New Report Offers Guidance for Reforming Medicaid

Medicaid’s current design unduly favors wealthier states, leaving millions with inadequate coverage

NEW YORK, NY – The Covid-19 pandemic has thrown millions of Americans out of work, forcing them to rely on Medicaid for health insurance just as states are struggling to recover from months of shutdowns and tax revenue declines. The federal government has increased Medicaid’s funding, but the program’s current structure will render it short of funds, as in previous recessions. As Congress seeks to stabilize Medicaid in light of the current crisis, a new Manhattan Institute report from senior fellow Chris Pope offers timely guidance for redesigning the program in a way that will enhance its fairness, focus, and accountability.

In 2018, Medicaid paid for health-care services for 76 million people, to the tune of $616 billion. Despite these figures, 28 million Americans still lack basic health-insurance coverage as a result of Medicaid’s poor design—one which grants federal funds to states according to how much they spend on medical services for eligible beneficiaries, thus favoring states who need Medicaid least. The coronavirus pandemic has only exacerbated the issue. To rectify Medicaid’s inefficiencies, Congress should seize the opportunity that Covid-19 presents to restructure Medicaid in line with the following guidance:

1. The federal government should take full financial and administrative responsibility for providing acute care to individuals that states are currently required to cover.
2. The federal government should provide a capped allotment to assist each state with the provision of long-term-care services to enrollees.
3. States should be free to provide additional health-care benefits (not required by federal law) to residents but pay for them entirely out of their own resources.

Click here to read the full report.