A GOP proposal to transform Medicaid into a block grant program could cost Georgia billions of dollars in projected federal spending, which some groups fear will cut access to health care for thousands of the state's neediest residents.
The state could see a $47.6 billion cut in federal funding from 2012 to 2021 if the new health care law is repealed and Medicaid became a block grant, a recent study by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured shows.
Proponents of the concept, including Gov. Nathan Deal, say giving a lump sum for Medicaid would allow states to find innovative solutions to improve care and better control costs with fewer federal rules. The proposal is part of House Budget Committee Chairman Paul Ryan's plan to trim $5 trillion in federal spending over the next 10 years.
“What we’re looking at right now is a Medicaid that’s going to be bankrupt,” said U.S. Rep. Tom Price, R-Ga. “We’re trying to save the program, not destroy it.”
But health providers say Ryan’s prescription for saving Medicaid, capping federal funding, would likely cut reimbursements to doctors that already don’t cover the cost of treatment and haven’t been increased in more than a decade. That, in turn, would reduce access to care, particularly in low-income urban and rural areas.
“It would kind of make me re-evaluate … whether I would accept it at all,” said Dr. Marti Gibbs, who already limits the number of new Medicaid patients she sees in a day at her Gainesville-area practice.
Price, also a doctor, and other supporters of block grants say they would give states flexibility to fashion Medicaid programs to fit their unique needs.
But Tim Sweeney, a health care analyst with the Georgia Budget and Policy Institute, said there is no flexibility that would allow states to provide the same services to the same number of people with 40 percent to 50 percent less funding. Georgia already has limited eligibility for Medicaid more than some states, he added.
“It would put pressure on the state to either significantly increase its investment in the program or it would force dramatic cuts," Sweeney said.
Under Ryan's proposal, Georgia would be among the states that take the biggest hit in federal funding, in part because it already has a high rate of uninsured and more restrictive Medicaid eligibility than other states. That gives it more to gain in federal dollars from the health care overhaul's expansion of the program in 2014.
Medicaid and PeachCare for Kids -- providing coverage to 1.6 million people -- cost the state roughly $1.7 billion this fiscal year, with the feds adding $5 billion. Officials expect the expansion to add 600,000-plus Medicaid recipients.
Ultimately, block grants would add to the number of uninsured in Georgia, Sweeney said. In 2009, Georgia had the fifth-highest percentage of uninsured people with 1.9 million residents, or 20.5 percent, according to the U.S. Census Bureau.
The rising number of uninsured increases health care costs for everyone, said Linda Lowe, a consumer health advocate. Estimates show the costs for caring for the uninsured can add $1,000 a year in premiums to the typical employer-provided family insurance plan, she said.
Cutting Medicaid eligibility doesn’t mean all those individuals will become uninsured, said Michael Cannon, director of health policy studies at the libertarian Cato Institute in Washington. With more flexibility, states could use their block grants to help people find private insurance, Cannon said.
“There are lots of people on Medicaid who don’t need to be there,” he said. “If the government makes something available, people are going to stop buying it themselves.”
Cannon pointed to the 1996 welfare reform as a block grant model that succeeded despite people’s fears.
Still, providers say block grants would hurt hospitals, especially those already losing money caring for the poor and uninsured. By 2021, Georgia hospitals could see annual Medicaid payments fall by $3.3 billion, or 46 percent, relative to the current system including the effects of the new health care law, the Kaiser study shows.
Some 54 percent of Georgia hospitals lose money on patient care, said Kevin Bloye, a spokesman for the Georgia Hospital Association. Lower Medicaid payments might lead to job or service cuts, he said.
It would be devastating to counties that have public hospitals such as Grady Memorial Hospital, said Fulton County Commission Chairman John Eaves, who recently joined other local government leaders to protest the proposal in Washington. It puts pressure on counties, which already help to cover the cost of indigent care, to help make up the loss in Medicaid dollars, he said.
It’s hard to know what the impact will be at the local level, but it will likely affect some counties more than others, said Beth Brown, a spokeswoman for the Association of County Commissioners of Georgia.
Cuts in federal funding would call for reduced spending or higher taxes at the state level, said Kelly McCutchen, president of the Georgia Public Policy Foundation. But better results can be achieved with less money by encouraging innovation instead of a one-size-fits-all program based on price controls, McCutchen said. For instance, chronically ill people could get incentives for following their disease management plans, he said.
Limiting Medicaid funds is moving in the wrong direction in efforts to improve care, said Dr. Harry Heiman with the Morehouse School of Medicine.
“Do we want to pay for health care upfront by providing people with good primary care and good preventive care in the communities where they live?” he said. “Or do we want to wait until they crash and burn and end up in the hospital?”
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