Medicaid 'Sweetheart' Deals Have A Storied Past : Shots - Health News Despite complaints about sweetheart deals made to move the health bill forward, they are as old as the country itself.

Medicaid 'Sweetheart' Deals Have A Storied Past

Senate Republicans lately have been ranting about the deals cut by Majority Leader Harry Reid to gain the votes of holdout members of his caucus for the huge health overhaul bill. Of particular note have been special payments to states for Medicaid, the health insurance program for the poor. The federal government and the states generally share Medicaid costs.

Sweetheart deals for Senate votes are nothing new. hide caption

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Sweetheart deals for Senate votes are nothing new.

First came the "Louisiana Purchase," some $300 million in additional Medicaid funding to win Sen. Mary Landrieu's OK to let the health bill come to the Senate floor in the first place.

Then in Reid's final offering, a.k.a., the manager's amendment, came the "Cornhusker Kickback." That's a deal under which the federal government would pay Nebraska's portion of the cost of expanding Medicaid into perpetuity. That helped cement Sen. Ben Nelson's vote to get the bill past the GOP filibuster it has faced.

These arrangements unleashed complaints of unconstitutionality and corruption from GOPers like Sen. Orrin Hatch of Utah and Tom Coburn of Oklahoma, respectively.

But if that's the case, this corrupt and unconstitutional behavior has been going on for a long time.

"When I first went to work for then Republican leader Bob Dole, it was explained to me by one of the top health care staffers that Medicaid is always a formula fight," said Alec Vachon, a former GOP health staffer for Dole, as well as former Majority Leader Bill Frist and now a health policy consultant. "As long as I was working in the Senate, and since I have left the Senate, there's always been some provision that benefits some state versus the other."

As to the possibility that it might be unconstitutional to give one state benefits that don't go to others, said Vachon with a laugh, "I'd like to see that legal brief."

I witnessed one of the greatest Medicaid bazaars of all time during the first George Bush administration in 1991. Then government budget office health aide Tom Scully and White House health policy head Gail Wilensky spent an all-nighter just before Thanksgiving, cutting more than a dozen separate state Medicaid deals in an effort to head off a House-passed bill their boss didn't like that was sponsored by California Democrat Rep. Henry Waxman.

But Vachon says the history of Washington dealmaking is as old as the city itself.

"Washington D.C.'s location is the function of a deal. Alexander Hamilton wanted to assume all the debts of the states in the Revolutionary War. Thomas Jefferson wanted D.C. sited on the Potomac. They cut a deal. So if it was good enough for the founders, I guess that passes Constitutional muster."