Medicaid change: States in 'straitjacket'

Turning U.S. Medicaid spending into block grants "would put states in a straitjacket," the head of a bipartisan state legislature advocacy group said.

The block-grant proposal, included in the U.S. House Republicans' 2012 budget blueprint approved Friday by a 235-193 vote, would probably not provide enough money to cover Medicaid program costs, so states would either have to "deny people of services they're used to" or pick up the financial shortfall, which would end up "shifting the federal deficit to the states," National Conference of State Legislatures President Richard Moore told United Press International Friday night.

Medicaid cuts under the House GOP plan would exceed $700 billion during the next decade. This would be accomplished largely by ending the financing partnership between Washington and the states and replacing it with block grants that cap federal contributions and give states less money but free them to manage Medicaid as they wish.

"Republican and Democratic legislatures alike are in opposition to Medicaid block grants," said Moore, a Democratic Massachusetts state senator.

This is because "inflation in healthcare rises a lot faster than inflation in the rest of the economy," and block grants "are not likely to grow" as inflation rises, Moore said.

In addition, if the economy worsens, more people would automatically become eligible for Medicaid, so even though federal funding is capped, state expenses would have to rise to cover the additional people, Moore told UPI.

"So the federal money would stop, but we would end up being responsible for the whole cost of increased services as more people become eligible for Medicaid," Moore said.

"We're not in a position to absorb, with the economy, any increased costs," he said.

Moore and 11 other state legislature leaders met with President Barack Obama at the White House Friday to discuss Medicaid, deficit reduction and other fiscal matters.

"We shared that block grants would put states in a straitjacket fiscally," Moore told UPI.

Obama, who as an Illinois lawmaker chaired the state Senate Health and Human Services Committee, "agreed with us that block grants would not work, because they would shift the financial burden to the states," Moore said.

"He understood that we need some flexibility, but he wanted to make sure we're not going to deprive people of basic programs 'under the cover' of flexibility," Moore said.

Obama assigned Gene Sperling, the president's assistant for economic policy, and Jeanne Lambrew, his deputy assistant for health policy, to work with the legislature group "to try to make state views incorporated into federal policy," Moore said.

The block-grant idea is not new, Moore added. "[President] George W. Bush suggested this [in 2003] and it was pushed back."