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Transform It, Don't Reform It

Medicaid Needs a New Structure and the Ability to Tap Technology

By Newt Gingrich
Wednesday, March 2, 2005; Page A17

As the discussion about overhauling Medicaid becomes more urgent, there is a grave danger that it will be narrowly focused on money, trapping lawmakers in an unproductive power struggle between federal and state governments. In truth, America's Medicaid challenges reach well beyond finances and budgets. The system is fundamentally broken, ensnaring the most vulnerable in our society in a cycle of dependence and poverty while failing to realize the benefits of emerging technologies and new capabilities in health and long-term care. Medicaid is beyond reform and cannot be fixed with small cuts and waivers from the bureaucracy. It must be transformed with legislation to bring it into the 21st century.

The fundamental problem with the Medicaid system is that its beneficiaries are distinct and separate groups of individuals with radically different needs and characteristics: people with disabilities, the poor and the elderly poor. A 21st Century Responsible Citizen Medicaid Act would divide Medicaid into three distinct areas, each administered separately with its own rules and structures.

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First, the act should establish a Capabilities Program to help both Americans with disabilities and those with work-related or other injuries lead the fullest possible lives. The program should provide incentives to people with disabilities to be productive, rather than threatening them with a loss in benefits if they get a job. The program should also allow participants to capitalize on technologies and therapies that maximize their abilities, and that emphasize integration into social, family and work life. This philosophy closely resembles the government's successful approach to rehabilitating and reintegrating amputees and other wounded veterans from the Iraq campaign.

The second area would address the needs of the relatively healthy poor, who have much different needs than people with disabilities or the elderly. Poor individuals should be offered vouchers for health savings accounts that sensitize them to the benefits of prevention, wellness and early detection. This would also encourage a more rational use of health care; prenatal care, for example, is far cheaper than neonatal intensive care. Similarly, a visit to a health clinic or doctor's office rather than to an emergency room will save a significant amount of money. But the rules currently allow for payment for expensive emergency room visits despite the lack of an urgent health care need. Government leaders need to rethink the part of Medicaid serving the healthy poor in the same way we rethought welfare in the 1990s.

Third, the legislation would create a program to serve the elderly that reintegrates the family back into their care. The current system, for example, prevents a daughter whose mother is in an assisted-living facility from contributing financially to her mother's care without losing all Medicaid coverage. This either-or mentality is anti-family and leaves the recipient with a lower quality of life.

The program should also integrate modern information technology systems, home diagnostic equipment, real-time monitoring and rapid health assistance when necessary. For example, a growing company called Living Independently has created the QuietCare home monitoring system, with motion detectors that actually learn an individual's daily habits and routines. The system regularly updates a caregiver on the person being cared for and immediately highlights any atypical patterns. Caregivers use this technology to provide unobtrusive monitoring of seniors in their homes while preserving individual privacy and freedom.

In addition to recognizing the unique needs of Medicaid's beneficiaries, Medicaid legislation must encourage investment and innovation. The Medicaid budgeting system cannot distinguish between costs and investments, making it impossible to introduce new technologies, information systems and quality approaches -- things that have led to a revolution in productivity in most of the private sector. Government budget rules and outdated scoring methods used by the Congressional Budget Office and the Office of Management and Budget keep health in general and Medicaid in particular mired in an obsolete system of paper, regulations and inspections that simply fail to deliver for Medicaid beneficiaries the efficiencies Americans benefit from in the rest of their lives. Passing a 21st Century Responsible Citizens Medicaid Act is achievable. Because Medicaid is equally a federal and state challenge, the first step is for the governors, Congress and the administration to join in establishing a working group that would be charged with fundamentally rethinking Medicaid and developing the enabling legislation. It is vital to integrate the governors' staffs into the process up front, just as we did with welfare reform in 1995.

America's Medicaid program isn't working. A "money only" debate would be an exercise in futility and -- more tragically -- would trap the most vulnerable people in our society in a hopelessly broken system. Transforming Medicaid is a moral imperative.

The writer, a former Republican representative from Georgia and speaker of the House, is the founder of the Center for Health Transformation. He is also the author of "Winning the Future: A 21st Century Contract with America."


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