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Medicaid at 50: Time for a Major Overhaul

It’s understandable that attention is heavily focused these days on imagining alternative futures for the Affordable Care Act (ACA) after the US Supreme Court renders its decision in King v Burwell, expected this June. (This case challenges the legality of making tax subsidies available for people to buy health insurance through the federal exchange in states that have decided not to run their own exchanges.) But it’s also time to look hard at Medicaid, the joint federal-state program for lower-income Americans. Whatever happens to the ACA, Medicaid needs urgent attention—and some basic rethinking.

The cost and scale of Medicaid has been growing sharply, due in part to newly eligible people in those states that have chosen to raise the income eligibility cap under the ACA. This is increasing concerns among state treasurers and federal budget analysts. According to the most recent federal estimates, Medicaid costs are expected to rise at an annual average rate of 7.1% over the next decade to a program that already consumes 24.5% of state expenditures, often crowding out funds for education and other vital services. It’s also estimated that almost 81 million individuals could be Medicaid beneficiaries by 2022—nearly 18.5 million of them as a result of expansions under the ACA.

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