Why Medicaid Gums Up Machinery of Budget Deal GOP Unbending on Need to Curtail Costs and Shift Power to States

Article excerpt

CALL it Medicaid madness. Washington politicians haggling over the federal budget have called the 30-year-old entitlement a "deal-breaker," and the biggest obstacle to reaching an agreement.

While President Clinton insists on preserving government guaranteed health care for the disabled, the elderly, and the poor, his Republican adversaries are adamant about curtailing spending and entrusting more power to state officials.

Even as the negotiations continue in fits and starts in the nation's capital, state leaders across the country are struggling to bridge their own differences over just how to grapple with the program's runaway costs. Their interest is understandable. Medicaid is by far the fastest growing portion of state spending - sometimes devouring a third of state budgets. Nationally, Medicaid spending eclipses the next biggest program under which federal funds are given to states - the highway program - by five times.

California's experience with rising costs typifies the challenges facing reformers at the state and federal level. With a burgeoning indigent and immigrant population, Gov. Pete Wilson (R) has persistently battled Washington for more Medicaid funds. When he is not warning about the economic consequences of rising costs, the governor is pointing to the federal program's inequities.

"In California, we have more than 14 percent of the nation's poor patients, yet New York, with only 9 percent, is the single largest recipient of federal {Medicaid} money," says Tim Ransdell, head of the California Institute for Federal Policy Research.

Indeed, government statistics show that New York absorbs 13 percent of federal Medicaid dollars, while California gets just 9 percent. That's because New York spends three times as much to care for each patient as does California, Mr. Ransdell says. The message, he claims, is that Washington rewards inefficiency.

How much money should be doled out, and for what reasons, underlies the negotiating going on in Washington. The GOP is calling for a lump-sum federal Medicaid payment to states, which would direct the funds as they see fit. Washington would be out of the Medicaid business altogether. The GOP would reduce costs by forcing states to deal with a finite sum of money.

The White House, by contrast, wants to limit Medicaid spending by putting a cap on the dollars each individual can receive. …