.8 percent increase in population growth plus inflation. Texas, just like other states, cannot spend more money than it takes in. Unlike most other states, Texas has had a robust economy and was able to compensate for its yearly Medicaid shortfalls by routinely passing supplemental spending bills.

States such as Illinois, Connecticut, and Massachusetts that flirt with bankruptcy cannot do this. What occurred in New Mexico, another cash-strapped state, demonstrates the effect of Washington’s spending mandates on the state’s Medicaid program.

New Mexico expanded its Medicaid program and received an additional $3 billion from the federal government. However, the Land of Enchantment was required by federal law to spend $417 million more on insurance benefits and bureaucracy in 2017 than the state had in its bank account. Without the luxury of Texas’ exuberant economy, New Mexico had to cut spending somewhere while remaining compliant with federal regulations. Thus, they cut reimbursements to providers.

Now think about all those states—26 of them and the District of Columbia according to the Ayalere study—that will receive less money under the GOP block grant scheme. They will still have to spend according to federal mandates. And just like New Mexico, they will be forced to cut services in order to balance their budgets. Half of the nation will be filled with Medicaid-insured patients who expect to get the care they need but can’t get it, for lack of doctors.

Apparently, the GOP can’t do simple fiscal arithmetic. Enamored with their fundamentally flawed, one-size-fits-all block grant, they will cut costs, and cut care without fundamental health care reform to focus on improving patient care. 

There is a way to make this work. Along with block grants, repeal the federal Medicaid mandates. That would put control of spending where it belongs—at the state level, closer to patients. Administrative processes could be streamlined. Resources would be apportioned more closely in accordance with local needs. Healthcare dollars could actually be spent on health care.

We can fix Medicaid using block grants, but only by giving control of both income and spending to the states.

​Advocates of Medicaid expansion in Texas often highlight our state’s record of the largest uninsured population in the nation, according to a recent U.S. Census Bureau report. Though the uninsured rate is falling, advocates say, it would fall even faster if we expanded Medicaid.

However, expansion supporters overlook research showing that Medicaid patients have poor health outcomes, access to care is relative to private health coverage, and the growth of the program’s costs are unsustainable.

To address these concerns, for both Medicaid enrollees and taxpayers, it’s time to reform the Medicaid program to improve access to quality health care while saving taxpayers billions of dollars annually.

Skyrocketing Medicaid costs contributed to spending more on health care than on education for the first time in Texas history during the last budget cycle. Medicaid now accounts for 23 percent of general revenue appropriations in the current budget — up an unbelievable 42 percent as a share during the last decade.

If Texas expands Medicaid and receives dwindling federal funds to cover more enrollees, state costs will continue to soar. This has been the case in Ohio and elsewhere, where the actual expansion cost during the just first 18 months has exceeded the $2.56 billion projected amount by a staggering $1.5 billion.

With Medicaid already crowding out budget priorities, Texans might soon have to forgo other government services, even as Medicaid enrollees receive substandard quality care without substantial reform.

Fortunately, there is a solution: the Texas Medicaid Reform Model.

Instead of Texas receiving matching federal funds to pay for Medicaid, the state would receive a lump sum of federal funds, also known as a block grant. In exchange, the state would get more flexibility over the program.

For example, Texas could allocate federal and state funds to subsidize private health insurance for nondisabled children, pregnant women and adults approved to receive benefits from the Temporary Assistance for Needy Families program.

My colleague John Davidson and I calculated the savings this approach could achieve using coverage costs based on the federal exchange’s gold or silver Affordable Care Act (ACA) plans. Subsidies to pay for an enrollee’s monthly premium would be based on a sliding scale determined by the federal poverty level (FPLs) — with the amount decreasing as the enrollee’s income increases up to the nonexpanded Medicaid maximum FPL per risk group. An enrollee’s contribution would be no more than five percent of their income in most cases, which is substantially less than the eight percent maximum under the ACA.

For example, a pregnant woman enrolled in Medicaid today costs the state, on average, $718 per month. Since she’ll likely receive additional care throughout her pregnancy, making her health care costs higher, she could be offered a gold plan with a $435 monthly premium. Given her income of $920 per month is near 100 percent FPL, the state could subsidize 90 percent of the premium, lowering her monthly contribution to $44. This would be a cost-savings to taxpayers of $327 per month.


We used this approach to calculate the reform costs for all considered risk groups based on actual and projected enrollment data for 2013 to 2023 from the Texas Health and Services Commission (HHSC). Comparing HHSC’s cost estimates under the status quo to our reform model, cost-savings could be at least $4 billion dollars per year, increasing to as much as $6 billion per year by 2023.

Because the cost of private health coverage is artificially inflated due to government restrictions and mandates in Obamacare, health insurance deregulation could lower these costs. Choices made by enrollees who have more control of their health care could also increase savings through more efficient use of health care dollars. In addition, reforms to Medicaid long-term care could also help bend the cost curve.

By transforming a joint federal- and state-directed Medicaid program into one that allows some enrollees a path towards private, market-based, patient-centered coverage, those currently enrolled in Medicaid will receive higher quality health care and save taxpayers billions of dollars.

We owe it to all Texans to pursue such a reform.

Don't miss this video where I present the Foundation's Medicaid reforms that saves taxpayer dollars and provides better access to quality care and outcomes for recipients.

A supplemental spending bill passed by the 84th Legislature caused total state spending on health and human services (Article II) to exceed education spending (Article III) for the first time in Texas history. As the state’s Medicaid rolls continue to grow (even without the ACA Medicaid expansion), hospitals face looming federal funding cuts, and the state grapples with unprecedented healthcare costs, how can we stabilize the growth of state healthcare spending while improving access to and quality of care?

Featuring

Rep. Garnet Coleman, Texas House of Representatives
Dr. Vance Ginn, Economist, Center for Fiscal Policy, Texas Public Policy Foundation | Presentation
Camille Miller, President & CEO, Texas Health Institute | Presentation 

Moderated by John Davidson, Director, Center for Health Care Policy, Texas Public Policy Foundation
​http://www.texaspolicy.com/multimedia/video/uncompensated-care-medicaid-and-solutions-to-texas-health-care-crisis-po2016

This commentary originally appreared in Forbes on October 15, 2015.


Most across the political spectrum agree that the government should provide some degree of access to healthcare for the poor and disabled. Disagreements tend to be over to what extent that access should be provided and whether people should be forced to purchase health insurance, as is the ongoing conversation at the heart of Obamacare.

To increase the number of insured people, Obamacare mandated that everyone have some form of health insurance or pay a $95 penalty the first year, increasing steeply thereafter. While this “individual mandate” clearly imposes costs on an individual’s budget and liberty, the U.S. Supreme Court did give states the option to expand Medicaid—the federal-state healthcare program for the poor and disabled.

Obamacare also introduced online federal insurance exchanges that include subsidies to help lower-income people purchase private health insurance and has drastically increased the eligibility criteria for those qualifying for Medicaid.

The Census Bureau recently reported that one year after Obamacare began the number of uninsured fell by 8.8 million to 33 million. This reduction seems rather minimal when individuals are forced to purchase health insurance or pay a penalty along with a decade cost of at least $1 trillion.

Critics blame the less than impressive decline on the 20 states that have not expanded Medicaid. However, these states are actually better equipped to care for those most in need because the states that have expanded Medicaid have seen much higher costs than projected. For example, Ohio’s expansion cost of $4 billion has been $1.5 billion greater than initially projected because per-member costs and enrollment were substantially higher than first thought.

The federal government has held a large carrot in front of states to pressure them to expand Medicaid by paying 100% of the increase in costs for the first three years through 2016. That share will gradually decline to 90% of the costs by 2020 and likely lower thereafter, leaving less of a stick to fall back on later.
 This carrot and stick approach gives critics ammunition to claim that states that haven’t expanded are costing them dollars. The Kansas Hospital Association, which is in favor of Medicaid expansion, has a ticker on its website showing that the state’s choice not to expand has cost Kansas almost $750 million since January 1, 2014. This completely overlooks the fact that the state will face a growing share of the long-term costs, putting many Kansans’ on the program at risk.

Federal payments for Medicaid are based on matching state dollars depending on the state’s average per capita income. These payments range from 50% of the cost in Wyoming, to 57.13% in Texas, to 74.17% in Mississippi. The National Association of State Budget Officers recently noted that for the first time Medicaid represented a majority of federal funds to states in 2014.

In general, healthcare spending under Medicaid is rising at an unsustainable pace. Unless other budget priorities are forfeited, taxpayers may soon have to pay higher taxes. This has been the case in Texas.

While Texas didn’t expand Medicaid, the costs continue to skyrocket and during the last budget cycle increased healthcare spending to more than education spending for the first time in Texas history. The states’ share of General Revenue appropriations to Medicaid has increased by 42% to 23% in just over a decade.

Texas is now faced with how to best meet the needs of those on Medicaid and patients on the program are not receiving adequate care. Research shows that Medicaid patients have poor access to care and poor health outcomes. On the other hand, patients with private health insurance top both categories.

Considering these costs, the Texas Public Policy Foundation devised the Texas Medicaid Reform Model that first requires a federal block grant for Medicaid instead of matching funds. This would allow the state to allocate federal and state funds to assist non-disabled risk groups (i.e. kids, pregnant women, and adults eligible for TANF) purchase private health insurance based on a sliding scale determined by the federal poverty level (FPL).

As an enrollee’s income falls into a lower FPL category, the subsidy amount for monthly private health insurance premiums would increase until the subsidy covered 100% of the premium for the zero to 50% FPL range. At higher income levels for each risk group up to their maximum FPL under the current Medicaid program, enrollees would be required to contribute to the cost of their private coverage.

We based the coverage cost on gold or silver plans under the federal exchange. Enrollee contributions would be no more than 5% of their income on healthcare in most cases, which is substantially lower than the 8% maximum under Obamacare.

Using data from the Texas Health and Human Services Commission (HHSC) from 2013 to 2023, our cost estimates from our reform model compared with HHSC’s data show that Texas could save at least $4 billion per year, increasing to around $6 billion by 2023. Cost-savings will likely be much higher as more competition in the private health insurance market bid down prices and patients have more control over their future healthcare needs.

This patient-centered, market-based model should be a path forward for other states to follow so patients will be in the driver’s seat when it comes to controlling their healthcare costs. For the poor and disabled insured through Medicaid but who receive fewer positive outcomes and limited access to care and all taxpayers who pay more for this program than private coverage under our proposal, the time for reform is now.

http://www.texaspolicy.com/blog/detail/choosing-not-to-expand-medicaid-was-the-right-call-but-we-still-need-reform 

Originally published at TPPF. 

​The Texas Medicaid program is on an unsustainable trajectory. Steadily rising healthcare costs and growing enrollment mean that Medicaid is consuming an ever-growing share of the state budget. If no reforms are put in place to control spending growth, the Medicaid program will eventually crowd out other state spending priorities.