(09/01/05) The Medicaid problem is not difficult to understand.  Vermont needs increased funding to meet growing Medicaid demands of increased caseloads and increased costs.  Every 40 cents spent by the state is matched by 60 cents of federal money.  However, simply looking to Washington to bail us out is not realistic.  They don’t have extra money and neither do we.

Medicaid in Vermont is the fastest growing budget line item whose expenses outstrip revenue sources because of generous past policies advocated by well-meaning lawmakers.  This year, taxpayers are balancing the shortfall with budget surpluses but it’s questionable whether working Vermonters can continue to absorb the projected $300+ million deficit in the future.

The combined costs for Medicaid are a stunning $886 million between state and federal dollars.  In state funds alone, it costs every man, women and child in Vermont $1,429 annually.  Medicaid is the second largest item in the state budget, behind education.

The enrollment numbers are even more shocking:  about one in four Vermonters receive Medicaid benefits.  In fact, Medicaid funded 40 percent of all births in Vermont.

The total state and federal costs of Medicaid in the United States is around $350B.  The problem is not whether the federal government kicks in enough money but whether taxpayers want to continue funding a program that’s so expensive and unsustainable.  Asking the federal government for more money without reform is akin to putting more money into a bottomless pit.  Medicaid needs to change direction and is badly in need of reform.

Several states are looking at ways to reform their programs by encouraging enrollees to manage their own health care purchases; freeing providers to design innovative care programs to meet unique recipient needs; and enabling intelligent choice with new information and support.

Vermont must be more aggressive in controlling costs, encouraging greater personal responsibility; increasing cost sharing and toning down medical benefits to basic services working Vermonters currently receive.  Benefits should only go to the truly needy and the private health insurance market should be strengthened to prevent the growth of the uninsured

Reform at the federal level is crucial.  States should be allowed to run efficient and effective programs that meet their needs.  They should be given flexibility that will allow them to increase competition, limit asset transfer that allows middle class elderly to appear destitute and eligible for Medicaid and provide patient choice and greater responsibility.

The debate over estate recovery is part of a growing battle over the high cost of Medicaid.  Medicaid nationally covers nearly half of the nations nursing-home bills and consumes almost 50% of our Medicaid budget in Vermont.  With Congress trimming Medicaid by $10 billion over five years, Vermont will have to be aggressive in capturing these assets protected in the past.

Currently, 30 states have statutes under which an adult child may be held responsible for the cost of caring for an indigent parent. These laws discourage parents from transferring their assets to their children and expecting the state to pay for their long term care.  The counter policy is that if families want taxpayers to pay for parent’s care, they shouldn’t be able to claim inheritance, gifts or other assets from their parents.

With Medicaid consuming more and more of our state budget, Vermont must control its growth and avert a funding crisis.  The simple band-aid solution adopted by this recent legislative session just puts more holes in a sinking ship.

Frank Mazur
South Burlington

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Frank Mazur is a small business owner and was a member of the Vermont House from 1995-2004. He’s also chair of the advisory board to FreedomWorks.com