COLUMN: Medicaid block-grant momentum builds
AUSTIN Already a burden on the states, Medicaid enrollment is set to skyrocket as the Obama health care law moves forward. Texas legislators recently took a bold step to stop the out-of-control Medicaid spending before it breaks the state budget.
Texas Senate Bill 7 (SB 7), the omnibus health-care reform bill passed during special session, contains a provision for the state to formally request a Medicaid block-grant waiver similar to the reform proposed for all 50 states by U.S. Congressman Paul Ryan in his budget plan. The state of Washington, with a Democratic legislature and governor, passed similar legislation last month, making this a non-partisan, good-government movement.
State Sen. Jane Nelson (R-Flower Mound) and State Rep. John Zerwas (R-Simonton), a medical doctor, sponsored the Texas legislation. Rep. Louis Kolkhorst (R-Brenham) fought hard for the Medicaid waiver and for Interstate Health Care Compacts, another measure included in SB 7 that allows states to band together to create more health care options for patients.
The waiver would “provide flexibility to determine Medicaid eligibility categories and income levels” and further “design Medicaid benefits that meet the demographic, public health, clinical, and cultural needs of this state.” Rhode Island has already had success with a similar waiver issued in January 2009, saving more than $100 million within the first eighteen months.
Medicaid covers more than four million individuals in Texas costing $24.5 billion in fiscal year 2009, representing 28.2 percent of the Texas budget for the 2008-2009 biennium. As the Medicaid expansion required by Obama’s new health care law moves forward in 2014, Medicaid’s share of the budget is expected to jump to a crippling 46.6 percent of the biennial budget for 2014 and 2015, according to an analysis by the Texas Public Policy Foundation. Texas simply cannot afford to spend that much of its budget on a program largely subject to federal control.
Yet these dramatic numbers quite possibly underestimate Medicaid’s true cost starting in 2014. Last month, Medicare and Medicaid’s chief actuary Richard Foster told the Associated Press that a costly mistake was made in Obama’s health care law that will result in middle-class seniors earning $64,000 a year qualifying for Medicaid in 2014.
Receiving federal funds as a lump-sum, instead of a matching grant that rewards higher spending with more federal dollars, will allow Texas to find cost-savings within Medicaid. Currently, if the Texas legislature wants to reform Medicaid to save money, they have to find more two dollars in cuts to save one dollar for state taxpayers. Under a block grant, every dollar saved is saved in full.
Even if Texas cut all non-federally maintained programs within Medicaid, it would save the state just $67 million annually. Slashing physician and hospital reimbursements, risking health outcomes, would save another $46 million annually. Combined, these two cost-saving options would save Texas less than 5 percent a year. Any more significant spending would require the waiver.
Block grants are a proven approach. In 1996, a Republican Congress and President Bill Clinton transformed the Aid to Families with Dependent Children (AFDC) into block grants to the states. With finite funding, states had new incentives to control costs, and reform programs as additional costs would be borne solely by the state. Critics argued that states would not be successful and thousands of families would be harmed.
The new program, Temporary Assistance to Needy Families (TANF) was an overwhelming success. Welfare rolls decreased by two-thirds, and by 2006 total real federal and state spending on TANF has decreased by 31 percent from 1995 AFDC levels. Texas saw our caseload fall from 662,000 individuals in 1996 to 115,100 in 2010.
What worked for AFDC will work for Medicaid. State legislators from both sides of the aisle are demanding the ability to make important health care decisions themselves, and not be subject to unelected bureaucrats in Washington, D.C.
Texas, like the state of Washington, now awaits the decision of Secretary of Health and Human Services Kathleen Sebelius.
She should approve the waiver and give Texas the opportunity to run our own Medicaid program, tailored to the unique needs and priorities of our citizens.
Congress should then go further and adopt a block-grant reform for all 50 states, getting DC politicians and bureaucrats out of the Medicaid business completely.
Venable is state director of Americans for Prosperity, a nationwide organization of citizen leaders committed to advancing individual’s right to economic freedom and opportunity. For more information, visit www.americansforprosperity.org
