In the last two years, there has been a major reform of Medicare, Medicaid and other federal health care programs like the State Children's Health Insurance Program (SCHIP) under the general rubric of Obama Care. These programs are designed to cover the elderly over age 65 (in the future age 55), the poor who have no health insurance, and workers not yet covered by private health insurance or other federal programs. One of the main questions that must be addressed with Medicaid reform is whether the program should be nationalized like Medicare, even though such efforts will always provoke strong Republican opposition. One possible reform would be to expand Medicaid to universal coverage, which has already begun with the reforms of 2009-10. Medicaid is going to be partially opened to the general public, including those who have employer-based health insurance and incomes above the means test cutoff, based on a sliding scale for premium payments. This plan could be introduced quickly as this insurance already exists, so costs would be reduced to just the enrollment of newly insured.. Opening up Medicaid to accepting premiums would also allow for increasing providers reimbursement rates which would make Medicaid more desirable and more providers would then accept this insurance. Since people could buy in at any level the premiums would be adjusted according to wages and Medicaid would actually be taking in money just like any other insurance and this would help to offset for those who receive it for free. Right now, states pay part of the costs (from 20-50%) and set many of the terms for eligibility, but this might no longer be the case once the program is federalized. Medicaid reimbursement rates are notoriously low, only 50-60% of private health insurance and it takes four times as long to make payments (Hyde, 2009, p. 186).
Because of rising costs, some states have already mandated that middle and upper income families purchase long-tern care insurance from private companies in order to be eligible for Medicaid in the future, once these benefits are exhausted. Almost certainly, requirements like these will expand in the decades ahead and possibly become federally mandated, since these costs are the highest in the entire program -- far more so than expenditures of pregnant women, children and the working poor. For the latter group, Governor Jeb Bush of Florida proposed in 2005 that Medicaid patients buy insurance for basic and catastrophic care, with costs adjusted for risk and state-subsidized at the lower income levels (Patel and Rushefsky, 2006, p. 123). Some states already require Medicaid patients to make small copayments for some services and prescriptions, just as Medicare patents do, but studies also show that Medicaid patients "react much more strongly to cist sharing than middle class individuals," and often cut back on even essential medical care (Hyde, 2009, p. 188).
Medicaid's State Children's Health Insurance Program (SCHIP) covers all children with family incomes at 100-200% of the federal poverty level, although some states allowed eligibility to 350%. SCHIP covered 4.1 million children by 2006 at a cost of $7.9 billion and after a major expansion in 2009 was expected to expand to eleven million children over the next four years (Hyde, 2009, p. 187). Medicaid and SCHIP have a "cliff effect" in that anyone who makes even a dollar more than the federal mean test cutoff loses all their benefits and is pushed over the cliff. This often leads to concealment of assets and incomes, especially by families of elderly nursing home patents (Hyde, p. 188). Any reform of Medicaid should make this a universally applicable federal standard instead of the present hodgepodge.
Medicaid is a weak entitlement in that it has always been associated with welfare and charity medicine, and is not financed by payroll taxes like Social Security and Medicare. Nor does it have a trust fund and large federal administration like those strong entitlements. This makes it politically vulnerable any time the Republicans take over the White House or Congress or if there is an economic downturn like the present. When state and federal budgets come under pressure, Medicaid is always one of the first programs to be cut or restricted (Smith and Moore, 2008. p. viii). By 2004, Medicaid was 21.4% of all state spending and had become the "800 pound gorilla of state budgets," a situation that will only worsen as the population ages (Patel and Rushefsky, p. 120). Republicans oppose the growth of all entitlement programs on general principles or paying for them out of general revenue, but they were never able to abolish Social Security because every voter in the country has been paying into it for their entire working lives and will demand that they receive what they were promised when they retire. This was the political genius of Franklin Delano Roosevelt, who knew very well that this entitlement would grow over the years and end up being financed out of general revenues rather than payroll deductions, but that these taxes were essential to make the program politically invulnerable. So it has been since 1935, but Medicaid has much less political cover in hard times (Smith and Moore, p. ix).
Since the U.S. did not develop a true system of national health insurance earlier in the 20th Century, Medicaid and Medicare are the closest it will ever come to universal coverage. In the last two years, Obama Care has expanded Medicaid to cover more of the working poor, and will add 17-18 million enrollees over the next four years. It also prevents private health insurance companies from denying or dropping coverage to those with preexisting conditions and offers federal subsidies to those who cannot afford to purchase policies. Medicaid will be open to everyone within 133-150% of the federal poverty line, and also be available as supplemental coverage to at least two million people who already have employer-provided health insurance. In the future, therefore, Medicaid is likely to keep expanding from its current level of 60 million enrollees to at least 75-80 million (Politifact 2010). Although the Republicans are expecting to make large gains in the 2010 elections and have vowed to repeal Obama Care, this will probably not happen because of the presidential veto: assuming that Obama has the courage to use it or threaten its use like all his predecessors have. If history is any guide, then, these new federal mandates and subsidies will continue to drive up the price of private insurance, and indeed this has already begun.
In containing and controlling medical costs, the federal and state governments have always been weak regulators at best, and costs of medical care over the past 40 years have risen astronomically faster than the true rate of inflation. From 1965 to 2007, Medicaid costs rose form $1 billion to $333 billion or 33,000%, especially as the disabled and chronically ill elderly were added to the program (Hyde, p. 190). No amount of legislation or regulation has ever stopped this phenomenon of uncontrolled medical costs or even slowed it down significantly. By 2003, 60% of Medicaid patients were enrolled in managed care programs, although these had "mixed results" at best in controlling costs and improving access (Patel and Rushefsky, p. 107). About 40% of Medicaid spending is also lost to fraud, such as billing for dead or nonexistent patients or services never performed, which is why some states have begun to employ private insurance companies and their sophisticated fraud detection units (Hyde, p. 190). During this time, Medicaid has served as a catchall program for those not covered by private insurance. About 30-35% of its enrollees are elderly or disabled patients in nursing homes, state institutions and other long-term care facilities who have exhausted their assets and now ended up on "welfare." This group accounts for 65-70% of Medicaid spending, with the rest going to women, children and the working poor who cannot afford private insurance. Although the institutionalized elderly and disabled do not vote, cannot work or obtain private health insurance -- at least not prior to the Obama reforms -- the fact that the elderly do have a stake in the program gives Medicaid a certain degree of political cover: the AARP supports it and every politician in America knows that its members do vote, and at a level higher that any other group in the population (Smith and Moore, p. x).
Medicare Part A, passed in 1965, only covers hospital expenses and physicians services, while supplemental coverage must be purchased under Part B, although this is also subsidized by the federal government. Medicaid was originally intended to be Medicare Part C when the law first passed in 1965, and was intended to cover the "medically indigent" and not only the "totally indigent" on public assistance (Grugan and Andrews, 2010, p. 279). Even in 1970, Medicaid had already become a middle class entitlement to the extent that it was already the largest funder of nursing home care. By 1980, it exceeded…