Keeping An Eye On Medicaid

By: Melissa Medeiros  

While Medicare and “Obamacare” have received a lot of airtime this election season, less attention has been paid to Medicaid, in particular Romney’s plan to overhaul the system.  Under the Affordable Care Act, the Medicaid system would be expanded, covering an additional 15.9 million people nationwide by 2019. However, the Romney camp, if elected, will look to reverse health care reform and reduce federal spending on Medicaid by shifting more control over to states under a block grant system.

Currently the federal government and states share the cost of Medicaid through a matching formula based on a state’s average per capita income, with the federal government paying no less than 50 percent. So for example, Maryland picks up 50 percent of its state’s Medicaid tab, while Mississippi pays about 26 percent. Under a block grant system, the federal government would give states a lump sum of money, equivalent to what they received now and adjusted for inflation annually.

The block grant proposal has circulated in the Republican camp as far back as the Reagan administration. However, it has received greater attention in recent years as concerns over the federal deficit and government spending continue to top the agenda. Proponents of a Medicaid block grant claim that it will give states more freedom for innovation and will ultimately reduce costs and improve health care.

However, critics point out that block grants do not necessarily reduce program costs, but just shift the cost burden to states. The plan is estimated to reduce federal Medicaid (and Children Health Insurance Program) spending by $1.5 trillion to $1.9 trillion over the next ten years. As an entitlement program, states are required to meet the needs of those who are eligible – no matter if they have already blown through their budgets.  As a result, the Congressional Budget Office reports that states would likely need to pay more, decrease payments to Medicaid providers, cut benefits, or reduce eligibility requirements. Additionally, states that have already found innovative, cost-cutting practices will not be rewarded under this system and may actually see their share of the bill rise if their Medicaid caseloads increase.

But who will these cuts impact? Most people think that Medicaid is just a funding program for low-income children and families. However, most Medicaid spending actually goes to the disabled and elderly, who account for nearly two-thirds of Medicaid spending. Medicaid funds more than 40 percent of long-term care costs for the elderly. With limited funds, states may change eligibility rules or impose waitlists for nursing homes. While Medicaid may not be at the forefront of most voters mind this fall, they may find it harder to get care for aging family members or even themselves if Romney is elected and his plan goes through.

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