July 30, 2015 | Issue Brief on Health Care
Medicaid, enacted along with Medicare in 1965, was created to provide health care for certain categories of low-income Americans. Over the past 50 years, the program has changed significantly. Not only has Medicaid eligibility expanded, so also has the scope of its care and services. Mounting fiscal, demographic, and structural challenges continue to strain the federal–state partnership on which Medicaid is based. These weaken the future of the program and those it was intended to serve.
Congress and the states must address these central problems. Congressional failure will come at the expense of both enrollees and the taxpayers. Looking ahead, Congress should seriously consider restructuring the program by injecting patient choice and genuine market competition into the program. These changes would better serve the poor and ensure that both federal and state taxpayers are also protected.
After 50 years, Medicaid needs an overhaul. By enacting the ACA, Congress bypassed any real reform to Medicaid and simply adds new enrollees to this already overburdened program.
Congress needs to reform Medicaid—but Medicaid reform should not be another excuse to create a lifetime of dependence, but to support independence. Reform should assist those who are able to shift to a competitive private health insurance market, where coverage is more affordable and thus the need for assistance diminishes. For the disabled and elderly, reform should be more accountable to the patients by giving them greater choice and allowing for more patient-centered options, including private-sector options, especially in accessing long-term care. Finally, Medicaid must be put on a real budget, like other federal programs, to rein in spending and protect taxpayers from runaway spending. These reforms will help to ensure that Medicaid does not drift further from its core mission, and remains committed to preserving a safety net, and protecting taxpayers as well.—Nina Owcharenko is Director of the Center for Health Policy Studies and Preston A. Wells, Jr., Fellow, of the Institute for Family, Community, and Opportunity, at The Heritage Foundation.
 Medicaid and Medicare are distinct programs. Medicare is a federal program that provides health care services to seniors and certain categories of people who have disabilities. Medicaid is a joint federal and state program that provides health care for certain categories of low-income Americans and operates through a structure providing for federal funding and state administration.
 Centers for Medicare and Medicaid Services, Office of the Actuary, 2014 Actuarial Report on the Financial Outlook for Medicaid, 2014, p. 24, http://medicaid.gov/medicaid-chip-program-information/by-topics/financing-and-reimbursement/downloads/medicaid-actuarial-report-2014.pdf (accessed July 27, 2015).
 National Association of State Budget Officers, “State Expenditure Report (Fiscal 2012–2014 Data),” 2014, p. 47, https://www.nasbo.org/publications-data/state-expenditure-report/state-expenditure-report-fiscal-2012-2014-data (accessed July 27, 2015).
 Centers for Medicare and Medicaid Services, “2015 Summary of Plan for Improvement in the GAO High Risk Area,” p. 10, http://www.cms.gov/apps/files/2014_CMS_GAO_High_Risk_Program_Report.pdf (accessed July 27, 2015).
 Government Accountability Office, “Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls,” GAO–15–33, May 14, 2015, http://www.gao.gov/products/GAO-15-313 (accessed July 27, 2015).
 Centers for Medicare and Medicaid Services, 2014 Actuarial Report on the Financial Outlook for Medicaid, p. 18.
 Excludes Medicaid managed care. See Kaiser Family Foundation, “Medicaid-to-Medicare Fee Index,” http://kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index/ (accessed July 27, 2015).
 Esther Hing, Sandra L. Decker, and Eric Jamoom, “Acceptance of New Patients with Public and Private Insurance by Office-Based Physicians: United States, 2013,” Centers for Disease Control and Prevention, National Center for Health Statistics Data Brief No. 195, March 2015, http://www.cdc.gov/nchs/data/databriefs/db195.pdf (accessed July 27, 2015).
 For a discussion of the literature, see Kevin Dayaratna, “Studies Show Medicaid Patients Have Worse Access and Outcomes than the Privately Insured,” Heritage Foundation Backgrounder No. 2740, November 7, 2012, http://www.heritage.org/research/reports/2012/11/studies-show-medicaid-patients-have-worse-access-and-outcomes-than-the-privately-insured .
 The ACA exchanges fall short of a true free market for health care. See Robert E. Moffit and Edmund F. Haislmaier, “Obamacare Insurance Exchanges: ‘Private Coverage’ in Name Only,” Heritage Foundation Backgrounder No. 2846, September 26, 2013, http://www.heritage.org/research/reports/2013/09/obamacares-insurance-exchanges-private-coverage-in-name-only .