AEI scholars have been leaders in the debates on health entitlement reform, including the long-term Medicare funding structure, the Medicare prescription drug benefit, the Medicaid funding formula, and the State Children's Health Insurance Program.

‣‣‣ The current fiscal crisis facing state and federal budgets is the largest in recent history. Federal deficits combined with aggregate state budget deficits may total over $1.6 trillion in fiscal year 2011. Given these pressures and the added burden of recent health care reform legislation that will add 16 million new enrollees to Medicaid rolls by 2019, there is a clear and obvious need to identify potential savings opportunities to address budget pressures, particularly as they relate to health care spending. While some policymakers have advocated wholesale Medicaid reform, there are also intermediate opportunities for considerable savings within the existing program framework, writes Alex Brill in his working paper, Overspending on Multi-Source Drugs in Medicaid. Brill finds that the Medicaid drug program currently overpays for popular drugs by paying pharmacists for more costly brand-name medications that can easily be replaced by less costly generic alternatives containing the same active ingredient. He finds that Medicaid programs often reimbursed pharmacies for expensive brand-name drugs when alternative generic products were available at a lower cost--costing states in 2009 an estimated $329 million in excessive payments.   [Read More]