After two failed attempts at reform, the next step is clear: Congress should first focus on fixing the Obamacare exchanges before it takes on Medicaid. If we want to move Americans off Medicaid, there must be somewhere stable for them to go. For all its faults, at least Medicaid is currently a stable system for those who need it. The exchanges are anything but, and need immediate improvements.
One vital improvement would be to provide adequate tax credits, which would help keep health plans in the individual market and encourage — not undermine — robust competition. Companies should also be required to continue following reasonable guardrails like ensuring minimum coverage that is genuinely useful and covers pre-existing conditions. Once we see these repairs taking hold, Congress should then take up needed improvements to Medicaid as part of comprehensive entitlement reform.
States are willing to assume greater financial risk by transitioning to a block grant or per-capita cap, but will also need new flexibilities, such as tools to manage the rising cost of pharmaceuticals — the fastest growing component of Medicaid. And states cannot expect the federal government to continue paying 90 percent of Medicaid expansion costs given our nation’s historic debt; they must accept a gradual return to traditional cost-sharing levels.
