Congress, Governors Struggle with Shift in Medicaid Funds

Article excerpt

Congressional leaders are negotiating with Republican governors over a plan to turn over to the states control of Medicaid, the nation's largest and most expensive welfare program.

If adopted, the proposal would send as much as $88 billion in federal funds now spent annually on the medical program for the poor directly to the states in lump-sum payments. The plan also would allow the states to spend up to half of the money in areas other than health care.

The proposal, though not part of the Contract with America, has emerged as an important objective for congressional Republicans as they try to reduce the federal budget deficit while cutting taxes.

The proposal would end the entitlement status of Medicaid, which guarantees health insurance to anyone who meets eligibility criteria based on financial need and other factors. Each state would receive a lump-sum payment, or block grant, for the general purpose of providing medical care to the poor.

There is no guarantee that current Medicaid recipients would get coverage under the proposal. Nor is there any assurance that doctors and hospitals would be paid for treating these people. On the other hand, states could provide coverage to some people who do not qualify for Medicaid under current law.

"The approach taken in welfare reform is the right approach," said Gov. Jim Edgar of Illinois, the Republican governors' chief negotiator with Congress. "We'd like to see that same flexibility with Medicaid, which is a much bigger expenditure for most states. With more flexibility, we could control the cost of the program."

The proposal, a copy of which was obtained by The Washington Post, would allow states to use Medicaid money however they wish in providing medical assistance to low-income people. But they also would be allowed to transfer as much as half of their federal Medicaid funding to use for other purposes, such as nutrition or child-care programs.

Members of Congress involved in the negotiations are expected to respond to the Republican governors' proposal in the coming weeks. …