Restructuring Medicaid through a Swap: An Alternative to a Block Grant

Research Report

Restructuring Medicaid through a Swap: An Alternative to a Block Grant

April 1, 2011

Abstract

The large and growing U.S. deficit has led to calls for entitlement reform. Two prominent deficit commissions have made proposals to curtail Medicaid spending. One proposed a swap to address issues of gaming or creative financing in Medicaid. More recently, Congressman Paul Ryan proposed a block grant for Medicaid with substantially lower levels of federal spending. Both have problems. Swaps would result in a major redistribution of federal funds among states. The Ryan block grant would undoubtedly lead to much lower levels of coverage and access. In this paper we present a proposal for a swap that would largely eliminate incentives for gaming and strengthen incentives for cost containment without the distributional effects of straightforward swap proposals.

Research Area: 

Centers

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