Governor Ernie Fletcher’s Communication Office
Governor Ernie Fletcher discusses Medicaid Reform in monthly column and radio address

Press Release Date:  Monday, December 12, 2005  
Contact Information:  Brett Hall
Michael Goins
Jodi Whitaker

By Governor Ernie Fletcher


Most of us know all too well that Kentucky is not a very healthy state. We are overweight and don’t exercise enough. We eat and smoke too much. Health insurance costs are high, and so are Kentucky’s rates of diabetes, heart disease and cancer.


This crisis reaches beyond health to other critical issues facing the commonwealth. It reduces our quality of life. It costs money that could otherwise be invested in education or jobs. And an unhealthy work force limits our economic productivity.


Nowhere is this crisis as pronounced as in our Medicaid program. Medicaid is the health insurance program for the poor, elderly and disabled that Kentucky operates with the federal government.


Kentucky’s Medicaid program is very expensive – costing $4.7 billion this year and rising.


It is a one-size-fits-all program that offers little or no choice to members about their care.  And it focuses on simply treating members when they get sick, not keeping them healthy in the first place. This contributes to the commonwealth’s unhealthy population.


If this all sounds like a recipe for disaster, that’s because it is. Through Medicaid, Kentucky pays too much for medical care that is often delivered in the wrong place, at the wrong time, and without proper patient involvement.


What caused this crisis? Simply put, Medicaid is an outdated government program that struggles to cope with the realities of health care today.


Medicaid hasn’t changed much since it took effect in 1966, except in one key aspect. That year, it cost American taxpayers a total of $1 billion.  Last year, it cost more than $309 billion.


Along with the Medicare program, Medicaid was intended to prevent Americans from having to choose between food and medicine. Today, it forces states like Kentucky to choose between paying for Medicaid or funding other priorities such as better schools and safer highways.  


From coast to coast, states are dealing with runaway Medicaid spending, often by cutting tens of thousands of people from the rolls or slashing benefits.  States like Kentucky are left to treat a 21st century problem with a 1960s health plan.  When a program like Medicaid still offers the same one-size-fits-all treatment to its many different members, it’s no wonder costs are skyrocketing without corresponding gains in peoples’ health.


My administration will not neglect this problem. That’s why we’re modernizing Medicaid to meet Kentucky’s 21st century needs. 


A central part of Medicaid modernization is our application for a “waiver” from the federal government. Known as Kentucky Health Choices, this waiver will give us flexibility to avoid many cumbersome federal regulations and design programs specifically for the commonwealth.


We realize there is a big difference between the health needs of seniors in nursing homes, children with disabilities and pregnant women. What we don’t understand is why Medicaid currently treats them all the same. Under the new waiver, these categories of Medicaid members will be served by unique health plans tailored to their specific needs.


We also realize that empowering people to make choices about their medical care will lead to better decisions and better health.  


Today’s Medicaid benefits are largely free and unfettered. So it’s not surprising to see instances of overuse and abuse, with some individuals taking dozens of prescriptions at the same time, or visiting the emergency room 50 times in a year. No incentives exist for members to make responsible decisions, such as choosing a family doctor over an unnecessary ER visit. By making wise choices like this one, Medicaid members can improve their own health and the state’s financial outlook.


Kentucky’s Medicaid program has come a long way in two short years. Last year, we balanced a $526 million projected deficit without cutting anyone from the Medicaid rolls. We actually reduced our pharmaceutical costs in 2004, after they had skyrocketed by 80 percent over the previous four years.


But these measures alone are not enough. Over the next three years, Medicaid spending growth could consume all new revenue growth. That leaves no money to fund other priorities such as better schools and universities – the long-term investments that Kentucky needs to get ahead in the new economy.


At age 40, Medicaid faces a midlife crisis. To emerge from it, Kentucky must take bold action by modernizing the program for the 21st century.  And as the leader of this commonwealth, I intend to do just that. 


In the months and years ahead, Medicaid will look much different from the 1960s-era relic we see today. These changes won’t be easy, but they’re necessary for progress in Kentucky. 


As we move forward, I need and appreciate the support of the General Assembly and concerned citizens like you. Together, we can guarantee a modern and enhanced Medicaid program will be around to serve our children and grandchildren. 


Thank you.


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