The Bluegrass Institute for Public Policy Solutions will release its report on Kentucky's Medicaid program on Wednesday. The report's author projects Kentucky spending 70 percent more on Medicaid out of the General Fund by 2020.
A new report by the Bluegrass Institute for Public Policy Solutions indicates that without thorough reform, Kentucky’s Medicaid crisis will only worsen as mandates in the nation’s new federal health-care law are implemented.
“I think the evidence suggests it’s time to turn to more fundamental reforms instead of piecemeal fixes,” said the report’s author, John Garen, Ph.D., Gatton Endowed Professor of Economics at the University of Kentucky and a Bluegrass Institute adjunct scholar.
The report, entitled “An Unsustainable Path: The Past and Future of Kentucky Medicaid Spending,” will be released at a policy briefing this Wed., June 29, at 12:30 p.m. in Room 248 of the University of Kentucky’s Carol Gatton Business and Economics Building. The event is being sponsored by the Bluegrass Institute and the BB&T Learning Laboratory on Capitalism.
While total state and federal spending on Kentucky’s Medicaid program rose by a considerable 54 percent – from $3.3 billion to $5.1 billion – between 1999 and 2009, Garen projects future spending increases could rise more steeply.
Even without the federal Patient Protection and Affordable Care Act (PPACA), Kentucky could easily spend 70 percent more out of its General Fund by 2020, which could rise to 80 percent more with the federally mandated Medicaid expansion.
“Medicaid spending has been a problem for quite some time, brought on mostly by its expansive growth over the past 25 years, and this problem will intensify under PPACA,” Garen said. “Particularly troublesome is that past expansions of Medicaid have brought about only minimal improvements in the health of recipients, largely due to the fact that many new recipients enrolled in Medicaid instead of private insurance. Major reform is called for to focus the program on the truly needy while using taxpayer dollars carefully.”
The report highlights that Medicaid is rife with incentives that thwart budgetary control and good healthcare practices on the part of consumers and providers, including under-reimbursement for providers, a lack of co-pays and deductibles, matching federal funds that discourage cautious state budgeting and the poor targeting of truly needy Kentuckians while making many in the middle class eligible for benefits.
“It is important to move past old policy habits,” Garen said. “Fundamental reform needs to be embraced that will tap into the experience of the millions of consumers and tens of thousands of providers to determine what works best. This will require more heavy use of markets and market-based incentives.”
Without proven, market-based reforms, the future of the entire Medicaid program is threatened, he said.
“With a more market-based approach, we can better serve the truly needy while being careful with taxpayers’ dollars,” Garen said.