Medicaid Is Overdue for a Big Beautiful Overhaul

The program’s funding mechanism lends itself to bloat and inefficiency. The Senate can set this right

By John F. Cogan. Excerpts:

"Medicaid . . . now accounts for more than half of the 150 million Americans covered by government health insurance."

"The program’s funding mechanism—the federal government matches state payments—has made Medicaid ripe for expansion. In high-income states like California and New York, the federal government paid 50% or more of the state’s Medicaid costs. In lower-income states such as Mississippi, the federal government picked up more than 80% of the tab."

"Since neither the federal government nor state legislatures pay the program’s full cost, each has an extra incentive to liberalize Medicaid."

"Federally mandated eligibility was gradually extended beyond welfare recipients, and many states readily took up options for additional liberalization. Between 1989 and 2013, the year before the Affordable Care Act—ObamaCare—took effect, nonelderly Medicaid enrollment more than tripled to 69 million"

"In the 1990s, Republicans faced withering attacks from Democrats and the press over their welfare-reform plans. Congressional Democrats denounced Republicans, likening them to Hitler and Attila the Hun. Rep. Sam Gibbons (D., Fla.) charged that the Republican welfare plan’s time limits and work requirements would deprive “a million poor children of basic necessities.”"

"Republicans remained steadfast and, with President Bill Clinton’s eventual support, enacted what is arguably the most successful reform of any entitlement program in U.S. history."

"Even with its Medicaid changes, federal spending on the program will be 33% higher next year, after adjusting for inflation, than it was in 2019."