Governors Call for More Medicaid Flexibility

Governors Call for More Medicaid Flexibility
September 23, 2011

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

As a bipartisan committee of House and Senate members meets in Washington, DC to discuss the nation’s fiscal future, Republican governors are calling for increased flexibility in administering Medicaid, an important element of the budget.

Medicaid is already the largest budget line item for most states, and giving states the flexibility to apply their own reforms to the program is key to preventing a tide of increased costs, according to Republican Gov. Haley Barbour of Mississippi.

“We should not have to come to Washington on bended knee and kowtow for waivers to do these kinds of things,” Barbour said in a press conference.

Barbour and fellow governors released a list of 31 desired reforms to the program in a recent proposal from the Republican Governors Association (RGA). The RGA Chairman, Virginia Gov. Bob McDonnell, joined Barbour in announcing the reform proposal and said the need for process reform is paramount for states facing impending budget crises.

“Medicaid consumes an ever-increasing and frightening share of state budgets, and the current pace of spending is unsustainable,” said McDonnell.

Coming Expansion Worries States

President Obama’s health care law, which mandates a vast expansion of Medicaid eligibility to millions of Americans in 2014, includes a “maintenance of effort” provision which forbids states from cutting back on eligibility in the interim as a cost-saving method. It allows for waivers from this provision to be granted by the federal government in the case of a severe budget deficit, but to date only Arizona has successfully applied.

Christie Herrera, director of the health and human services task force for the American Legislative Exchange Council, says many states, not just Republican-led ones, are demanding more flexibility.

“The states are too diverse for a Medicaid policy by federal diktat. So yes, flexibility is critical. And it’s not just a Republican issue. The Democrat-controlled Washington legislature, along with Democrat Gov. Christine Gregoire, will submit a proposal to the federal government demanding more control over Washington’s Medicaid program,” Herrera said.

But Herrera remains skeptical the administration will approve such appeals.

“I think, institutionally, [the Centers for Medicare and Medicaid Services] isn’t inclined to go along with new Medicaid reform ideas from the states. Remember, these are the people that dropped the ‘S’ from ‘SCHIP.’ I wouldn’t be surprised if Medicaid meets the same fate,” Herrera said.

States Have Access Concerns

One of the problems addressed in the RGA proposal is declining health care access. Holly Carter, health policy coordinator for the Bluegrass Institute for Public Policy Solutions in Kentucky, says lack of flexibility prevents innovative solutiosn to the problem.

Medicaid flexibility is crucial for the future fiscal stability of states. As the RGA report discusses, states are paralyzed by the current financing structure of Medicaid. They have little room to innovate without going through the lengthy approval process from the federal government,” Carter said. “As a result, their efforts to improve the cost and outcome effectiveness of Medicaid are stalled or actively discouraged.”

Carter notes RGA’s suggestions are well-supported by limited experiences in other states, such as Rhode Island, where broader waivers have been allowed under previous administrations.

“Up to this point, Washington has been largely unwilling to bend on changes to the current federal-state financing of Medicaid, with a few exceptions. The governors are interested in solutions and successful examples that clearly demonstrate how flexibility would improve patient access and care,” Carter said. “RGA is offering diverse proposals to reform Medicaid and improve health care for America's neediest citizens.

“Every state has unique challenges and needs, and often Medicaid patients are poorly served by the encroachment of the federal government,” she added. “Instead of rejecting the individual mandate in Obamacare and ending it at that, they provide a menu of options for fundamental reforms to improve health care and emphasize personal responsibility.”

Simpler Solution

According to Herrera, the RGA’s ideas are solid—but reform has to begin with a simpler aim.

Overall, I liked the report, and I applaud the effort to really get into the weeds with Medicaid policy. However, I’d prefer a four-word report to the feds: ‘block grants’ and ‘repeal ObamaCare,’” Herrera said.

Internet Info:

“A New Medicaid: A Flexible, Innovative and Accountable Future,” Republican Governors Association: http://www.rga.org/homepage/gop-govs-release-medicaid-reform-report/

As a bipartisan committee of House and Senate members meets in Washington, DC to discuss the nation’s fiscal future, Republican governors are calling for increased flexibility in administering Medicaid, an important element of the budget.

Medicaid is already the largest budget line item for most states, and giving states the flexibility to apply their own reforms to the program is key to preventing a tide of increased costs, according to Republican Gov. Haley Barbour of Mississippi.

“We should not have to come to Washington on bended knee and kowtow for waivers to do these kinds of things,” Barbour said in a press conference.

Barbour and fellow governors released a list of 31 desired reforms to the program in a recent proposal from the Republican Governors Association (RGA). The RGA Chairman, Virginia Gov. Bob McDonnell, joined Barbour in announcing the reform proposal and said the need for process reform is paramount for states facing impending budget crises.

“Medicaid consumes an ever-increasing and frightening share of state budgets, and the current pace of spending is unsustainable,” said McDonnell.

Coming Expansion Worries States

President Obama’s health care law, which mandates a vast expansion of Medicaid eligibility to millions of Americans in 2014, includes a “maintenance of effort” provision which forbids states from cutting back on eligibility in the interim as a cost-saving method. It allows for waivers from this provision to be granted by the federal government in the case of a severe budget deficit, but to date only Arizona has successfully applied.

Christie Herrera, director of the health and human services task force for the American Legislative Exchange Council, says many states, not just Republican-led ones, are demanding more flexibility.

“The states are too diverse for a Medicaid policy by federal diktat. So yes, flexibility is critical. And it’s not just a Republican issue. The Democrat-controlled Washington legislature, along with Democrat Gov. Christine Gregoire, will submit a proposal to the federal government demanding more control over Washington’s Medicaid program,” Herrera said.

But Herrera remains skeptical the administration will approve such appeals.

“I think, institutionally, [the Centers for Medicare and Medicaid Services] isn’t inclined to go along with new Medicaid reform ideas from the states. Remember, these are the people that dropped the ‘S’ from ‘SCHIP.’ I wouldn’t be surprised if Medicaid meets the same fate,” Herrera said.

States Have Access Concerns

One of the problems addressed in the RGA proposal is declining health care access. Holly Carter, health policy coordinator for the Bluegrass Institute for Public Policy Solutions in Kentucky, says lack of flexibility prevents innovative solutiosn to the problem.

 

Medicaid flexibility is crucial for the future fiscal stability of states. As the RGA report discusses, states are paralyzed by the current financing structure of Medicaid. They have little room to innovate without going through the lengthy approval process from the federal government,” Carter said. “As a result, their efforts to improve the cost and outcome effectiveness of Medicaid are stalled or actively discouraged.”

 

Carter notes RGA’s suggestions are well-supported by limited experiences in other states, such as Rhode Island, where broader waivers have been allowed under previous administrations.

 

“Up to this point, Washington has been largely unwilling to bend on changes to the current federal-state financing of Medicaid, with a few exceptions. The governors are interested in solutions and successful examples that clearly demonstrate how flexibility would improve patient access and care,” Carter said. “RGA is offering diverse proposals to reform Medicaid and improve health care for America's neediest citizens.

 

“Every state has unique challenges and needs, and often Medicaid patients are poorly served by the encroachment of the federal government,” she added. “Instead of rejecting the individual mandate in Obamacare and ending it at that, they provide a menu of options for fundamental reforms to improve health care and emphasize personal responsibility.”

 

Simpler Solution

 

According to Herrera, the RGA’s ideas are solid—but reform has to begin with a simpler aim.

 

Overall, I liked the report, and I applaud the effort to really get into the weeds with Medicaid policy. However, I’d prefer a four-word report to the feds: ‘block grants’ and ‘repeal ObamaCare,’” Herrera said. 

 

Benjamin Domenech (bdomenech@heartland.org) is managing editor of Health Care News.

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)