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The F-Word In The Medicaid Debate

By Igor Volsky on May 6, 2011 at 7:15 pm

"The F-Word In The Medicaid Debate"

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Jonathan Cohn suggests that Republicans who are now fleeing House Budget Committee Chairman Paul Ryan’s (R-WI) Medicare plan may soon give a real push to his Medicaid reforms, which are no better. Ryan would transform the program’s matching rate financing structure — under which the federal government pays 50 to 75 percent of each state’s Medicaid costs and requires states to maintain certain eligibility and benefit standards — into a block grant system. States would receive a set “block” of money to do with it as they wished (within certain constraints) and could theoretically use that “flexibility” to design programs that go further in reducing health care costs. But Cohn isn’t buying it:

I don’t think the case for flexibility is particularly strong, in part because the states already have some of it. But make no mistake. The Republican proposal isn’t exclusively or even mostly about flexibility. It’s about money–and the desire by Republicans and their supporters to spend less of it on the health care safety net.

Medicaid, as you may recall, is a joint federal-state enterprise, with Washington picking up about two-thirds of the total cost. The House Republican budget would dramatically reduce the federal government’s contribution. According to the Congressional Budget Office, if the House Republican budget were to become reality, Medicaid spending in 2022 would be 35 percent lower and spending in 2030 would be 49 percent lower.

Yes, you read that right: If the House Republican budget were to become reality, federal spending on Medicaid would shrink to half of its projected value within two decades.

States would receive an annual federal appropriation that would be less than current projected growth of the program and would have to to make up the difference by increasing spending or (more realistically) capping enrollment, cutting eligibility, limiting mandatory benefits and lowering provider reimbursements.

That would endanger the coverage of the millions of elderly and disabled beneficiaries — two-thirds of Medicaid’s costs are spent on seniors and people with disabilities — who rely on the program today. In 2011, more than 69.5 million Americans will benefit from Medicaid, and according to a recent Kaiser Family Foundation poll, 59 percent of the American people said the program was either “very important” to them or their families or “somewhat important.” Which means that should the Ryan Medicaid proposal become law — and it’s doubtful that it will — that f-word will come to have a whole different meaning for Americans in the Medicaid debate.

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