Medicaid was created in 1965 as a supposedly small program with expenditures of $1 billion. It has since ballooned to $450 billion and now the Department of Health and Human Services projects Medicaid will cost $900 billion by 2019.

The solution is simple. Abolish Medicaid and give states block grants so they have the flexibility to figure out how best provide healthcare for their citizens.

Two Perverse Elements of Current System

  1. States have an incentive to spend more money to get matching funds
  2. Consumers do not care about costs with government footing the bill

Three Proposals to Fix Medicaid

  1. Cap Medicaid Spending
  2. Give Block Grants to States
  3. Allow states Full Flexibility to Define Eligibility and Benefits

Congressman Paul Ryan and Alice Rivlin former Director of the White House Office of Management and Budget under President Bill Clinton have teamed up to propose a block grant program. Rivlin was also appointed by President Obama to his National Commission on Fiscal Responsibility and Reform.

Paul Ryan – Alice Rivlin Proposal

If you agree with the approach outlined above, please contact your congressional representative and urge them to cap Medicaid and replace it with block grants.

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Mike “Mish” Shedlock
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