Yes, Medicaid caps really are a terrible idea

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John O'Connor
John O'Connor
OK kids, time for an unannounced pop quiz. Here goes: How do Medicaid caps differ from New Coke, Sarbanes-Oxley and hands-free lawnmowers? The other three bad ideas were actually carried out.

There's no doubting that almost all of us will be better off if Medicaid caps were never put in place. As for supporters of the concept, I wonder if they are also big fans of impoverished states, closed nursing homes and unmet caregiving needs? This is a bad idea that ought to be given a final burial.

Yet the topic has once again reared its ugly head, thanks to a recent policy brief from Health Affairs and the Robert Wood Johnson Foundation.

Advocates see these limits as a way to control the growth of federal spending. But this is a classic case of the ends not justifying the means. It would be like trying to lose weight by hacking off limbs.

For if enacted, Medicaid caps would cause at least two unfortunate things to happen. One would be massive cost-shifting to the states. And how would states likely react? Most would need to severely trim eligibility. For unlike the federal government, states can't simply print more money when the supply runs low.

The second disaster would be caused by the per-capita spending limits that would accompany such a policy shift. Should a resident need more care once an arbitrary magic number is reached, well that's just too bad. Now if that's not healthcare rationing, can someone please explain to me what is?

I realize that Medicaid costs are going through the Treasury like grass through a goose. The program ate up $432 billion in 2011, and is projected to hit $795 billion by 2021. Concerns about that kind of fiscal bite are real, and fair.

But let's not forget what we are asking the nation's largest public health insurance program to do: deliver care to more than 54 million low-income people, of which 4.8 million are elderly and 9.4 million are disabled. That's quite a challenge.

We've certainly seen many long-term care operators try to reduce their Medicaid reliance in recent years. But the program still remains the sector's largest and most reliable funding source. And if you thought a 2% Medicare haircut was a challenge, just wait until your Medicaid funds are slashed by half or more.

Like most providers, I'll be happy to drink to the demise of Medicaid caps. Just so long as New Coke isn't involved.

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McKnight's Daily Editor's Notes features commentary on the latest in long-term care news. Entries are written by Editorial Director John O'Connor on Monday and Friday; Staff Writer Tim Mullaney on Tuesday, Editor James M. Berklan on Wednesday and Senior Editor Elizabeth Newman on Thursday.

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