"The most important proposal I make today is to reform the Medicaid program. Medicaid is plagued by serious faults. Costs are mounting beyond reason. Services vary considerably from State to State. Benefits are only remotely related to family resources. Eligibility may terminate abruptly as a family moves off often losing more in medical benefits than it gains in income. In short--just like the existing welfare system--Medicaid is inefficient, inequitably excludes the working poor, and often provides an incentive for people to stay on welfare. I will propose legislation at the beginning of the next Congress to establish a family health insurance program for all poor families with children. This insurance would provide a comprehensive package of health services, including both hospital and outpatient care. Final decisions on the specifications of the family health insurance proposal must await further review by the new Domestic Council. We are satisfied that the basic principles will work. This proposal will constitute the second legislative stage of the administration's income strategy against poverty."