From Tapped:
A BLOCK GRANT BY ANY OTHER NAME. With the marquee battles over Social Security and tort reform claiming the bulk of the headlines, this year’s sleeper domestic issue could turn out to be Medicaid, which is in greater peril now than perhaps ever before. As rising medical costs and increasing numbers of people pushed out of employer-based medical coverage put an ever-greater strain on state Medicaid financing (see Maine, Missouri, North Carolina, Mississippi, Wisconsin, Virginia ...) George W. Bush's helpful solution is to cut back federal Medicaid funding even more. Much has been said about the illusory quality of the White House’s assurances that $60 billion can be saved from the federal portion of the program by eliminating “waste, fraud, and abuse” (ah, the old reliable) -- a phoniness that Health and Human Services secretary Mike Leavitt only further underscored by his evasive testimony before the Senate Finance Committee yesterday.
But the bigger issue could turn out to be as-yet unspecified plans to give states more flexibility in funding and administering the so-called “optional” components of Medicaid, which encompass about one-third of all beneficiaries and (since they tend to involve patients with more chronic needs) two-thirds of all expenditures.
Bush had proposed transforming the entire Medicaid program into a capped block grant system in 2003, but immediately ran into the opposition of most governors and the promise of a filibuster from Democrats. Leavitt and the White House have made a big show of promising that no such block grant proposal is being revived now. But the language found in the budget proposal as well as in Leavitt's statements (pdf) has been so vague when it comes to the issue of granting states “flexibility” and so pointed in making the firm distinction between mandatory and optional components, that most observers think their intention is to turn at least the optional portions of Medicaid into a capped grant, with the deal sweetened for the states by the offer of greater “flexibility” to cut back on services and eligibility rules. A filibuster threat is likely not an option, because Republicans will push such changes through the budget reconciliation process. It’s important to remember who the new Senate budget committee chairman is: Judd Gregg, an entitlement hawk who’s made no secret of his intention to tackle Medicaid. He’s gunning for the program. Social Security's not the only -- nor the most vulnerable -- entitlement in the GOP's crosshairs this year.
Incidentally, my limited anecdotal experience in discussing this issue suggests that a shocking number of people -- including, say, your average radio talk show host -- continues to have major difficulty distinguishing between Medicare and Medicaid. This has always struck me as a nice ancillary boon to Medicaid's defenders, ensuring that a means-tested entitlement program for poor people can enjoy some spill-off support from one of the durable, universal middle-class entitlements. It was a help in the big Bill Clinton-Newt Gingrich budget showdown in 1995-1996, and it still is.
