UPTON: Obama budget’s destructive impact on Medicaid

Increasing its rolls by millions will degrade care

By Fred Upton
Thursday, April 11, 2013

It’s been three years since the Democrats in Congress passed President Obama’s sweeping health care plan and the tragedy of the left’s so-called good intentions continues to mount.

Obamacare’s treatment of Medicaid — a program originally intended to assist low-income children, seniors and the disabled — is one of the best examples of how the new health law not only traps vulnerable Americans in a broken and failing system, but then also expands it. Instead of enacting state flexibility
and other common-sense reforms to fit the unique needs of this diverse group of Americans, Obamacare dumps millions of new able-bodied adults into an already demonstrably dysfunctional program. Moreover, the president’s fiscal year 2014 budget released Wednesday leaves states more confused about this administration’s Medicaid reform plans and simply encourages unsustainable spending. The administration’s vision for the program’s future fails to improve health care for the poor.

The three-year-old law could add more than 25 million previously ineligible or non-enrolled adults to an already struggling program. A recent report prepared by the majority staff of the House Energy and Commerce Committee, of which I am chairman, points to an undeniable conclusion: Medicaid under Obamacare not only lacks needed reforms, it also doubles down the Democrats’ inflexible, one-size-fits-all ideology. It represents the worst of liberal social engineering, and — as usual — the poor pay the price

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Obamacare originally planned to use Medicaid to achieve its health care coverage goals. The law mandates states expand eligibility, making childless adults who earn up to 138 percent of the federal poverty level part of the program for the first time. This change alone was supposed to cover approximately half of the new people covered under the health care law. The Supreme Court, however, held that the Medicaid expansion mandate was unconstitutional — removing a tremendous burden on states already struggling to manage the costs of their existing programs. Whether states opt into Obamacare and add this new population is now optional.

Still, many states will choose to expand, particularly since Washington picks up 100 percent of the
cost for the first three years (2014-16) and at least 90 percent thereafter. At least 25 states have already made this choice. The financial “carrot” comes with a cost, though. States that add all these new people receive little flexibility in managing the influx. They must do as Obamacare says, or lose the money.

This new federal entitlement has not kicked in yet, but beginning Jan. 1, 2014, it will. At a time of record deficits and debt, and across-the-board cuts owing to sequestration, this Medicaid expansion will cost federal taxpayers at least $630 billion over the next 10 years. That could be enough money to fund the entire National Institutes of Health, the front-line agency doing research on finding cures for diseases like cancer and Alzheimer’s, or the entire Environmental
Protection Agency, and still reduce the federal deficit.

But Medicaid’s lack of state flexibility is its central problem. The federal government has traditionally forced states into a one-size-fits-all scheme through the power of its financial incentives and federal law. As mentioned above, Obamacare takes an already diverse Medicaid population that needs the help — low-income families with children, adults with long term disabilities, poor elderly Americans — and now adds millions of new able-bodied adults to the mix. If fully implemented, Obamacare could grow the program to include 85 million Americans representing a very wide set of health care needs.

Rather than modernizing the Medicaid program so that it could be flexible and adaptable to meet the individual health care needs of our nation’s poorest and sickest, Obamacare offered no such options. Instead, states were buried with federal mandates like the Maintenance of Effort that curbs program-integrity efforts. The outdated and burdensome waiver process also provides little incentive for innovation
and often makes it harder to improve care for the millions of vulnerable Americans that already depend on the program today. This is one of the many avoidable tragedies of Obamacare. Medicaid needed flexibility to innovate and a chance for reform, not a major influx of new individuals. Transforming the money spent on Medicaid today to a block grant is a way to give states the flexibility to target resources to provide better health care to these populations that need the most help. Democrats reject this idea, insisting that Medicaid recipients should remain trapped in a program that looks like it did nearly a half-century ago. So much for “forward.”

At a minimum, Democrats should work with Republicans to find ways to modernize the Medicaid program — not just grow its rosters. Providing states the flexibility they need to deliver health care within different Medicaid population categories is one approach that has garnered bipartisan support in the past. For example, during the Clinton administration, many Democrats supported an idea known as “per-capita caps,” noting the idea would provide “states with sufficient funds to maintain coverage,” while addressing the “top concerns of governors.” Flexible
approaches like this incorporate ways to provide targeted health reform to the diverse populations served by Medicaid.

Dumping millions of new people into an already strained system — while providing no flexibility or reform — is a cruel, unfair and cynical way to treat the most vulnerable among us. Caring first for their needs — not promoting a rigid liberal ideology — should be our higher purpose.

Rep. Fred Upton is a Republican member of the House of Representatives from Michigan.

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