Thursday, August 26, 2004
Financial incentives built into Medicaid work against efforts to scale it down
[James W. Fossett and Courtney E. Burke, "Medicaid and State Budgets in FY 2004: Why Medicaid Is So Hard to Cut" (Albany, New York: Rockefeller Institute of Government, Federalism Research Group, July 2004).]
Ever wonder why policymakers are willing to raise taxes or cut other programs but refuse to really grapple with Medicaid? Researchers at The Rockefeller Institute set out to determine why, and studied Kansas as one of ten sample states. Here are a few of their conclusions:
- The attitudes and actions of elected officials, particularly governors, were the most important influence on the nature and extent of Medicaid spending cuts. In four states, governors made more or less explicit decisions to protect Medicaid from significant spending cuts and were largely successful.
- There are several reasons why Medicaid has proven so hard for states to cut. State governments derive considerable financial benefit from Medicaid by using it to pay for social service programs previously supported by state funds and through various “creative financing” techniques that allow states to receive substantial Medicaid funding without increasing their own spending. In addition, providers such as hospitals and nursing homes that receive Medicaid payments are major employers and purchasers in legislative districts, adding to the constituencies opposed to reducing Medicaid spending.
[James W. Fossett and Courtney E. Burke, "Medicaid and State Budgets in FY 2004: Why Medicaid Is So Hard to Cut" (Albany, New York: Rockefeller Institute of Government, Federalism Research Group, July 2004).]
Ever wonder why policymakers are willing to raise taxes or cut other programs but refuse to really grapple with Medicaid? Researchers at The Rockefeller Institute set out to determine why, and studied Kansas as one of ten sample states. Here are a few of their conclusions:
- The attitudes and actions of elected officials, particularly governors, were the most important influence on the nature and extent of Medicaid spending cuts. In four states, governors made more or less explicit decisions to protect Medicaid from significant spending cuts and were largely successful.
- There are several reasons why Medicaid has proven so hard for states to cut. State governments derive considerable financial benefit from Medicaid by using it to pay for social service programs previously supported by state funds and through various “creative financing” techniques that allow states to receive substantial Medicaid funding without increasing their own spending. In addition, providers such as hospitals and nursing homes that receive Medicaid payments are major employers and purchasers in legislative districts, adding to the constituencies opposed to reducing Medicaid spending.
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