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Solution Framework of Market Forces

Cato on changes to Medicare/Medicaid:  excerpts from the article.

Americans want to help the needy and the elderly obtain medical care. However, putting that task in the hands of the federal government has decreased access and quality while increasing cost.  In addition, there are concerns that providing too much assistance to people can induce them to take less care of themselves. A free market approach would make medical care of ever-increasing quality available to ever-increasing numbers of people, thus reducing the number of people who need, or want, assistance.

Medicare is meant to provide health insurance to the nation’s elderly and disabled. Instead, it infringes on the right of workers to control their retirement savings and on the freedom of seniors to control their own health care. Reforming this damaged entitlement program should be the nation’s highest health-policy priority. To best do this, Congress should

·         Charge premiums, proportionate to lifetime earnings, for all parts of Medicare

·         Allow seniors to opt out of Medicare without losing their Social Security benefits

·         Replace Medicare with a prefunded system where workers invest their Medicare taxes in personal accounts dedicated to their health needs in retirement

·         Grant all Medicare beneficiaries a voucher used to purchase a health plan of their choice. Larger vouchers would go to the poor and sick

Medicaid is a jointly administered program between federal and state governments, meant to provide health care to low-income Americans. Unfortunately, the method for distributing federal funds to the states encourages unnecessary expansion of the Medicaid program, often to people who don’t need assistance. By determining the amount of federal funds in proportion to what the state spends itself, Congress creates the potential for fraud and for state officials to under fund other priorities. It seems to make no sense that taxpayers send money to Washington, only to have these funds sent back to their state capitals with strings attached. In an effort to reform Medicaid, states should

·         Insist on more flexibility in administering Medicaid programs

·         Deregulate health care and health insurance

Congress should eliminate the federal entitlement to Medicaid as it did to welfare checks. In 1996, Congress placed a five-year limit on cash assistance and froze federal spending on such assistance, which was distributed to the states in the form of block grants with fewer federal restrictions. Welfare rolls were cut in half, and poverty reached the lowest point in a generation. This success should be emulated by

·         Eliminating federal entitlements to Medicare and SCHIP benefits

·         Freezing federal spending at current levels and distributing those funds to the states as unrestricted block grants

·         Giving states total flexibility to use funding to achieve a few broad goals

·         Eventually phasing out all federal funding of Medicaid and SCHIP