The Hill’s Jason Millman reports that in an effort to undermine the implementation of the Affordable Care Act, Republicans are now questioning whether Secretary of Health and Human Services Kathleen Sebelius has the authority to temporarily exempt limited benefit plans — so called mini-meds — from some of the requirements of the new law:

Republicans have been increasingly critical of waivers granted by the Obama administration to organizations that cannot meet a new mandate to provide at least $750,000 in coverage in 2011. They say the waivers, granted for just the annual limits requirement, are indicative of problems in the law. [...]

But House Republicans with oversight powers say the massive overhaul doesn’t explicitly grant the administration power to provide waivers.

“The entire waivers process is predicated on the ability of the secretary to grant waivers in the first place,” said Rep. Trey Gowdy (R-S.C.), chairman of the House Oversight Health subcommittee. “However, this seemingly fundamental step — the statutory basis for waiving compliance with the law — appears to have been wholly neglected by the plain language of the statute.”

It seems to me that the Secretary’s authority for regulating “annual limits” can be found in Section 2711 of the Affordable Care Act (pg. 33 in this PDF), which states: “a health insurance issuer offering group or individual health insurance coverage may only establish a restricted annual limit on the dollar value of benefits… as determined by the Secretary.” “[T]the Secretary shall ensure that access to needed services is made available with a minimal impact on premiums,” the law says. In other words, it would seem that Sebelius has the authority to determine what constitutes a “restricted annual limit” that can still be imposed before 2014.

And while progressives generally aren’t too crazy about allowing mini med plans — subprime insurance offered to lower wage employees — to skirt important consumer protections, the administration believes that it has to waive certain requirements for specific plans to ensure that individuals are not denied access to needed services or face significantly increased premiums before they have more coverage options in 2014.

The irony here is that conservatives — who have long argued that ACA represents a one-size-fits all approach to health policy — are trying to deny HHS the flexibility to ensure that some plans and beneficiaries aren’t adversely affected by the law’s requirements. (The very requirements they rally against). And, they’re arguing that by taking advantage of all of the provisions in the ACA — including the flexibility it offers — the Secretary is somehow demonstrating that the law is defective.

Under today’s Medicaid program, the federal government pays a fixed percentage of each state’s Medicaid costs (anywhere between 50 and 75 percent, depending on need) and requires states to maintain certain eligibility and benefit standards. Govenors that develop a more innovative approach to paying for health care services may receive a waiver from some of the program’s requirements to pursue other alternatives. Republicans — unhappy with many of the federal strings attached to the federal dollars — have long sought to reform this funding arrangement by transforming the matching-fund structure into a block grant system, under which states would receive set “block” of money to do with it as they wished (within certain constraints).

Last month, GOP governors attending the National Governors Association’s winter meeting pressed President Obama on the idea and according to the Wall Street Journal’s Corey Boles and Janet Hook, Congressional Republicans will likely unveil their own block grant proposal when they reveal their budget next week:

Rep. Mick Mulvaney (R., S.C.) told constituents at a town hall meeting in Lancaster on Thursday that the committee soon would unveil a budget resolution for fiscal 2012 that recommends revamping Medicaid to allow states more latitude in spending federal money.

“We’re getting ready to offer people the first real, substantive discussion on a major entitlement—Medicaid—in my lifetime,” the congressman said.

What Mulvaney describes as “more latitude” and greater state flexibility is really a gigantic cost shift from the federal government to the states. Under their proposal, states would receive an annual federal appropriation that would be less than current projected growth of the program, forcing state governments to make up the difference by increasing spending or (more realistically) capping enrollment, cutting eligibility, limiting mandatory benefits and lowering provider reimbursements.

As the CBO put it in examining Rep. Paul Ryan’s (R-WI) Medicaid block grant proposal: “reducing federal payments for Medicaid relative to currently projected amounts would probably require states to provide less extensive coverage, or to pay a larger share of the program’s total costs, than would be the case under current law.”

It’s the kind of policy that would place Medicaid’s 53 million beneficiaries — the great majority of whom are elderly and disabled — in great danger of losing their coverage and jeopardizing the success of health care reform, which relies on the Medicaid program to expand coverage to some 17 million Americans. And that of course, may be the very goal of proposing it.