Is the Obama Administration Giving States Flexibility When It Rejects Proposals to Reduce Medicaid Costs?


The Obama administration frequently refers to the state-level "flexibility" it gives states to manage their own health systems; its proposed rules governing ObamaCare's state based health exchanges employs the word 38 times. But that flexibility is often a mirage, especially when it comes to the single biggest state budget item: Medicaid. 

When states complain about not having flexibility to manage their Medicaid programs as they'd like, this is the sort of thing they're talking about. Via Kaiser Health News:

The Obama administration has rejected Hawaii's proposal to limit most adult Medicaid recipients to 10 days of hospital coverage per year, which would have been the strictest in the nation.

Instead, Hawaii has been approved to implement a 30-day hospital coverage limit starting July 1, state and federal health officials say. Exempted from the limit are children, pregnant women, those undergoing cancer treatment, the elderly and the blind and disabled.

The Centers for Medicare and Medicaid Services is still mulling aproposal from Arizona last September to limit adult Medicaid patients to 25 days of hospital coverage  a year.

It's also why converting Medicaid's system of federal matching dollars, which encourages states to ratchet up spending by giving them roughly a dollar of federal money for every home state dollar they put toward the program, to a block grant program paired with increased state-level authority over their own Medicaid programs seems like such a no brainer. Rather than making spending increases easy and reductions painful, as the matching dollars system does, block grants would give states a predetermined amount of federal funding and then encourage them to experiment with the best ways to use that money. Right now, though, even the most basic attempts at experimentation have to wait endlessly for federal approval and many are rejected. 

Here's my 2011 take on block granting and the Medicaid mess in The Wall Street Journal