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Columns

A Measure to Rein in Medicaid's 'Mission Gallop'

July 10, 2017 - 7:00am

Were it not for the provision that Pat Toomey, the Pennsylvania Republican, put into the Senate's proposed health care reform, this legislation would be moderately important but hardly momentous. Toomey's provision, however, makes it this century's most significant domestic policy reform.

It required tenacity by Toomey to insert into the bill a gradually arriving, but meaningful, cap on the rate of growth of per-beneficiary Medicaid spending. It is requiring of Toomey and kindred spirits strenuous efforts to keep it there, which reveals the Republican Party's itch to slouch away from its uncomfortable but indispensable role as custodian of realism about arithmetic.

Toomey notes that in every decade since Medicaid began in 1965, it has grown faster than the economy, and than almost every other program, none of which matched Medicaid as a driver of the deficit. In Medicaid's life, its expenditures have grown more than twice as fast as nominal (unadjusted for inflation) GDP. And although the federal government pays for most of Medicaid, states pay some, and since 1990 the portion of states' budgets devoted to it has risen from 9.5 to 19.7 percent -- almost one in five dollars.

Lawrence Lindsey, formerly a governor of the Federal Reserve System and an assistant to both presidents Bush, puts the matter plainly: "No large component of the federal budget can perpetually grow faster than nominal GDP." In 1970, Medicaid spending was 1.4 percent of federal spending. In 1980, it was 2.4 percent. In 1990, 3.3 percent. By 2000, it had doubled to 6.6 percent. In 2010, it was 7.9 percent. In 2017, it will be 9.8 percent.

Today, Medicaid, an open-ended entitlement, is one reason approximately 50 percent of America's $3.4 trillion annual health care bill is generated by 5 percent of the population: These "platinum patients" include some in long-term care largely funded by Medicaid. In the Senate draft, for eight years the growth of Medicaid spending would equal inflation in the health care sector (somewhat more spending for the elderly and disabled). After eight years, Toomey's measure would lower the growth rate of per-beneficiary spending to meet the normal measure of inflation -- the basic consumer price index.

In 1995, all 46 Democratic senators expressed to President Bill Clinton "strong support for the Medicaid per-capita cap structure." Three of those 46 are still senators -- Vermont's Patrick Leahy, California's Dianne Feinstein and Washington's Patty Murray. What about Medicaid's trajectory since then has changed to justify them changing their minds?

When a military intervention expands beyond its original objective, this is called "mission creep." Domestically, Medicaid demonstrates "mission gallop." In 1965, it was merely medical insurance for poor people eligible for cash assistance. Now it covers, in various states, many cohorts at or near the federal poverty level -- seniors, people with disabilities, families with young children and pregnant women, able-bodied childless adults, and people without adequate resources for long-term residential care. Says Lindsey: "In recent years, in almost half of the United States, a majority of the babies born had their deliveries financed by Medicaid."

In 1983, reforms that extended Social Security's solvency for approximately 50 years included increasing the age of eligibility for Social Security, in tiny increments, from 65 to 67 -- in 2027. Because of Medicaid's accelerating growth, and its impact on the states, Toomey's brisker eight-year phase-in is prudent.

On June 29, with the health care debate raging, the Congressional Budget Office revised $134 billion upward, to $693 billion, its projection for the 2017 budget deficit. And it raised by $686 billion its projection of cumulative deficits over the next decade. The main reason for the revisions is the CBO's expectation of interest-rate increases by the Federal Reserve. These will raise the cost of servicing the national debt, which itself is becoming a major driver of its own expansion. Medicaid, however, is another important driver.

As Lindsey says, Medicaid's unrestrained growth will become economically impossible, then arithmetically impossible. Democrats fancy themselves the "party of science" -- strangely, because they think climate science (unlike astrophysics, neurobiology or any other scientific field) is "settled." Democrats certainly are not the party of arithmetic. Republicans can fill that comparatively mundane but useful role by enacting Toomey's provision, which is, as Lindsey says, "the first serious attempt to limit the unsustainable rise in entitlement spending in our lifetime." Either by preserving or by rejecting Toomey's measure, congressional Republicans will answer an increasingly pertinent question: Is the Republican Party necessary?

George Will's email address is georgewill@washpost.com.

(c) 2017, Washington Post Writers Group

Comments

being realistic about arithmetic. The argument in this article is that the expansion in cost is all about "mission creep." Nonsense. The facts are that medical spending has gone from ~3-4% of GDP to nearly 20% and continues to accelerate. This of course means that ultimately it would exceed 100%, which is impossible. Unfortunately the choking off of economic vitality has already started to take place from this growth in expense and is now threatening to drive the nation into a permanent state of economic funk -- masked, for a short while, by alleged "gains" in health care spend. You can see this now in the employment report. The one sector that continually gains people at an astounding rate is health care. Yet almost none of those people are actual health care providers -- that is, doctors and nurses. They're all administrators and salespeople, which is great for them (they get a paycheck) but horrible for you (since you pay for it.) Remember this fundamental truth: Services are all about passing money from one person to another; they actually make nothing. This means that while you can be a "service-based" economy under those services must be the making of things -- goods!

Mr. Will is a smart man but no amount cutting benefit growth costs in the future can justify the tax cuts to the rich which are being touted by conservatives today. In fact, the "gallop" in Medicaid costs is directly proportional to numerous and ill fated trickle down growth economic efforts of repetitive conservative administrations. Before I ask a sick person to give up or delay their diabetic medicine, let's make sure we r not giving a wealthy, healthy, well to do billionaire his or her unnecessary tax cut at the expense of both Medicaid and the deficit.

I'd like to see a serious effort to eliminate the rampant fraud in Medicaid so that the people who really need it can benefit and the system doesn't go broke

Had we had a healthcare system that provided preventative care and medications to all those with chronic illness the past twenty years, the numbers of disabled would not have gone up so fast. This is a consequence of rationing healthcare by the wallet biopsy. For example, those with untreated hypertension suffered strokes prematurely. Those with diabetes inadequately managed got kidney failure and blindness. Don't blame the disabled. Blame the system that failed them.

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