Mitt Romney’s choice of Rep. Paul Ryan (R-Wis.) as his running mate has reignited a debate over the future of Medicare. But Ryan’s proposed cuts to Medicaid, the other huge federal health program, could have quicker and more far-reaching consequences, with the potential to dramatically affect state budgets and health care for millions of people.
Ryan has proposed scaling back the nation’s four-decade-old insurance program for the poor and disabled — bringing down the cost by $810 billion over 10 years. The measure is part of a budget he has said aims to avert “an epic collapse of our health and retirement programs that would devastate our nation’s most vulnerable citizens.”
Ryan, who chairs the House Budget Committee, also wants to give states their Medicaid contributions in “block grants,” or set amounts, each year. States would get more flexibility, with the expectation that they would be able to use the money more efficiently and creatively.
But experts say the cutbacks are so dramatic that it would be impossible for states to innovate their way out of massive cuts to a program that in 2010 served some 54 million Americans, roughly 6 million more than Medicare. “There’s always great interest on the part of Republican governors and conservatives in block-granting Medicaid, and it is always framed as a debate about flexibility. But it never is,” said Drew Altman, president of the nonpartisan Kaiser Family Foundation. “Really, it is all about money.”
The debate echoes one that has become central to this year’s presidential race, on the role of government and the best way to address the nation’s burgeoning deficit. By choosing Ryan, Romney has gambled that voters, in the name of deficit reduction, are willing to stomach the idea of cuts they previously rejected.
Though Romney has praised Ryan’s plan broadly, he has suggested without elaboration that he disagrees with some parts of it. However, Romney has endorsed the idea of converting Medicaid into a block grant program.
The recent attention to Medicare reflects a political reality — the program affects a much more engaged voting bloc, senior citizens, whose support can make or break a candidate.
No matter who is elected, Medicaid likely will be the subject of fierce debate in coming months, as the government continues to roll out changes under President Obama’s new health care law and lawmakers on Capitol Hill begin to tackle the national debt.
Medicaid emerged as a flashpoint in late June when the Supreme Court struck down a requirement under the health law that states expand eligibility to the program, ensuring that about 17 million more Americans would gain health coverage. Some Republican governors have since announced they will not go along with that expansion.
Budget experts say Medicaid is likely to again become a major issue as Congress begins to tackle the “fiscal cliff” — when a number of budgetary deadlines coincide and lawmakers are expected to hash out a strategy for addressing the national debt.
“Certainly, on some level and for a variety of reasons, Medicaid will likely change in the near future regardless of who wins the November election,” said Matt Salo, executive director of the National Association of Medicaid Directors. “A big driver of that is going to be the federal deficit reduction efforts.”
The notion of converting Medicaid into block grants for the states is not new. Conservatives have pushed for it for years and almost succeeded in the 1990s, when then-President Clinton rejected the idea after it was floated as part of a larger package of reforms to the nation’s social welfare system.
Under Ryan’s budget — approved this year by the House but rejected by the Senate — states would be given a set amount each year based on population and inflation. Unlike the Medicare changes he proposes, which would not kick in until 2023, the Medicaid changes would happen almost immediately.
Critics note that any annual increases would be less than the expected rise in the cost of health care, and say it is likely that the change would result in people being kicked off the Medicaid rolls and states lowering payments to doctors and hospitals.
A study for Kaiser by the nonpartisan Urban Institute estimated that under a similar plan proposed by Ryan in 2011, between 14 million and 27 million Medicaid recipients could lose their coverage by 2021. But supporters of the block grant concept say the program is too costly as it is currently run, and that the increased flexibility could help states tailor the program to their citizens and improve their health.
“To be able to respond to local needs and take advantage of local opportunities, you need to be able to move as quickly as the private sector,” said Tony Keck, director of the South Carolina health department and a supporter of Medicaid block grants. “Medicaid has to plod on behind, getting permission from the federal government to do anything really innovative.”
Critics say Obama’s expansion of Medicaid will encumber state governments and burden taxpayers.
The Congressional Budget Office estimates that the expansion of insurance under the health law will cost about $1.2 trillion during the next decade, though the health law overall is projected to reduce the deficit.
But critics of the Ryan plan say it would gut a program that has been a crucial part of the social safety net for decades, and has been proven to improve the health of those who enroll.
“It’s hard to see how you can squeeze out so much savings without making significant cuts,” said Edwin Park, vice president for health policy at the left-leaning Center on Budget and Policy Priorities. “Basically, many people are going to end up uninsured and they’re going to go without care.”