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Mr. States Goes To Washington

By Judd Legum on February 2, 2005 at 9:06 am

"Mr. States Goes To Washington"

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Lurking in the shadows of the administration’s high-profile campaign to privatize social security is a quieter effort to slash health coverage for the poor. In his first address as Secretary of Health and Human Services, Michael Leavitt called Medicaid — the federal/state program that provides basic health coverage to the poorest Americans — “not financially sustainable.”

Although Leavitt’s comments were somewhat obtuse (including an extended analogy involving a cul de sac, a dying girl and a character named “Mr. States”), an expert at the Kaiser Family Foundation said the bottom line is Leavitt is indicating he plans to “reduce spending on the aged and people with disabilities.”

Leavitt “repeatedly pointed the finger at state leaders” for Medicaid’s financial problems, attributing Medicaid’s difficulties to “gimmicks” states use to game the system and increase costs for each enrollee. But that isn’t true. A detailed analysis by John Holahan, Director of the Urban Institute’s Health Policy Center, in the 1/26/05 edition of Health Affairs (which is – gasp! – not available online) found that:

Increases in spending per enrollee over the period were faster than inflation but slower than increases in private insurance spending.

In other words, states are doing a better job of controlling costs than the private sector. So why are Medicaid costs increasing quickly? Again, from Holahan:

For the entire 2000–2003 period, Medicaid spending increases were largely driven by enrollment growth, much of which was attributable to the economic downturn.

To review, Medicare costs have gone up because more people are struggling in the lousy economy we’ve had during the Bush administration. But instead of giving people the help they need until the economy recovers, Leavitt is determined to cut benefits.

Update: The Health Affairs article is on the internet after all. Now we know it’s true.

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