Wisconsin's New Way to Make Medicaid Cuts

Medicaid is a lifeline for millions of uninsured Americans. For public officials, however, it’s often a quagmire—a program that drains as much as a quarter of total state spending, yet can’t be streamlined without political bloodshed. Previously, states have tried to rein in costs by pruning “optional” benefits (such as adult day care), reducing payments to health-care providers, or raising taxes, none of which are attractive choices in the era of the perpetual campaign. Could Wisconsin have a better way?

Last year Gov. Jim Doyle proposed to slash $400 million from the state’s health-care system, one of the country’s most comprehensive. But rather than oversee the cuts, he and the state legislature left them up to Medicaid officials, who not only found the savings but expanded enrollment. The fixes, most of which kicked in this summer, were a predictable mix of new contracts and procedures (incentives for natural birth will save $4 million in C-sections). But the approach upended traditional politics. Lobbyists lost influence, officials were insulated from blame, and lawmakers were shielded from "tough votes," says Steve Barton, president of the Wisconsin Hospital Association. Best of all: voters seem to be happy. “We by no means have the exclusive answer,” says Doyle, whose staff got calls about the idea from around 10 other states. But anything, he says, is better than “all those political battles.”

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