Discussions about transforming Medicaid into state block grants has entered its 14th month. Congressional and White House discussions last year were unable to resolve fundamental policy issues.
Attempting to break the congressional and Administration deadlock on Medicaid, the National Governors’ Association (NGA) adopted a six-page policy statement giving states greater control over the program. Key Republican and Democratic governors testified before Congress at the end of February, but the legislation has yet to be drafted, and there are rumors that the general consensus among NGA has broken down somewhat as the details are fleshed out.
NGA Chairman Gov. Tommy Thompson (R-Wis.) has called the NGA proposal a “very, very fragile compromise.” Because of the lack of details, the potential ramifications for counties is not known completely
NGA’s Medicaid policy tries to meld the guarantee to benefits for eligible individuals with a block grant limiting federal expenditures through a capped, per-person payment and an overall fixed payment to each state. States would have much more flexibility in operating the program.
Counties could experience cost shifts through state restrictions on eligibility. States would define and determine eligibility for persons with disabilities, and they would no longer have to cover children over the age of 12.
The NGA proposal would guarantee a number of basic health services. States would have “complete flexibility,” however, to define the amount, duration and scope of services. Counties could bear the brunt of payments for services in excess of those covered by the state.
Using a yet to be determined formula, states would be given a “maximum federal allocation” to cover Medicaid enrollees. The maximum state match to draw down federal dollars would be reduced from 50 percent to 40 percent.
An “umbrella” fund would be available to those states which have spent all of their Medicaid allotment, but whose growth in eligible populations was not estimated accurately. States would have “complete authority” to set provider and health plan rates.
While the words “block grant” do not appear in the NGA document, the financing proposal appears to have the qualities of one.
To the extent that the federal allocation falls short of the funds needed to cover eligible individuals, counties may have costs shifted to them. A lower, 40 percent state match would give states the ability to put less money into the program, which may shift costs.
Additionally, to the extent that this proposal adopts the congressional approach eliminating “statewideness” by allowing states to reimburse and enter into contracts with different providers differently, depending on the area of the state in which they operate, there may be the potential for states to enter into different agreements with different counties.
The Congressional Budget Office will have to estimate the savings from the NGA proposal. The amount of budgetary savings and the final legislative outcome are far from certain.
(Prepared by Tom Joseph, deputy legislative director.)
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