Heartland Experts' Plan to Give Medicaid Funds Straight to Patients

by Justin Haskins, Michael Hamilton, and Sam Karnick

As Congress and the White House rethink legislation to replace Obamacare, all ideas are back on the table, including one newly developed by staff of The Heartland Institute.  To enable Medicaid enrollees to obtain first-rate insurance and care, Congress should adopt the "Personal Health Care Safety Net Medicaid Fix," developed by Heartland Executive Editor Justin Haskins, Research Fellow Michael Hamilton, and Director of Research Sam Karnick.

The plan would give each Medicaid adult and child a transferable deposit of $7,000 per year in a health savings account (HSA). As Haskins and Hamilton write in The Wall Street Journal: "Washington and state governments spent $545 billion in 2015 on 73 million Americans covered by Medicaid and the Children’s Health Insurance Program. Instead lawmakers could take $511 billion of that total, divide it equally among enrollees, and give each one a health savings account with $7,000 a year. This would be real money for the poor, stored in real private accounts."

Most Medicaid enrollees are part of a family. Family members could share Medicaid funds. A family of four would have $28,000 with which to buy insurance and pay for an entire $12,000 family deductible. This plan creates a way for family members to take care of each other, according to the same WSJ article: {OR this ame $28,000 could be used to pay doctors and other health providers dirrectly negotiating upfront for the lowest healthcare costs.  - ED}

"Recipients could use the deposit to purchase health insurance and cover the cost of prescriptions, copays, deductibles and other related expenses. Unspent money would carry over to the following year. Enrollees could share that $7,000 with a sick spouse, sibling, parent or child."  Because most people don’t get woefully sick several years in a row, most enrollees will start rapidly building their personal safety nets in year one, banking unspent HSA Medicaid deposits as a personal rainy day fund:

"Enrollees who are relatively young and healthy soon would build personal safety nets worth tens of thousands of dollars. This would not only be good for them, it would stabilize Medicaid, which has become an enormous and unpredictable burden on state budgets."

Older and sicker patients who spend their entire $7,000 Medicaid deposits, and who lack family members able to share HSA funds, would get federal assistance, funded by $34 billion saved by this plan, the WSJ article states:

"[S]ome patients, especially those over age 59 or with serious health problems, will need more help. Lawmakers could allocate the remaining $34 billion in the Medicaid budget line to assist them."

To break up Washington, DC gridlock, the "Personal Health Care Safety Net Medicaid Fix" could be adopted as a standalone Medicaid fix or paired with broader health care reform legislation.

Excerpted from the Heartland plan. For more, read the full Wall Street Journal op-ed by Heartland’s Justin Haskins and Michael Hamilton and the "Personal Health Care Safety Net Medicaid Fix" plan by The Heartland Institute's Justin Haskins, Michael Hamilton, and Sam Karnick.