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Making Medicaid great: What it would take

It’s time to take control of Medicaid before it takes control of us. Unless we act, Medicaid increasingly becomes another mechanism by which government skews spending toward the old and away from the young. In the raging debate ObamaCare, it’s a subject neither Republicans nor Democrats dare touch.

Medicaid is the sleeping giant of U.S. health care. Created in 1965, it provides health insurance for the very poor. It is the nation’s largest health insurance program in term of beneficiaries — 68 million recipients compared with Medicare’s 55 million (Medicare insures the 65 and over population).

In 2015, Medicaid spending totaled $545 billion, compared with Medicare’s $646 billion, according to the Kaiser Family Foundation. Medicaid’s costs are shared between the federal government (roughly 60 percent) and state governments (40 percent).

While the Obamacare debate has focused on private insurance subsidized through health exchanges, it was the expansion of Medicaid — adopting more liberal eligibility requirements — that resulted in the largest gain of insurance coverage, about 11 million people.

But the most significant Medicaid fact is this: While three-quarters of Medicaid recipients are children and young adults, they account for only one-third of costs. The elderly and disabled constitute the they represent two-thirds of costs. How could this be? Doesn’t Medicare cover the elderly and disabled? Well, yes, but there’s a giant omission: nursing home and other long-term care. Medicaid covers these for the poor elderly and disabled.

Here’s where the past and future collide. As the population ages, people needing long-term care will soar. From 2015 to 2030, the number of Americans 85 and older will rise about 50 percent to 9 million. Many will end up in nursing homes, with high costs. The average health costs of Americans 85 and over are 2.5 times greater than for people 65 to 74, says the Center on Budget and Policy Priorities, a research and advocacy group for the poor.

At the federal level, spending on the elderly — mainly for Social Security, Medicare and Medicaid — is already crowding out non-elderly spending, as the Trump administration’s new 2018 budget shows.

Now pressures are tightening on states. Medicaid’s “entitlement” nature means that anyone who qualifies for support must get it. By contrast, schools and other state services get what seems affordable. Slowly, Medicaid is usurping state priorities. Medicaid now claims nearly one-fifth of states’ general revenues, reports Robin Rudowitz of the Kaiser Family Foundation. Under present law, the squeeze will worsen.

Fortunately, there’s a sensible solution to this problem. It isn’t to gut care for the elderly. Instead, we should transfer Medicaid’s long-term care to the federal government, which would pay all costs, probably by merging with Medicare. In return, the states would assume all Medicaid’s costs for children and younger adults, give up some or all of their federal aid for K-12 schools and, if needed, trim other federal grants to ensure financial neutrality.

Over time, this swap of responsibilities would make sense for everyone. It would concentrate oversight for the young at the state and local level while aid to the elderly and disabled would be firmly lodged at the federal level.

Unfortunately, there is little support for this sort of swap. Commentators (including this reporter) periodically propose it and praise its benefits. But national politicians seem uninterested. They prefer instead to bleed the states.

Robert Samuelson is a columnist with the Washington Post Writers Group.

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