While much of the focus in Rep. Paul Ryan's budget proposal has focused on the elimination of Medicare as we know it, turning it into a voucher program, Ryan also went ahead with his anticipated
massive cuts to Medicaid, turning the program into a block grant program, a "reform" that would likely cripple and kill the program.
HuffPo's Sam Stein reports that 17 Democratic governors have already weighed in, stating their opposition to the proposal in a letter to congressional leaders.
“We strongly oppose a congressionally-mandated block grant of federal Medicaid spending, which would shift costs and risk to states,” the governors wrote. “Such a cost shift would severely undercut our ability to provide health care to our residents and adequately pay providers.”
Added the signatories: “We are concerned that Congress, in an attempt to reduce the federal deficit, may pursue the exact opposite course of action by creating a mandated block grant which would do little to address cost growth while shifting costs to states and threatening program integrity.”
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“In the face of state and federal budget pressures and rising health care costs, we need federal policy that creates cost savings, not cost shifting,” the governors wrote. “States are already innovating within Medicaid, and the current financing system provides ample room to manage our Medicaid programs to provide increasingly efficient quality care.”
Medicaid is an opt-in program for states, but once they decide to participate, they have to comply with federal guidelines for the program. In return, the feds picks up (in most cases) the majority of costs for the states, anywhere from 50 to 75 percent. The key element to the program for state is that the federal financing is open-ended, meaning that as expenditures in the state increase, because of economic recession, high unemployment, whatever, the federal government shares in that increased cost.
A block grant program ends that commitment. Participating states would get a chunk of money, presumably with some strings attached, but if Ryan is writing those strings, don't count out. When that chunk of money was spent, that's that, and good luck keeping up with healthcare costs. The Center for Budget and Policy Priorities reviewed an early draft released as the Rivlin-Ryan proposal.
Medicaid block grants produce federal budgetary savings by giving states less federal funding each year than they would receive under the current system. Under the Ryan-Rivlin proposal, the amount of the block grant would be adjusted for growth in GDP per capita plus one percentage point and for population growth. This formula could increase the block grant funding by up to 1.5 or 2 percentage points less each year than projected cost growth, with the difference compounding over time. The Congressional Budget Office estimates that this change would reduce federal Medicaid funding by $180 billion through 2020 alone. The cuts in funding would be substantially larger in later years.
Reduced federal Medicaid funding would significantly shift costs and risks to states, low-income beneficiaries, and health care providers. States would either have to increase their Medicaid spending or, as is much more likely, cut back eligibility, benefits, and payments to providers. Moreover, with a block grant, federal funding would fail to keep pace with unanticipated cost increases stemming from an economic downturn, an epidemic, medical breakthroughs, or other factors. When those developments occurred, states would have to bear 100 percent of the added costs.
Responsible governors (i.e., Democrats) see the potential disaster this would be for their states. The CBPP references modeling done by the Urban Institute that found that "a one-percentage-point increase in the unemployment rate results in a 1 million person increase in Medicaid enrollment among children and non-elderly adults." Governors who actually worry about governing their states—looking out for the general welfare and all of that that's so out of vogue with the GOP—recognize the potential for disaster for their constituents in this proposal.