The Governors' Dangerous Medicaid Endgame

Abstract

Many public opinion surveys show that people have more trust in state government than in federal government. - Larry Sabato, University of Virginia The governors are a special interest group, trying to maximize federal aid and increase their ability to withdraw state money from welfare and Medicaid. - Robert Greenstein, Center on Budget and Policy Priorities Since October 1, when federal fiscal year began without a budget agreement, there have been not one but two federal government shutdowns and 10 temporary, or stopgap, spending bills to either reopen it or keep it going. Nearly six months into 1996 fiscal year, with a White House-Congressional impasse like none in recent memory, our national government still does not have a budget. And President Clinton appears to be holding firm in his resolve to veto Congress's Medicaid cuts and welfare reforms (Medicaid Conference Reports, 1996). But don't exhale yet. Into this impasse waded National Governors' Association (NGA), elected officials people traditionally trust more than federal government, with a Medicaid proposal even more regressive than that made by House of Representatives last year and vetoed by president. Hoping to resuscitate welfare issue, governors announced outlines (and few details) of an allegedly new position on February 6 during a dinner with their former gubernatorial colleague at White House. Approved by 75 percent of governors (of whom nearly two-thirds are Republicans), their agreement was extolled as the catalyst to break deadlock and get everything else moving (Pear, 1996a, p. A1). Having embraced Republican federal budget-cutting mania of 1994, many governors face serious budget balancing pressures in 1996. But rather than take their own medicine - cutting programs, raising state taxes, and accepting consequences - they have proposed a complex, cheap, short-term plan to scare federal money by obtaining relief from mandates that accompany categorical grants-in-aid. Their proposals cover welfare, Medicaid, nutrition, child care, and child protection; their Medicaid position is addressed in this column. THE GOVERNORS' MEDICAID PROPOSALS Medicaid is now largest remaining open-ended entitlement program in federal budget. Since 1965 it has grown to be a significant funder of U.S. health care system and an important source of coverage for people and of revenues for providers, far surpassing Aid to Families with Dependent Children (AFDC) and grants in state budgets. In 1993, 32.1 million people were covered by Medicaid at a cost of $112.8 billion. About 64 percent of cost was financed by federal government, with balance paid directly by states. About 33 percent of all births are covered by Medicaid, as is health care for nearly 25 percent of children (Testimony of D. Rowland, 1995). Medicaid finances half of all nursing home care, provides health insurance to 13 percent of nonelderly population, and supplements Medicare for 10 percent of elderly people. Overall, 60 percent of all people living in poverty are assisted directly by Medicaid (Friedland, 1995). The governors' proposed changes to Medicaid are artfully crafted to avoid term block grant but still remove vital entitlement protections. Medicaid recipients would continue to be covered for hospital and physicians' services, nursing home care, family planning and supplies, and laboratory and X-rays. But states would have complete flexibility in defining amount, duration, and scope of services (Pear, 1996a, p. A12). The NGA plan includes following guidelines: * States would have to continue to provide Medicaid for pregnant women with family incomes up to 33 percent above official poverty level, children under age six in families with incomes up to 33 percent above poverty line, and children ages six to 12 in families below poverty line ($11,821 for a family of three in 1994). …