Wisconsin Medicaid Cost Reduction - A Little Bit Of Good News On Government Spending

It does not happen often but every once in a while we come across an instance of a government entity actually reducing its costs and inefficiency when it comes to spending taxpayer money. A short article by Ryan Tracy in the August 23, 2010 issue of Newsweek magazine reported on how the state of Wisconsin was able to make a significant cut in its Medicare budget but still maintain quality and also keep the voters happy. Medicaid provides medical coverage and insurance for low income families and people across the country with both the Federal government and each state funding the program.

Last year, Mr. Ryan's article stated that Wisconsin Governor Jim Doyle wanted to slash the state's Medicaid budget by $400 million. However, the Governor took a different approach than most politicians in defining what budget cuts to make. Past efforts like this to cut entitlement programs have usually been ineffective since it involved sitting politicians attempting to make the cuts without endangering their political futures and careers, or in Mr. Ryan's words, "programs like Medicaid cannot be cut without political bloodshed." Usually what happens when politicians have to make difficult decisions they make suboptimal decisions since their actions are guided by their political careers and fortunes, not what is best for the citizens they represent.

Governor Doyle took a different approach in this case, rather than rely on politicians to make the decisions on cutbacks, people that are mostly ignorant of how operations like Medicaid work and thus, are least likely to identify root causes of problems, the Governor turned to the people that that ran Wisconsin's Medicaid program and asked them to come up with the $400 million in savings. The result: Wisconsin Medicaid officials found the necessary changes with the following positive effects:

• The $400 million target was met with a mix of new contracts and new procedures that steer customers to lower cost but just as effective treatments.
• Lobbyists lost influence since elected politicians were taken out of the loop and thus, lobbyists lost all of their leverage.
• Politicians were happy since they did not have to take any courageous but unpopular positions relative to budget cuts, preserving their political careers.
• Knock down, drag out political battles were avoided and changes were identified quickly rather than compromised, ineffective answers that took forever to agree on.
• Best of all, according to the article, voters are also happy.

Wow, a government entity that reduced itself in an effective and efficient manner, saving taxpayer money. How did it happen? It allowed the experts in the field, not politicians in the legislature, to identify the root causes and then solved the problem by attacking the right causes. Compare this behavior of the Federal political class that passed health care reform and financial regulatory reform where in each case, the politicians did not understand the root causes of the problems, resulting in idiotic legislation that will never solve the problems: the politicians never understood the root causes.

Since the Federal government usually pays at least fifty percent of the states' Medicaid budget, you could assume that if the Wisconsin changes saved the state $400 million, it probably saved the Federal government about the same amount, resulting in the nation saving $800 million. Since Wisconsin's population is about 1.9% of the country's total population, a rough, rough estimate of national savings if the Wisconsin savings were rolled out coast to coast would be over $42 billion a year. Taking it another step, what if those same types of changes were instituted in the bigger medical entitlement program, Medicare, on a national basis? Conservatively, at least another $50-$60 billion could be saved just between Medicaid and Medicare.

This step is consistent with two steps outlined in "Love My Country, Loathe My Government." Step 1 would reduce Federal spending by 10% a year for five years in order to downsize the government out of inefficient and ineffective programs and departments. A major process for attaining these downsizing targets is to do exactly what the Wisconsin politicians did: allow the experts, i.e. the government employees who know the ins and outs of the government operations they are involved in, to identify and propose the necessary changes. The twist that "Love My Country, Loathe My Government" proposes is the implementation of a lottery system that would randomly pass on a monetary reward to employees that come up with true costs savings. Imagine what savings we could incur if similar savings were identified in all government departments.

Steps 26 to 29 would attack major issues such as reducing medical costs, instituting a national energy program, fixing public education, and implementing a comprehensive immigration reform
in the same manner. It would institute panels of experts, sans lobbyists and politicians, that would identify true root causes of each issue, just like they did in the Wisconsin Medicaid area, and develop cost effective solutions quickly, without the political infighting that is never good news for the American public.

Congratulations to the Wisconsin leaders, whose foresight and courage allowed their own expert state employees to solve their budget problem. We can only hope that the rest of the political class shows the same initiative. and show it quickly Waiting for our politicians to do the same has resulted in a national debt of over $13 TRILLION.



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http://www.flipcongress2010.com/