To California and New York, President Reagan's New Federalism looks like a Trojan Horse: harmless at first, disastrous later for the poor, the sick and the state budgets.
In thinly populated Vermont, it looks like a challenge but no big deal. In Mississippi, the nation's poorest state, the idea might not change much at all.
There is no wild enthusiasm anywhere, much less in Congress, for the newest version of New Federalism, in which Washington would shoulder basic Medicaid but turn over to the states $38.7 billion in federal programs between 1984 and 1991.
Reagan promised there would be "no winners or losers among the states," and while that may be true when the gates open in 1984, some states see ruination later on.
In fact, their officials say, New Federalism is a weapon with which the Reagan administration would eliminate Medicaid coverage for the nation's working poor and abolish 35 needed federal programs of education, transport, health care and energy assistance.
"The proposal is wholly unacceptable to New York taxpayers," said Brad C. Johnson, director of New York's Washington office. He predicted that if the plan is not modified, it would be "an unwanted child" when it comes to Congress later this month.
All sides agree that the version Reagan outlined in Baltimore 12 days ago blurs the distinction between winners and losers far more than the administration's January proposal. That one would have given the states both food stamps and the aid to families with dependent children (AFDC) program in a swap for Medicaid.
As ever in the perennial effort to reform the welfare system, states with large populations and/or extensive aid programs cried foul, arguing they would be short-changed and forced to slash benefits while low-spending Texas and Mississippi would suddenly seem generous.
Welfare reform has always foundered on these bedrock differences among the states, which involve resources and industrial history as much as traditional attitudes toward poverty.
As poorer states turned to Washington for help, welfare became a complex system in which some programs are funded half in the state legislature and half in Congress or run in one place and paid for in another.
This time, "the governors wanted a rational sorting-out of responsibility, but Budget Director David A. Stockman and those folks just wanted to cut the welfare budget at our expense," complained one state official.
Under the new plan, Washington keeps food stamps. The states take on the AFDC program ($8.1 billion) and the 35 programs ($30.6 billion), for a total burden of $38.7 million.
The federal government shoulders the $18.3 billion state share of Medicaid and gives the states a $20.4 billion trust fund to help pay for the programs, for a parallel load of $38.7 billion.
No state gets or spends less or more as the program opens in 1984 than in 1983: no winners, no losers. After that, however, the tally changes.
The federal Medicaid program would, in the words of administration officials, be "a leaner version" than Medicaid is now in the larger, mostly northern, states, and fatter than some southern states' approach.
"In California they were reimbursing everything including faith healing and acupuncture," said Rich Williamson, Reagan's assistant for intergovernmental affairs. Some cuts, he said "are fiscal necessities unrelated to the federalism objective."
Washington would pay basic Medicaid bills for the truly poor who get welfare, but would let the states pay the whole "acute care" tab for people not on welfare, people whose sudden medical bills alone drive them below the state poverty line. These "medically needy" people get Medicaid now in 34 states at a cost estimated to be $2.1 billion in 1984.
The medically needy getting care as the program opens would be "grandfathered in" to the new Medicaid, but a working poor person hit by a car 10 minutes later must pay the doctor bills himself.
Neither would the feds pay any more "optional" medical costs like eyeglasses, foot care or dental work, although the state's $900 million estimated 1984 costs for those items would also be grandfathered in the first year. The government simply won't spend the $1.2 billion it would have used for its share of the optional program.
Neither would Washington any longer cover unemployed parents who receive AFDC, nor aged, blind and disabled people who receive state but not federal welfare aid.
"For a state, what counts is where you'll be two or three years down the line," said Rick Curtis of the National Governors' Association. "Even in the first year there'll be attrition, but after that it just becomes unacceptable."
New York would be short about $500 million if it wants to provide all the services it now gives. "There's no way the state could fund that, and it's sure to be a lot larger by the time they finish this thing," Johnson said.
There are questions of definition. The Reagan plan would put up $8.4 billion for "long-term care," mainly nursing home fees, raising the ante yearly as medical prices rise. "But when does a person become a long-term patient? If an old 'medically needy' person goes back and forth from hospital to nursing home, are they covered?" asked Betsy Lyman, California's deputy director for health care policy and standards.
The grant does not cover doctors or medicine for nursing home patients, she noted, and would not expand to cover new patients.
"There's no way the trust fund is going to give California enough to keep us from being a loser in the deal," said Traer Sunley of the state's Washington office. "We can choose between reducing services or raising taxes, both of which are unacceptable." Asked what could be done, she echoed many other officials. "We're a long way from seeing this legislation enacted."
The trust fund is also a big question mark. The idea is to finance it from federal taxes on tobacco, liquor, gasoline and telephones, plus $8 billion in general revenues, and to repeal these taxes one by one after 1988.
If the states want to continue the programs after that, they must come up with the money.
"But not every state has distilleries and . . . tobacco farms and oil refineries that could be taxed," noted Peter Doyle of the Northeast-Midwest Institute in a study of the proposal. Advocates for the poor say too many states would return to the bad old days when some had no programs at all.
"Nothing I've seen from the states so far indicates that current recipients will be protected at the same level they're currently receiving services," said Al Gonzalez of the National Association of Social Workers. The program, he said, "reflects a kind of anti-welfare meanness on the part of the administration."
The National Governors' Association, still negotiating on some of these points, wants Reagan to cut the current link between food stamps and AFDC, in which federal food stamp money drops 30 cents for every $1 that a state raises its AFDC benefit. There is no sign this will happen.
Even in Mississippi, where welfare hits national rock-bottom at $120 a month for a family of four and New Federalism would help initially, it gets a lukewarm welcome.
"It's a movement in the right direction," said George Parsons, director of planning and policy, "but we're uncertain that in the long run there'll be no losers and no winners."
In Texas, next to the bottom, where AFDC families of four get $140 a month, "it would be advantageous to the state, but not by much," said Thomas M. Suehs, assistant human resources budget planning commissioner.
"It's still questionable that we'll get all the long-term care money we need."
He disagreed with Gonzalez on the program's incentive value. Like all states, Texas gives Medicaid to its welfare recipients and as welfare rolls grow, so do Medicaid bills. With Medicaid hospital bills rising 15 percent per year or more since 1975, state legislators have balked at widening welfare.
"We ask every year for an increase in the grants," Suehs said. If the feds pick up Medicaid costs, "the legislators wouldn't have that excuse."
Vermont would lose $5.4 million, but "there are strategies we can use short of just making up the money," said state planning director John G. Simson, who is broadly supportive of New Federalism.