Why block granting Medicaid is a terrible idea

Medicaid has the rare distinction of being one of the most misunderstood Federal programs of the American safety net system. Usually depicted as a program focused on providing health insurance to low income families, the vast majority of Medicaid spending is used to cover two specific groups: seniors and the disabled.

DISTRIBUTION OF MEDICAID PAYMENTS BY ENROLLMENT GROUP, FY2009VIEW 50-STATE COMPARISON
  US
%
US
$
US
%
US
$
Aged 23% $80,660,323,951 23% $80,660,323,951
Disabled 43% $147,331,691,737 43% $147,331,691,737
Adults 14% $47,382,742,690 14% $47,382,742,690
Children 21% $71,111,551,676 21% $71,111,551,676
Total 100% $346,488,974,182 100% $346,488,974,182

Most Medicaid spending for seniors goes to cover long term nursing care (41%) and home and personal care (45%), very expensive services that they otherwise won´t be able to afford. Long term disability coverage, meanwhile, is a corner of the health insurance market that private insurers have largely left alone, as premiums would be prohibitive.

Interestingly enough, even if most tax dollars go to cover these patients, the vast majority of Medicaid and S-CHIP participants are children and their parents:

DISTRIBUTION OF MEDICAID ENROLLEES BY ENROLLMENT GROUP, FY2009VIEW 50-STATE COMPARISON
  US
#
US
%
US
#
US
%
Aged 6,117,262 10% 6,117,262 10%
Disabled 9,534,463 15% 9,534,463 15%
Adults 16,196,075 26% 16,196,075 26%
Children 30,746,220 49% 30,746,220 49%
Total 62,594,979 100% 62,594,979

Why does most of the spending go to seniors and the disabled? Simple: costs for those groups are much higher. As usual, most medical spending goes to a tiny sliver of the population, as costs usually are concentrated on those that are really sick.

MEDICAID PAYMENTS PER ENROLLEE, FY2009VIEW 50-STATE COMPARISON
  US
$
US
$
Aged $13,186 $13,186
Disabled $15,453 $15,453
Adults $2,926 $2,926
Children $2,313 $2,313
Total $5,535 $5,535

When political candidates talk about block granting Medicaid, consequently, they are not proposing to cut benefits to low income adults that don´t have insurance. Most program participants are children, not adults - and the bulk of the spending goes to two population groups that are extremely vulnerable, seniors and the disabled. Cuts in Medicaid are much more damaging for the elderly than any proposed cut to Medicare spending any candidate has put on the table.

And by the way, Obama and Ryan have largely similar Medicare cuts in mind.

Be the first to comment

Please check your e-mail for a link to activate your account.

get updates