While five Republican governors have flatly refused to expand Medicaid under the Affordable Care Act, another five have said there's one way the expansion could work.
Those governors want "block grants," which limit the amount of federal dollars states get to one lump sum but have fewer rules on how it must be spent. Officials are then free to figure out what works best in their states. Under the current system, federal funding is open ended — increasing if enrollment or health care costs go up — but comes with a lot more instructions.
"They ought to be giving all states more flexibility, block grant the money and let us find our own unique ways with our own unique populations and demographics to find the best way to provide health care," Utah Gov. Gary Herbert told Politico at a meeting of the National Governors Association last month. "The key word is flexibility."
Georgia Gov. Nathan Deal and the state's top health official, weary of the federal red tape wrapped around Medicaid, have both talked about block grants as a possible option for the state.
Right now, if states want to do anything innovative with Medicaid, they have to go through a lengthy application process for a waiver that can take more than a year, said David Cook, head of the Georgia Department of Community Health, which administers Medicaid.
"The amount of manpower and time and resources that are consumed in applying for [a waiver]. ... It is just an outdated and cumbersome process," Cook said.
Critics of the concept worry the "flexibility" some governors are seeking could lead to states serving fewer people and delivering fewer services.
"I understand the interest in greater flexibility, but block grants would be a disaster," said Russ Toal, former state Medicaid chief who directs the Center for Rural Health and Research at Georgia Southern University. "Fast-growing states like Georgia would likely be hurt the most."
Toal said the feds have historically allocated less and less to block grants over time; in addition, he said, block grants are often based on predetermined rates of inflation and don't take into account the effects of economic downturns or increasing populations.
The end result, opponents say, would be higher taxes or cuts in the program — either stricter eligibility requirements, reduced services and/or lower reimbursements for doctors.
The block grant idea that was a major part of U.S. Rep. Paul Ryan's deficit reduction proposal last year was designed to save the federal government money, which meant less money going to the states, said Tim Sweeney, a health care analyst at the Georgia Budget and Policy Institute.
Gov. Deal supported the idea at the time. Meanwhile, the Obama administration has been vocal in its opposition to Medicaid block grants.
Georgia already has some of the most restrictive eligibility requirements and is among the lowest spenders on Medicaid in the nation.
No one is saying let's leave the poor and disadvantaged uncovered, said Kelly McCutchen, CEO of the Georgia Public Policy Foundation, which supports market-based approaches to public policy issues.
"We're all for designing a plan, but let's make it flexible and affordable," said McCutchen, who supports the block grant idea.
Conservative leaders point to Rhode Island as proof that a Medicaid block grant can work.
In January 2009, the Bush administration granted the state a waiver that capped federal Medicaid spending in exchange for greater flexibility. State officials originally boasted the waiver saved the state $100 million in 18 months, though a recent study found it saved a more modest $23 million over three years.
One key reason that some governors find block grants so appealing: the hundreds of thousands of pages of federal regulations and instructions on how states should run their Medicaid programs, said Matt Salo, head of the National Association of Medicaid Directors.
Salo cautioned, however, that state leaders think hard before embracing a block grant system.
Many people have said that Temporary Assistance for Needy Families — a block grant established in 1996 as part of welfare reform — has been a wild success, Salo said. But he points out that the dollar amount states agreed to hasn't changed in 16 years.
Another federal block grant that funds preventive care services has also been targeted for elimination by Congress every year for the past decade because there are almost no rules, so it's impossible to measure the grants' effectiveness from one state to the next.
"[Block grants] sound like a great deal, but you better make sure the money is right," he said. "And whatever flexibility you get, be very, very careful that the next Congress doesn't say 'Oh, wow, we really didn't mean to give you that much. We're taking it back,' because that's exactly what they would do."
The story so far
The U.S. Supreme Court in June upheld key provisions of the Patient Protection and Affordable Care Act, but it rejected the idea that the federal government could force the states to expand Medicaid.
Gov. Nathan Deal said a day later that he would wait until the November elections before making decisions on Medicaid or on setting up a state health insurance exchange, on the chance that Republicans would take over the White House and the Senate and repeal the law.
The expansion in Georgia would add about 650,000 uninsured people to Medicaid (and about 17 million nationwide). Deal has said he is concerned that the state will not be able to afford its share of the cost.
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