RALEIGH – Daniel Boone and other North Carolinians famously trekked across the mountains and through the Cumberland Gap to build settlements in what would later become Kentucky. Does the Bluegrass State have something to offer in return, in the form of public-policy lessons?
Certainly not in the area of government ethics. The state’s Republican governor, Ernie Fletcher, is staying barely one step ahead of a criminal prosecution for allegedly misusing political patronage. After a court ruled that he couldn’t be tried until he left office, Fletcher resorted to tried and true rhetoric: “Now, we can all turn our full attention to the children, families and communities of this great commonwealth.” Yes, it’s always about the children, isn’t it?
However, I would call attention – make that favorable attention – to a separate initiative of the Fletcher administration that should interest North Carolina policymakers struggling to fashion responses to the rapid, unsustainable of the state’s Medicaid program. Kentucky is the first state in the union to reform Medicaid under the provisions of a 2005 federal law that eliminated the prior “waivers” process in favor of a standardized, streamlined process for federal approval.
Under Kentucky’s new system, some 700,000 Medicaid enrollees will have their choice of four customized benefits packages reflecting four broad categories of recipients: 1) healthy but low-income children; 2) able-bodied adults, often single parents; 3) mentally and developmentally disabled recipients, children or adults; and 4) elderly or disabled recipients in nursing homes. It has always been problematic for all these very different groups to be filed into one Medicaid drawer. Low-income families, for example, would often be better off – as would taxpayers, actually – if their subsidies could be used to buy into an existing employer-based health plan. Other differences also merited separate treatment in eligibility and benefits policies. Kentucky seems to be moving in the right direction in this regard.
For example, for several classes of recipients, it never made sense to offer Medicaid services with no or virtually no out-of-pocket cost at the time of sale. Human nature being what it is, even the prospect of a nominal fee has the effect of making patients ask more questions, think twice before taking a minor condition to a doctor or hospital, or perhaps forego services of marginal medical benefit. Obviously, since most of the Medicaid population is low-income (leaving out the seniors and their middle-class families who game the system), copayments and cost sharing have to be administered sensibly. Kentucky’s plan has a $450 annual cap on out-of-pocket costs, and the fees don’t apply to some visits and meds. Still, this is a modest step forward.
It will be instructive to study the new Kentucky system as officials implement and operate it over the next couple of years. There will likely be wrenching adjustments and unforeseen consequences, as there are with any major change in policy. The goal should be to reshape a state Medicaid program so that it provides the basic medical safety net required by state and federal statutes without serving as a snare of long-term dependency or a piggy-bank for families seeking to shield their inheritance from their parents’ legitimate creditors.
If the new program accomplishes at least some of its goals, it may be a nice parting gift to taxpayers from a governor who apparently has a track record of, um, generosity in public office.
Hood is president of the John Locke Foundation.