Plan Would Trade Medicaid Funds For Flexibility The budget passed by the House would give states more authority over Medicaid — but less money over time. GOP governors say they'll embrace the chance to have more flexibility over their budgets, but critics say society's most vulnerable would suffer.
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Plan Would Trade Medicaid Funds For Flexibility

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Plan Would Trade Medicaid Funds For Flexibility

Plan Would Trade Medicaid Funds For Flexibility

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Now, House Republicans passed a budget plan last month. And the debate surrounding it is focused on proposed changes to the Medicare health program for seniors. There are signs that public criticism directed at members of Congress when they were on their spring break may be prompting Republicans to reconsider.

WERTHEIMER: But the budget plan the Republicans passed also calls for big changes to Medicaid, the health program for the poor. NPR's Julie Rovner looks at a fight that's getting less attention but could end up involving even more money.

JULIE ROVNER: Most people don't realize it, but the Medicaid program is actually bigger than the Medicare program. Medicaid covers more than 50 million people, compared to Medicare's 48 million. And Medicaid's patients are among the most vulnerable in society, says Health and Human Services Secretary Kathleen Sebelius.

Secretary KATHLEEN SEBELIUS (Department of Health and Human Services): Kids, pregnant women are the vast majority. But then older seniors, many of whom are in nursing homes, and very disabled individuals.

ROVNER: And those latter categories consume a lot of very expensive healthcare. Right now, states and the federal government share the cost of Medicaid, with the federal government paying about two-thirds and the states one-third. That varies by state, however. For wealthy states, the costs are shared 50-50.

What really makes governors chafe, however, are all the rules that come with the federal money.

Governor CHRIS CHRISTIE (Republican, New Jersey): I think you find this in a bipartisan way. Governors just want flexibility to run our states.

ROVNER: That's Republican Governor Chris Christie of New Jersey.

Gov. CHRISTIE: You don't want to pay 50 percent of the cost of Medicaid and have zero percent of the authority. And I don't think that's an unreasonable thing to be asking for.

ROVNER: So a number of governors, most of them Republican, have offered the federal government a deal. If the federal government will get rid of most of the rules for who and what is covered, the governors will accept something very dramatic: an end to unlimited federal funding for Medicaid.

Here's how Mississippi Republican Governor Haley Barbour put it.

Governor HALEY BARBOUR (Republican, Mississippi): If I could get total flexibility, I'd take a two percent cap in a heartbeat.

ROVNER: What he means by that is that no longer would Mississippi be entitled to federal funding for every Medicaid patient or service. Instead, it would get a lump sum - what it gets now, plus two percent.

Under the plan passed by the Republican-led House, states would get increases only for general inflation - which tends to rise more slowly than health inflation - and for changes in population size.

According to the Congressional Budget Office, that would lead to big reductions - cuts as large as a third in most states' Medicaid allotments within a decade, and a half by the year 2030.

Sec. SEBELIUS: So then we're looking at a huge cost shift onto states and onto taxpayers.

ROVNER: Again, Health and Human Services Secretary Kathleen Sebelius.

Sec. SEBELIUS: This is about taxpayers picking up through more uncompensated care in hospitals, through costs of people who end up under bridges, on streets, or who end up in a workforce where they're totally unproductive because they're not healthy. Those costs are picked up by the rest of us.

ROVNER: Sebelius, who was governor of Kansas before coming to Washington, says she gets it when governors say they want flexibility.

Sec. SEBELIUS: What they would like is: give us the same amount of money and get rid of the rules, which is always a nice deal.

ROVNER: But Sebelius says those rules are there for good reasons, to make sure those vulnerable patients actually get the care federal taxpayers are helping pay for.

On the other hand, some conservatives say Medicaid is already guilty of shifting costs from taxpayers in rich states to those in poorer ones. That's because those less-wealthy states get so much money from Washington, says Michael Cannon of the libertarian Cato Institute.

Mr. MICHAEL CANNON (Cato Institute): In the case of low-income states, they get $4 from the federal government for every additional dollar they put toward their program. That creates a huge incentive for them to expand their programs, and many states have enrolled people who could obtain private health insurance.

ROVNER: Cannon says limiting what the federal government provides to each state would make the program more fair to federal taxpayers.

Mr. CANNON: Block grants would make Medicaid more efficient, because they would require states to take responsibility for their Medicaid policy decisions and not shift those costs to other states.

ROVNER: This isn't the first time Republicans in Congress have proposed to turn Medicaid's open-ended funding into a capped grant program. Previous efforts haven't succeeded. But never has the pressure to cut federal spending been as great as it is now.

Julie Rovner, NPR News, Washington.

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