Medicaid

The Medicaid Wrecking Ball

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Think construction equipment, not Emmylou Harris.

If you're still not convinced that Medicaid, in conjunction with rules put in place by last year's health care overhaul, is wrecking state budgets, a reported piece in this morning's Wall Street Journal is here to remind you once again.

For those who've been paying attention, the basic storyline is fairly familiar at this point: The program has grown dramatically since its inception in 1965 thanks in large part to a federal-match structure that encourages ill-considered expansion. Thanks in part to the downturn, enrollment in the program has grown dramatically in recent years while state revenues have fallen. Temporary higher levels of federal funding included for the program included in the stimulus package were originally set to run out last summer, but are now schedule to go away this year. Normally states would respond to the reduced federal funding levels by cutting eligibility levels, but a provision in last year's health care overhaul requires states to keep eligibility levels the same or higher—or risk losing billions in federal funding to implement the overhaul in 2014.

But the article does a good job of underlining the little-noticed fact that although Republicans are complaining about Medicaid the loudest, it's not strictly a Republican problem:

As a result, every one of the country's 29 Republican governors has asked the federal government to waive the requirement, with New Jersey penciling a waiver into its budget. Some states with Democratic governors, including Washington, are also quietly pressing for the change.

"We're asking for cooperation…so that we can work our way through what is a very challenging time for us," Washington Gov. Christine Gregoire said at a meeting of the National Governors Association in Washington this weekend, where curbing Medicaid costs was a top issue.

…Delaware Gov. Jack Markell, a Democrat, may also pursue a waiver to reduce Medicaid eligibility. "We haven't ruled anything particular in or out yet," Mr. Markell said, adding that it has been difficult to rein in Medicaid costs and "the population that qualifies has increased significantly."

Obligatory geek allusion.

Nor is it only a problem in states that have taken an oppositional stance to the program. Indeed, states that passed expensive expansions are arguably in the toughest position, with higher costs that they cannot now easily reduce. Maine, for example, expanded its Medicaid eligibility, building the program into a more expensive and more generous program—but is now restricted in terms of how it can roll back those changes:

Since taking office last month, Maine Gov. Paul LePage, a Republican, has brought his state's Medicaid woes to President Barack Obama, Vice President Joe Biden and Ms. Sebelius.

Maine has among the country's most generous Medicaid standards. Around a quarter of the state's residents are in the program, which costs $2.6 billion a year.

To help cover a nearly $1 billion budget gap, Mr. LePage wants the Obama administration to let Maine drop its standard to match the federal ceiling—a move he says would save the state at least $70 million a year. He says the administration is so far refusing to grant the state an exemption.

The health law allows states that have budget deficits to eliminate certain higher-earning enrollees, though that provision applies only in a narrow amount of cases.

"We are being penalized for being overly generous," said Mr. LePage. "All we are asking for is latitude in how we work our own system."

It's a raw deal for the states: They fund a significant portion of the program (about 43 percent, on average), but despite putting up billions of their own money, they have very little say in how the program gets run.

I looked at how ObamaCare's Medicaid rules would affect the states in the October print edition last year. More on states and the need for Medicaid flexibility here.

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  1. A few states discussed rejecting the stimulus Medicaid money originally because of those provisions that made it impossible to return things to normal once the money went away.

  2. “We are being penalized for being overly generous,” said Mr. LePage. “All we are asking for is latitude in how we work our own system.”

    Who said it was your system? Air raid, freshmen!

  3. Wait a minute! That looks like my apartment!

    1. Can’t be. It’s not a multi-family igloo.

      1. I have an igloo built to government specifications.

        1. How do you comply with the temperature codes?

          1. No windows.

  4. It’s a raw deal for the states … they have very little say in how the program gets run.

    I call bullshit. They can simply tell the feds to fuck off and scrap their Medicaid program entirely. They just want the federal money so they can buy the votes of their poorer citizens.

    1. Nope. Still a raw deal, because scrapping your Medicaid program and foregoing federal matching funds does not release your residents from paying the federal taxes used to support Medicaid in other states.

      1. Your residents aren’t paying the federal taxes used to support Medicaid in other states. That money is coming from bond purchasers.

      2. If the state stops making Medicaid payments to its residents, it shouldn’t take long for all the recipients to leave the state for greener pastures.

  5. Wait. I thought the Republicans were just slashing public employee benefits because the Kochtopus told them to.

    1. It’s called union busting now.

  6. Some states with Democratic governors, including Washington, are also quietly pressing for the change.

    Gregoire has no choice. There’s no such thing as Republican government in Washington, so there’s no one else to blame when the budgets implode.

  7. Why didn’t these state govts rush through a rollback while Obamacare was plodding through Congress?

    1. Because they couldn’t roll back anything without Sebelius’s approval, plus the stimulus funds had “maintenance of effort” requirements. ObamaCare just formally locks it all in for perpetuity – not much of a change, really.

      So there was no point trying.

    2. Partially because the stimulus funds were still flowing. There were a few governors, like Bobby Jindal, who discussed forgoing the stimulus Medicaid funds because of the issue when they went away, but naturally they were called crazy for proposing giving up free money.

      See here and here.

      Presumably most of the governors figured that it was a losing political battle to turn down the free money, and decided to fight the battle after the money was gone.

  8. Hey why not do this the way Gov Scott Walker is….move it out of the legislature where public hearing are included over to the state Dept head of Medicaid that is a Governor appointed position…let’s say yes to eliminating democracy….
    Meanwhile just remember….Move the discussion up to the real question/level?.This is really about (the people) versus (politician + lobbyist). In Wisconsin, this was made perfectly clear by Gov Walker’s supposed call with the Koch brothers (billionaires)?..The strategy is to distract people from this real issue??Distraction is almost always used (Remember in Egypt when the authorities tried to distract people into thinking the issue was stability?..) Where you agree with unions or not (which I have some problems with), it is time for the current worker bees and future worker bees to come together?.the 1% already have 40% of our countries’ wealth?will we not respond as a cohesive until they have 80%)????????

    1. Aw Jeez…..really ?

      1. It has been here before under many different names. Protean and vile.

    2. “move it out of the legislature where public hearing are included over to the state Dept head of Medicaid that is a Governor appointed position…let’s say yes to eliminating democracy”

      You mean the legislature where the democrat legislators fled the state rather than show up to vote? Just clarifying.

      1. It is called fillibuster…

        1. No, a filibuster is a different thing. But it’s functionally similar, sure. You would think that libertarians would be happy that government had effectively shut down (except that it really didn’t since a lot of issues can go forward in the Senate without any Democrats present, but anyway).

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