The Economics
of Medicaid: Assessing the Costs and Consequences

Top experts explain everything you
wanted to know about Medicaid—from
federal-state financing to potential reforms.

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About the Book

Medicaid, originally considered an afterthought to Medicare, is today the largest health insurance provider in the United States. Under the Affordable Care Act, the Congressional Budget Office projects Medicaid enrollment to increase nearly 30 percent by 2024, and federal spending on the program to double over the next decade. For the states, Medicaid is already the largest single budget item, and its rapid growth threatens to further crowd out other spending priorities.

In this collection of essays, nine experts discuss the escalating costs and consequences of a program that provides second-class health care at first-class costs. The authors begin with an explanation of Medicaid’s complex federal-state funding structure. Next, they examine how the system’s conflicting incentives discourage both cost savings and efficient care.

The final chapters address the pros and cons of the most mainstream Medicaid reform proposals and offer alternative solutions. This book offers a timely assessment of how Medicaid works, its most problematic components, and how—or if—its current structure can be adequately reformed to provide quality care, at sustainable costs, for those in need.



Contributors

Joseph Antos

American Enterprise Institute

[see full bio]

Charles P. Blahous

Mercatus Center at George Mason University

[see full bio]

Darcy Nikol Bryan

practicing physician

[see full bio]

James C. Capretta

Ethics and Public Policy Center

[see full bio]

Robert F. Graboyes

Mercatus Center at George Mason University

[see full bio]

Jason J. Fichtner

Mercatus Center at George Mason University

[see full bio]

June O’Neill

Baruch College, CUNY

[see full bio]

Nina Owcharenko

Heritage Foundation

[see full bio]

Thomas P. Miller

American Enterprise Institute

[see full bio]


Contents

Click the titles to download PDFs for each chapter

Introduction
by Jason J. Fichtner

Part 1: Challenges Facing Medicaid

1. The Structure of Medicaid
by Joseph Antos
Medicaid’s structure creates a dynamic among the states, the federal government, and medical practitioners that reduces incentives for cost savings and efficient care.
2. Medicaid’s Cost Drivers
by June O’Neill
Understanding Medicaid’s cost growth requires understanding its key drivers: benefit expansion, liberalization of eligibility rules, rising enrollment of high cost recipients and waste, fraud and abuse.

Part 2: Medicaid’s Budgetary Impact

3. The Federal Side of the Budget Equation
by Jason J. Fichtner
While the ACA significantly expanded Medicaid’s beneficiaries and costs, it failed to address the program’s fundamental flaws that produce conflicting incentives, high costs, and poor health care.
4. The State Side of the Budget Equation
by Nina Owcharenko
Medicaid costs will eventually crowd out states’ ability to pay for other government services.

Part 3: The Affordable Care Act and Medicaid

5. Changes to Medicaid under the Affordable Care Act
by Charles P. Blahous
The ACA will significantly increase future Medicaid expenditures for both the federal government and for state governments that choose to expand the program
6. A Physician’s Perspective
by Darcy Nikol Bryan, MD
A physician explains her frustrations with Medicaid and discusses the need to refocus America’s health care conversation on health rather than health insurance.

Part 4: Medicaid’s Health Care Failures and Possible Reforms

7. Reforming Medicaid
by James C. Capretta
Successful Medicaid reform requires a fundamental transformation of the federal-state relationship.
8. The Hard Truth to Achieve Sustainable Medicaid Reform
by Thomas P. Miller
Medicaid provides second-rate care at first-rate costs. Improving this situation will require changing the incentives inherent in Medicaid financing.
9. Medicaid and Health
by Robert F. Graboyes
The ACA’s Medicaid expansion creates an additional strain on taxpayers but fails to achieve the objective of better health for low-income individuals.