It is scary, growing at an accelerated rate and it consumes all the funding within its reach. No, I'm not describing a scene from "The Blob," I'm describing Medicaid and its impact on the state budget. Often confused with its sister program Medicare, Medicaid is a health care program for low-income and disabled adults and children that is jointly funded by federal and state governments, but administered by individual states.
While the idea of a safety net program for the poor and needy is admirable, the simple truth is the enormous costs of the program are overwhelming all the states, including Utah.
The hard reality of our current budget situation is that our state revenues have shrunk while demand for state services has grown, and grown dramatically in certain sectors. Public education, which has long occupied the top spending spot in our budget, is now being challenged by Medicaid. Right now Medicaid requires 13 percent of the state budget, but it is projected to grow to almost exponentially to 36 percent of the total budget by 2020.
This growth rate is three times faster than the overall growth of state revenue. Unemployment rates due to the recession are causing Medicaid rolls to expand to never before seen highs and medical costs have never been higher. All this is compounded by new requirements in the federal Patient Protection and Affordable Care Act (federal health care reform bill) passed last year have only exacerbated the growth problems by greatly expanding the program while leaving states with fewer options for managing costs. We can't spend more than we have.
The end result is a program that does resemble the "Blob" gobbling up all the resources in sight.
It is not at all hard to imagine a time when the costs of Medicaid expand beyond our ability to pay for them. The program is like a ticking time bomb that will eventually blow up and bankrupt the state.
The Legislature has been studying the unsustainable growth of Medicaid and has proposed a plan for addressing the Medicaid cost curve, with potential cost savings of $770 million over the next seven years. Since many rules for the program are dictated at the federal level, we as legislators had to think outside of the box for solutions within state control.
The plan places incentives for health services on cost and quality of care, not the number of procedures performed. By moving to a managed care model we hope to provide better overall health outcomes for Medicaid recipients.
This plan would also limit the per enrollee growth of Medicaid to the overall growth rate of the state's general fund. For example, if the general fund growth is 5 percent, then Medicaid per enrollee growth can only be 5 percent. This way Medicaid can't grow faster than the state can afford to pay. I can't emphasis this component enough.
While we want to be able to care for our poor and needy, we can't do so at the expense of every other state responsibility (like public education).
One of the more interesting components of the bill would create a Medicaid-specific rainy day fund. If Medicaid growth falls below 8 percent, the cost savings would go into the fund.
We have seen over the last few years the wisdom of having rainy day funds for both public education and the general fund.
It makes sense to plan for a time when more people than expected might need to take advantage of the safety net services Medicaid provides.
Some of these ideas will require federal waivers in order to enact the changes. My hope is the federal government will see the wisdom of taming this wildly growing program and quickly grant the necessary waiver requests.
We've learned from the recession that we can't let programs balloon beyond our ability to pay or we will all end up dealing with the difficult aftermath when the balloon pops.
Rep. Brad Dee is the majority leader in the Utah State House of Representatives. He represents House District 11, which covers portions of Davis and Weber counties.