As a joint state-federal program, Medicaid has long been riddled with tension over who gets to make what decisions. Both parties foot a significant part of the bill, so it’s no surprise that each wants a big say in how that money gets spent. The federal government sets certain parameters — particular populations and benefits that every state has to cover — but beyond that, it’s an ongoing negotiation with states over what changes they can or cannot make. Most states have about a dozen or so Medicaid waivers, which allow them to try new ideas or cover a new population.
Playing a central role in this debate lately has been Texas Gov. Rick Perry (R), who has not been shy about advocating for greater state flexibility under the Medicaid program.
Last November, Perry gave legs to the idea that states might drop out of the program altogether, telling Fox News’s Greta Van Sustren that he’d “like to see the states be given the opportunity to opt out of the Medicaid program that we are looking at today.” As chair of the Republican Governors Association, Perry petitioned the Obama administration to drop a health-care law provision that requires states to keep all current Medicaid patients on the rolls through 2014.
In the regulatory realm, too, Perry has pursued some ambitious waivers to reshape his state’s Medicaid program. In 2008, under the Bush administration, Texas applied for a waiver allowing it to limit the number of beneficiaries and create a comparatively sparse benefits plan, among other changes. This year, Perry signed legislation that compels the state to apply for a Medicaid block grant. The idea is that Texas would accept a capped amount of federal Medicaid funding in return for more flexibility on how to spend this money.
But there’s a pretty wide disconnect between what Perry says he would like to change about Medicaid in Texas and what he’s been able to accomplish: His biggest reform proposals have hit dead ends under both Democratic and Republican administrations.
The Bush administration rejected Texas’s 2008 waiver request. There was “no precedent,” an administration official said in explaining the decision, in approving an “annual benefit limit as low as” the Perry administration proposed. Michael Leavitt, the Health and Human Services secretary at the time, recently told the New York Times that all the flexibilities Texas wanted weren’t justified by the benefits that enrollees would get in return.
Perry’s more recent proposal to opt out of Medicaid was pretty much pulled off the table by Texas Republicans after a state analysis showed that it would cost Texas billions in federal funds.
Likewise, his block-grant proposal will almost certainly be dead on arrival in Washington. President Obama has opposed block-grant financing of Medicaid; his administration fears it could leave states shorthanded and unable to cover vulnerable populations.
So despite the sweeping reforms that Perry has proposed, the Texas Medicaid program remains pretty vanilla. It mostly hews to the federally mandated minimums in terms of what populations it covers, adding on coverage for a few optional populations, including pregnant women and patients in long-term care. Since Perry took office in 2000, Texas has received six waivers to do things that a number of other states are doing, too. For example, it has used multiple waivers to expand Medicaid managed care, mirroring a national trend of moving Medicaid patients into privately run programs to streamline costs and make care more efficient.
Facing budget shortfalls, Texas has relied on cuts to Medicaid provider rates, along with 35 other states. It has also joined 29 other states in looking to control pharmacy costs as another way to rein in the entitlement program’s costs.
In the end, Perry’s Medicaid record might be less relevant to what the state’s program looks like today and more pertinent to what he wants to do in Washington. A President Perry could approve all those flexibilities that he’s been unable to gain as governor.
“I see the Perry presidency as one with a theme of returning power to the states,” says Arlene Wohlgemuth, who directs health policy for the conservative Texas Public Policy Foundation. “I would expect President Perry to give states that freedom, to continue to show that they can deliver better care for less money.”