The Wall Street Journal recently reported on bureaucratic barriers for patients covered by both Medicare and Medicaid. These two programs serve the elderly and the poor, respectively, and people who fall into both categories—the “dual-eligibles”—should get better-quality care with more efficient taxpayer spending.

According to the WSJ, an estimated 9.7 million Americans fall under the dually eligible criteria. They account for 16 percent of the Medicare population but 27 percent of Medicare spending, and 15 percent of Medicaid’s population but 39 percent of its spending. More efficient financing for this group is essential to reining in spending on both entitlement programs.

Not surprisingly, dual-eligible costs are high mainly because the two government programs do a poor job of working together. In her recent testimony before the House Energy and Commerce Committee, Director of the Medicare–Medicaid Coordination Office of the Centers for Medicare and Medicaid Services Melanie Bella said, “Too often, the care journey for these individuals is fragmented and uncoordinated…Over the years, a lack of coordination for this population has led to fragmented and episodic care, which can lead to lower quality and higher costs for this population.”

Take Victor Maceyra, for example. After recovering from a shoulder injury, he was kept at a government-funded rehabilitation center for six months. The reason? Medicare and Medicaid each tried to force the other to pay for his home care. Examples of this kind of lack of coordination abound, and dually eligible patients frequently receive treatment at hospitals that they could obtain elsewhere. According to the Medicare Payment Advisory Commission, the panel that advises Congress on Medicare reimbursement, up to 40 percent of all dual-eligible hospital admissions are unnecessary, and care would be more appropriately addressed in a different setting. This is bad news for the patients affected—and it also means significantly higher costs for taxpayers.

Adding more layers of bureaucracy to government-run health care programs will only make them more clumsy and inefficient. Obamacare dramatically expands Medicaid and depends on draconian cuts to Medicare that will result in less access to care for already vulnerable populations. This approach to health policy is chock full of bureaucracy-based solutions, and you can bet it will worsen existing problems and make real reform more difficult.

The Heritage Foundation’s Saving the American Dream proposal includes a better plan. It addresses the needs of dually eligible seniors by expanding their access to private coverage, promoting coordination of their care, and making financing more efficient, benefiting patients and taxpayers alike. The Heritage plan would replace the current “defined benefit” structure of Medicare with a defined contribution for seniors to offset their costs, whether they choose to enroll in traditional Medicare’s fee-for-service program, keep their existing private health insurance and bring it with them into retirement, or purchase another private plan that better suits their personal needs. Dually eligible beneficiaries would receive the maximum contribution from the federal government, and in place of traditional Medicaid, states would “top off” the federal contribution to provide further financial assistance if they enrolled in private coverage. The low-income elderly would thus be better served by receiving coverage from one single health plan.

There is no question that Congress could do a much better job to secure care for the most vulnerable members of society. By rooting out the staggering waste and inefficiency in Medicare and Medicaid through structural transformation of these programs, the Heritage plan would improve the quality of care for low-income seniors and increase the sustainability of both programs.

This post was co-authored by Kyle Rusciano, a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: