While some Republican governors are still advocating transforming the current matching fund system of Medicaid funding into block grants (more on why this is such a bad idea here), Mother Jones’ Suzy Khimm is reporting that other Republican lawmakers are adopting a far less radical approach that could potentially appease governors worried about the growing cost of the Medicaid program:
Rep. Cathy McMorris Rodgers (R-Wash.), the fourth highest-ranking Republican in the House, is at the forefront of the push in Washington. She’s currently examining a proposal that would let states opt out of existing Medicare and into some such alternate setup. “The key is flexibility,” she told Mother Jones, employing the GOP’s latest buzzword. “Perhaps those who want to stay with the current system could do so,” the congresswoman adds. “Those states that want a different option could do so, with the flexibility. We need to work on it.” [...]
McMorris Rodgers says she’s encouraged by her own state’s Democratic governor, Christine Gregoire, who chairs the National Governors Association. While a strong supporter of federal health care reform, Gregoire convinced the Obama administration to exempt Washington state from certain Medicaid rules. She has also echoed the call of Republican governors demanding the right to take full control of their programs—and scale them back if need be. “She’s had to make some very difficult decisions and she needs the flexibility,” says McMorris Rodgers, noting that Gregoire has already slashed certain dental and vision benefits to keep Medicaid solvent.
States are already free to opt out of the Medicaid program, but McMorris Rodgers’ proposal would allow states to apply the federal funds they currently receive towards an alternative program. It’s unclear what level of benefits the alternative plan would have to provide to qualify for federal funding, but extending states the “flexibility” to craft their own designs is on par with the Wyden/Brown bill Obama endorsed on Monday.
Still, it’s important not to overstate the rigidity of the existing program. For all the Republican complaints about the federal government’s control of Medicaid, states already have a good deal of flexibility to design benefits, implement delivery system reforms, and set payment strategies without applying for a federal waiver. For instance, states can eliminate optional services, add or increase cost sharing for some services and do a better job of managing and coordinating chronic care (since one percent of all Medicaid beneficiaries account for 25 percent of all expenditures). In fact, under the Affordable Care Act, states can even apply for federal funds to better coordinate services for people with chronic conditions and receive federal support to design new models for serving the very expensive dual eligible population (these beneficiaries, who qualify for both Medicare and Medicaid, represent just 15 percent of Medicaid beneficiaries but make up 40 percent of all Medicaid expenditures).
Federal policy makers recognize that states in budget distress may need additional assistance to control Medicaid spending and the administration is meeting with local officials to find new solutions to control costs. McMorris Rodgers’ proposal may provide states with even more options, but whether its moderate tone will attract GOP support, remains to be seen. Given the party’s reaction to Obama’s endorsement of the Wyden/Brown flexibility bill, however, its safe to assume that the provision will fare better if the President keeps his distance or outright condemns it.