WASHINGTON, Sept. 22 -- A House panel Friday approved a sweeping Republican measure that would scrap the current Medicaid funding system and replace it with block grants paid directly to the states. The Republican-led House Commerce Committee voted 27-18 in favor of the GOP's MediGrant proposal, a complete overhaul of the Medicaid health program for the poor and elderly. 'Together, we are on the verge of transforming the fastest-growing entitlement program in America,' said Committee Chairman Thomas Bliley, R-Va. 'MediGrants will allow the states more money for health care, and fewer bureaucrats, fewer rules, to tell them how to spend it.' Democrats have accused the Republican leadership of trying to ram through Medicare and Medicaid reform with few or no hearings so the American public would not know the details. The Medicaid reform proposal was unveiled Tuesday, and Bliley said he hopes to take it to the House floor by the end of the month for passage. The GOP plan, in addition to the block grants, would strip most federal requirements for how the states have to spend the money. Supporters say that the states would know better than Washington how to set up health care plans for the poor. Payments to the states would total $773.1 billion over seven years. House Democrats label that amount a cut: they say the GOP is chopping one-third of Medicaid's budget over the next seven years to pay for a tax cut for the wealthy. However, House Speaker Newt Gingrich says federal spending on the program would be 39 percent higher in seven years.
Republicans say each state will receive a flat 7.2 percent increase in funding through block grants in fiscal year 1996. A distribution formula for individual states would kick in the following year, with no state receiving less than a 2 percent increase. The committee added to the bill a requirement that the states cannot force the spouses of nursing home patients to sell their property in order to become eligible for MediGrant aid. Critics said the initial plan would have given states the flexibility to require the sale of valuable property. The panel also approved a measure to allow the Department of Health and Human Services to join states in identifying waste and abuse in the Medicaid program, and added an amendment establishing equal payment rates in rural and non-rural areas. Meanwhile, Senate Finance Chairman William Roth Jr. gave a brief outline Friday of the Senate's plan to overhaul Medicaid largely by allowing states to develop their own plan for providing care for the poor. States could also set provider payment rates and their own benefit packages. The federal government, however, would mandate coverage for pregnant women, children, and disabled and elderly poor people. Overall, Roth said the as-yet sketchy Republican Medicaid plan was intended to save $182 billion over seven years.