Rob, we certainly do agree that state government should not dole out corporate welfare. From there the disagreements proliferate, which kind of comes in handy when you are engaging in a public debate.
On finding savings, you say that I favor freezing services and you favor reimbursement adjustments. Actually, I favor both. We can?t achieve significant savings by fiddling around the edges, and certainly not by joining in the current ?bash-the-drug-companies? folly because drug costs don?t explain much of the rise in Medicaid spending.
North Carolina?s Medicaid program costs more than its peers? programs do for a number of reasons. Our package of benefits for recipients includes more optional services. Our reimbursement rates for all providers are higher than those offered in neighboring states. North Carolina isn?t as aggressive as other states are in combating fraud and misspending, and indeed in recent years has been known more for being aggressive in misspending Medicaid funds.
Also, in the 1980s and 1990s North Carolina lawmakers expanded eligibility for Medicaid services several times to include groups not required to be covered by Washington. These expansions did not result in one-for-one reductions in the number of uninsured North Carolinians, as we have documented in previous reports, because such expansions reduce the incentive for those of modest (but not necessarily poverty-level) incomes to purchase or retain their private health insurance.
The problem was not, as some have suggested, either imposed by federal mandates or by worsening poverty. Bouts of rapid Medicaid growth, in North Carolina as well as nationally, don?t correlate with either trend. They are primarily self-inflicted wounds by state policymakers.
On poverty, I might be persuaded that we should adopt a different formula for determining destitution, but I certainly do not endorse the ?living wage? formula you advance, for reasons that readers can examine in detail here. This point touches on the philosophical divide you invoke, too. Once you get too far removed from poverty in defining eligibility for welfare, it becomes incoherent. You end up designating huge swaths of the population as ?the needy,? while the only way to finance services for them is to tax punitively a now-shrunken share called ?the wealthy.? This degenerates into old-fashioned wealth redistribution, which is both morally appalling (think cardinal sin beginning with ?e?) and impractical in a free society where entrepreneurs, investors, and highly skilled professionals can simply choose somewhere else to reside and earn their income.
