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baltimoresun.com

The federal government's fiscal problems can't be fixed unless Medicaid is reformed

7:00 AM EDT, July 28, 2011

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While Rep. Chris Van Hollen may wish that a deal to fix the federal government's fiscal problems could leave Medicaid untouched, the reality is that if the federal deficit is to be addressed, entitlement programs like Medicaid must be fundamentally reformed ("Debt crisis could hurt Maryland," July 17).

Under the current Medicaid system, in which the federal government gives Maryland a dollar-for-dollar match for every Medicaid dollar the state spends, there is little incentive to control costs. In fact, since 2000 spending on Maryland's medical care programs — primarily Medicaid — has increased by 185 percent.

That not only contributes to the federal fiscal crisis but also to Maryland's ongoing structural budget deficit. In 2000, 12.6 percent of the state's revenue was devoted to these programs. This fiscal year, over 17 percent of the state's revenue will go to pay for them.

With all this "free" federal money rewarding the state for spending more on its Medicaid program, it actually costs the state money if it tries to combat the rampant fraud plaguing Medicaid. An open-ended Medicaid entitlement also reduces Maryland's incentives to reform its health insurance regulations so that low-income Marylanders can afford coverage. Instead, the state keeps expanding Medicaid, bringing more people into a program that is noted for offering an extremely poor level of care.

The apocalyptic rhetoric Rep. Van Hollen uses to describe what would happen under Medicaid block grants recalls the overheated claims made by those who opposed welfare reform in the 1990s. Welfare reform did not lead to catastrophe, and neither will Medicaid reform. Given the state of the federal budget, it seems inevitable that Medicaid's structure will one day be changed. Let's do it now and start reaping both the health and fiscal benefits such a reform will bring.

Marc Kilmer,Rockville

The writer is a senior fellow at the Maryland Public Policy Institute.