GOP governors and Obama at impasse over Medicaid

— Strained state budgets and a new crew of Republican governors have combined to reopen the debate over Medicaid, the health care program for the poorest and sickest Americans.

GOP governors want control of the purse strings and leeway to rewrite coverage and payment rules. So far President Barack Obama has turned them down, but he may be forced to give some ground if negotiations to reduce federal debt get serious later this year.

Here are some of the major issues looming over the nation's largest health care program, a federal-state partnership that covers about 60 million people, including many nursing home residents, people with AIDS and low-income mothers and children:

Q: What do Republican governors want?

A: Ideally, they'd like Washington to cut them a big check for Medicaid and let each state decide how best to spend the money. The government calls that a block grant, and though some strings would be attached, it would give states a lot more flexibility. Republican governors would probably put most Medicaid recipients in some kind of private insurance.

Washington pays just under 60 percent of the Medicaid tab on average, though the federal share varies by state. The federal contribution will surpass $275 billion this year.

Mississippi Gov. Haley Barbour is so confident he can stretch health care dollars farther that he's offering the feds what amounts to a rebate. If they give him a block grant, he'd let Washington keep half of any annual adjustments for inflation. Nationally, that would save federal taxpayers $10 billion a year.

"We shouldn't have to come up here and kowtow and kiss the ring," Barbour told the House Energy and Commerce Committee this week. "Give us a block grant."

They're not likely to get that.

Q: So do they have a fallback?

A: Yes. GOP governors would like Obama and Congress to waive requirements in the new health care law and other legislation that keep them from restricting Medicaid eligibility. Enrollment is one of the main forces driving up Medicaid spending, and it usually jumps in a soft economy.

Altogether, states are facing estimated deficits of $175 billion over the next two years, and Medicaid generally is one of their top three budget items. The predicament is worse because additional Medicaid funds that Congress had pumped in due to the recession run out later this year.

Q: How does the Obama administration respond to that?

A: As a former Democratic governor of Kansas, Health and Human Services Secretary Kathleen Sebelius says that she feels the states' pain - but they should look elsewhere for cuts.

Democrats point out that most program spending is for the needs of a relatively small share of beneficiaries - those who are sickest, many of them disabled and elderly. Finding more efficient ways to provide care for these patients could save money while helping the beneficiaries themselves lead healthier lives.

Cutting back eligibility for low-income children and parents isn't the answer, said Rep. Henry Waxman, D-Calif. "Those populations are not where the money is."


