Turns Out it is Hard to Cut Medicaid

Looks like Medicaid block grants are due for their turn in the spotlight again. Julian Pecquet notes that even some Republican governors are skeptical this time around. First, they don’t think they will be given the flexibility they need:

Former South Dakota Gov. Mike Rounds, who also served from 2003 to 2011, raised concerns that block grants may restrict states’ funding without giving them enough flexibility to deal with the fallout.

“I think there is a possibility with a block grant that it could work,” he said, “but only if the authority to make changes went along with the block granting.”

Fat chance, said Bruce Lesley, president of the children’s advocacy First Focus. He points out that Ryan’s block granting proposal merely changes how states get their Medicaid money; the hard work of figuring out just how much flexibility they’d really have – whether they could bump children or seniors off the rolls, or limit prescription drug benefits, or any other substantive changes – would still have to be worked out in the House and Senate committees of jurisdiction.

Additionally, they are concerned that when this doesn’t work, they will be on the hook:

“All block granting does is it changes the financing,” Lesley said. “There’s no real promise of flexibility (and) the governors are starting to realize that they’re just going to be left holding the bag.”

House Republicans led by then-Speaker Newt Gingrich (R-Ga.) tried the same approach in 1995, only to see their Medicaid block granting proposal vetoed by President Bill Clinton who was then able to run for re-election as the program’s champion. Lesley recalled that the proposal led to pandemonium as Republicans were forced to take tough votes on which Medicaid provisions to keep out of states’ reach.

If block granting ever came back on the table, he said, “all the advocates would definitely push to keep the provisions for the populations they represent in place.”

And, still, I have seen no one address the basic facts that make it clear that it will be hard, and painful, to cut Medicaid spending. You can’t magically spend significantly less and think this will go well, when you look at how Medicaid money is actually spent.

[Cross-posted at The Incidental Economist]