A Better Way to Contain Medicaid Costs

The Tennessee legislature recently passed a bill that could make it the first state to request a Medicaid block grant. Under a block grant, Tennessee would receive a fixed annual sum from the federal government for its Medicaid program rather than open-ended federal dollars. But John Kitzhaber, MD, former governor of Oregon, and Bruce Goldberg, MD, former director of the Office for Oregon Health Policy and Research, say that this approach does nothing to reduce the cost of care and hurts Medicaid recipients.

In a new Milbank blog post, Kitzhaber and Goldberg make the case for why block grants don’t work and look at an alternative approach that they put in place in Oregon: A global budget for Medicaid with a fair negotiated per-capita rate of increase. Global budgets, they say, can contain costs by improving efficiency in care delivery rather than by reducing benefits or cutting enrollment.