Making Medicaid Work

It was good to see CHRIS EDWARDS and ALAN REYNOLDS calling for block grants to states for Medicaid in today’s WSJ:
“We think that Congress should go beyond the administration’s limited cuts by enacting an overall federal budget cap to force trade-offs between defense, entitlements and domestic discretionary spending. And Congress needs to start moving major programs such as highway spending and the giant Medicaid back to the states. A first step would be to turn Medicaid into a block grant and slow spending to at least the inflation rate. The Bush budget includes some restraint on Medicaid spending, but block-granting the program would create savings of $55 billion annually by 2010 and $161 billion annually by 2015.”
It is time we recognized the perverse incentives that lead states to deny scarcity when it comes to Medicaid decision making.