Congress Must Provide States More Medicaid Flexibility

Feb 16, 2011
Health Care

Published in the Seattle Times

By Rep. Cathy McMorris Rodgers & Washington Policy Center

When President Obama signed the unpopular Patient Protection and Affordable Care Act last year, he made many promises, including that the law would increase health-care access and lower costs. As states begin the process of devising their annual budgets, it's more clear than ever that those promises aren't being kept — especially in our home state of Washington.

State officials last year debated opting-out of the federal Medicaid program so they could preserve flexibility in providing health-care services to needy families. Currently, Washington faces a projected $5 billion state budget shortfall. The alternative to opting out of Medicaid is the potential elimination of all state-only health-care programs such as the Basic Health Plan, prescription-drug coverage and the Disability Lifeline program.

The new federal health-care law imposes a Medicaid Maintenance of Eligibility restriction on the states that prohibits local elected officials from making reductions. This restriction, combined with looming state budget deficits, means legislators and governors are faced with the painful decision of funding state-only health-care programs or providing matching funds for federal Medicaid dollars — they can't do both.

Already health officials in Nevada and Wyoming have drafted white papers discussing the possibility of opting out of Medicaid to preserve more budget flexibility. Similar conversations are occurring across the country in blue states like Washington and red states like Texas. This problem transcends which party controls a state's budget and demands bipartisan congressional support for Medicaid reform.

Though a state actually opting out of Medicaid remains unlikely, the fact that it is openly being discussed signifies the need for states to have more flexibility in the Medicaid program. Otherwise state health-care spending will be limited to administering the federal Medicaid program at the expense of state-directed priorities.

While the new Republican majority in the U.S. House will not provide states another federal bailout, it can work with the Senate to reform the Medicaid program to provide states the discretion to make local health-care decisions. We are working on a proposal to do just this.

Unless states are provided more flexibility over Medicaid spending they will be forced to either opt out of the program or eliminate state-only health-care priorities. A better strategy would be for Congress to transform the current categorically restricted Medicaid program, which is dictated by D.C. priorities, into an indexed block-grant program that would allow each state to design a comprehensive state-based health-care system that meets the unique needs and priorities of its citizens while protecting the most vulnerable.

Many states are already asking the federal government for this type of Medicaid flexibility, including legislators here in Washington. Last month, state Sens. Linda Evans Parlette, Joe Zarelli, Randi Becker and Minority Leader Mike Hewitt introduced Senate Bill 5596 to require the Department of Social and Health Services to request an indexed Medicaid block-grant waiver to "allow the state to operate as a laboratory of innovation for bending the cost curve, preserving the safety net, and improving the management of care for low-income populations."

To help determine what indexed growth factor should be used for a Medicaid block-grant program, governors and state Medicaid directors across the country should work with Congress to design a fiscal growth factor that would meet state needs. This type of reform would also help Congress with its deficit-reduction efforts since Medicaid costs would be more predictable.

Congress should reform Medicaid to avoid radical disruptions to state health-care networks. Failure to do so will result in states merely becoming passive administrators of the federal Medicaid program while state-only health-care programs are eliminated to balance budgets.

Reforming Medicaid into an indexed block grant that provides state spending flexibility will instead facilitate 50 laboratories of democracy working to identify innovative health-care reforms to provide a meaningful safety net for the most vulnerable in our society.

Rep. Cathy McMorris Rodgers represents Washington's 5th Congressional District and serves as vice chair of the House Republican Conference. The Washington Policy Center is based in Seattle.

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