1. Repeal all federal Medicaid rules and regulations.
Medicaid is riddled with rules and regulations aiming at controlling the exploding costs of the system: regulations reimbursing providers at or below cost, rules forcing hospitals to admit patients to the ER, regulation prohibiting copays and deductibles, etc. Removing federal rules and regulations will allow states the freedom to experiment with modifying eligibility, deductibles, copays, coverage, provider payments, fraud management, etc., and to learn from one another’s successes and mistakes.
2. Divide federal funding between the states based on population and current spending, and reduce the funding by 5% per year over 20 years.
Today’s Medicaid funding is a system of large federal grants matching what the states spend themselves. The individual states basically get a big federal subsidy, which removes much of the incentives to manage the costs. This should be replaced by so-called block grants that give the states full financial freedom and responsibility to manage the transition, no federal questions asked. Dividing the federal funding based on both population and current spending accounts for the fact that some states have a higher Medicaid spending per capita than others because of the population makeup.
Think Right or Wrong, Not Left or Right 