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Medicaid Blend Rate Misses the Point

Posted By Nina Owcharenko On July 13, 2011 @ 1:09 pm In Obamacare | Comments Disabled

Conservatives should beware of policies that simply meet a budget target number without considering whether the underlying policy changes move a program in the right direction. Case in point: the Medicaid blend rate, which would replace the various federal matching rates for different categories of enrollees with one unified federal rate.

Yes, those on the left are attacking the blend rate proposal that would set one federal match rate in Medicaid and the Children’s Health Insurance Program (CHIP). That could lead conservatives to think it must be a good idea. But this misses the point. Conservatives need to judge these proposals based on whether they advance conservative principles for fundamental Medicaid reform. This proposal has several problems:

  • No real budget. First, unlike a block grant approach, this plan does nothing to put the federal share on a fixed budget. Under the block grant proposals, the federal contributions are capped at a dollar amount (and indexed from there). Under the blend rate, the federal share is still open-ended and therefore provides no long-term spending protections for taxpayers.
  • Strict federal control. Second, unlike the block grant approach, this plan offers states nothing in exchange. Under the leading block grant proposal, states are given extensive new flexibility and opportunities to manage their programs without massive federal interference. Under the blend plan, states are shackled with the same federal mandates—just with less federal money to administer them.
  • Ignores the main problem. Finally, all the commentary seems to sidestep the biggest issue facing Medicaid: the enormous expansion of the program enacted under Obamacare. No wonder the left is panicking. More than half of the promised reductions in the number of uninsured are dependent on expanding Medicaid. The left must certainly recognize that if the program already struggles to provide quality care and access to current beneficiaries, how in the world will it manage close to 25 million more Americans?

When it comes to Medicaid, the left typically argue or concede many of the problems in the program. The difference is that their solution is more money. Conservatives need to have their own solution, and it is not more of the same.

Now is the time for Congress to quit kicking the can down the road. Medicaid needs to be and should be reformed. In its fiscal plan, The Heritage Foundation outlines its plan for reforming Medicaid [1], starting with fully repealing Obamacare (and its unbearable Medicaid expansion). From there, it puts Medicaid on a budget with all other anti-poverty programs, mainstreams healthy moms and kids into private coverage, and (with the continued help of the federal government) gives states the tools and flexibility needed to provide quality care at lower costs to the most vulnerable in society. Any proposal should make significant progress toward this outcome.

The last time Medicaid was a serious part of a budget discussion, conservatives introduced important policy changes such as cost sharing based on income, limiting loop holes for eligibility, and loosening the benefit package restrictions, including for private coverage. At the very least, this round of budget talks related to the debt ceiling should focus on expanding those policy ideas that would save money for both state and federal taxpayers. As we highlighted last week [2], more bad health policy is the last thing lawmakers should consider as a solution to the federal government’s spending problem.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/07/13/medicaid-blend-rate-misses-the-point/

URLs in this post:

[1] plan for reforming Medicaid: http://savingthedream.org/what-it-covers/medicaid/

[2] As we highlighted last week: http://www.foundry.org/2011/07/08/debt-ceiling-debate-making-bad-health-policy-worse-doesnt-justify-budget-savings

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