THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, September 23, 1995 TAG: 9509230015
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 60 lines
To keep their promise of a balanced budget by 2002, GOP legislators have to save money on entitlements. Their latest proposal concerns Medicaid.
It covers 36 million low-income Americans including one-third of all births, 20 percent of the nation's children, 6 million people with disabilities and more than two-thirds of elderly patients who have depleted savings and are in need of long-term care. For them Medicaid is the safety net of last resort, and 70 percent of Medicaid dollars are spent on senior citizens.
The program is now costing $156 billion a year. About $90 billion comes from the federal government; the rest is paid by the states. Growth in spending has been running at 10 percent a year because medical costs have outpaced inflation and because the pool of eligible recipients grows as the country ages.
The Republican plan is simple, perhaps too simple. Medicaid money would be turned over to the states in the form of block grants. States would be required to spend the money on health care. At least 40 percent would have to be on groups now covered - low-income families, disabled people and seniors needing nursing-home care. Most federal strings would be loosened. States would decide how to allocate money and who would be eligible.
In exchange for greater freedom, states would get less money. The federal government would permit the program to grow at an average of 4.5 percent a year, saving $182 billion over seven years.
But someone would pay for those savings. Republicans claim that states would eliminate waste. They also argue that managed-care programs can provide the same services for less money. In other words, there is such a thing as a free lunch.
Some analysts don't buy that rosy scenario. The Wall Street Journal quotes an Oregon Medicaid expert who believes a cut of 15 percent in services would be required. The Brookings Institution predicts freezes on reimbursements and a tightening of eligibility rules.
That seems plausible. If the cost of services and the demand for them keep growing but funds don't, something's got to give. Health-care providers will be paid less and health-care recipients will get less - or fewer will be eligible.
These block-grant proposals are troubling because they represent an abdication of responsibility. The GOP claims it's returning power to the states, but it's actually washing its hands of a problem the federal government created and hasn't solved. Passing the buck to the states may be politically expedient, but it doesn't address runaway health-care costs and patients in need.
Trusting states to carry the ball could be perilous. The quality of solutions adopted is likely to vary widely. Some states can be relied on to be generous and innovative, others may be niggardly and incompetent. Poor states may deliver poor care. And if states can't solve a problem that's stumped Washington, it's the patients - poor, old and disabled - who will suffer the consequences of this medical experiment. by CNB