• Steve Grant

A Medicaid Prophecy Comes True

A March of 2019 Wall Street Journal editorial described a prediction made by Michael Leavitt, the U.S. Secretary of Health and Human 2008.

Medicaid costs, said then-Secretary Michael Leavitt, were projected to grow so fast that within 10 years they would “crowd out virtually every other category of spending.” State spending on higher education, infrastructure and safety, he predicted, would all get squeezed.

The bottom line is that states simply cannot tax enough to pay for Medicaid. New York state has had "solid growth in revenues" over the past decade yet still faces a 6 billion budget gap in the coming fiscal year.

What makes Medicaid so unique is that in addition to being virtually unfundable by many states - despite growth in tax revenues - is that Medicaid systems, which are enormously expensive, make massive errors in payments and eligibility. New York itself made 100 million in duplicate payments, Rhode Island was unable to claim 100 million in federal reimbursement and California paid almost 4 billion dollars in incorrect payments.

A state as small as Rhode Island spent almost a half a billion dollars on a Medicaid system that lost it 100 million in reimbursement.

Clearly Medicaid is a large complex program that is critical to millions of Americans. But the question remains if it has a fundamental problem in the way it is structured and managed.


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