Paul Ryan's Budget Gives Medicaid Block Grants to States

House Budget Committee Chairman Paul Ryan (R.-Wis.) said that his new budget for Fiscal Year 2012 will give Medicaid funds to states in the form of block grants.  In an interview with “Fox News Sunday,” Ryan said that the governors have said that they need more flexibility in dispersing the funds to their varied states’ populations.

“We propose block grants to the states.  We’ve had so much testimony from so many different governors saying, ‘Give us the freedom to customize our Medicaid programs, to tailor for our unique populations in our states.’  We want to give governors freedom to do that,” Paul said on Fox.

The Medicaid entitlement program’s cost is split 50/50 between states and the federal government.  President Obama’s new health care law includes provisions to drive more people onto the Medicaid health system.  The unfunded federal mandate in ObamaCare has resulted in an increased cost to already strained states budgets.  The nation’s governors, who have to work within their states’ balanced budget resolutions, have been looking for solutions to deal with the red ink flowing from ObamaCare.

In an interview with HUMAN EVENTS last week, Mississippi Gov. Haley Barbour, said that he had told the congressional Republicans that he would take less federal money for Medicaid in exchange for more flexibility.

“If they would give us a block grant, we would be willing to limit the amount of our Medicaid payments from the federal government because, if we had total flexibility to run the program, we would save a lot of money,” Barbour said by phone.

Barbour said that currently his state budget has the cost of Medicaid under control.  Mississippi has the highest match rate for Medicaid, receiving about $3 from the federal government for every $1 spent.  Barbour, who is also the chairman of the Republican Governors Association, said that his appeal to Congress for block grants seeks to save everyone money.

“My costs are pretty well under control right now.  But if I could have total flexibility to run Medicaid in Mississippi, then I am confident that for a five-year period, we could take one-half of the increase we would otherwise get—meaning one-half of the national increase—and come out better for the taxpayers and better for the beneficiaries,” Barbour told HUMAN EVENTS.  Barbour also told Congressional Republicans that said he would accept less federal money in exchange for more flexibility in Medicaid federal funds.

“I told the House Energy and Commerce Committee that I would agree to a multi-year deal.  In return for total flexibility, we would limit the increase by one-half of the total amount of federal funds paid to Mississippi.  So if nationally the Medicaid federal matching went up by 8%, we would pay 4%.  If it went up 4%, we would pay 2%, because we are so confident that we can run it, and frankly have a better program, but for less money,” said Barbour.

In Virginia, Gov. Bob McDonnell cut $6 billion in his state’s budget, and had a budget surplus of more than $400 million in only six months.  Still, McDonnell said that the increased size and cost of Medicaid “is a budget buster for Virginia and really every state.”

McDonnell, in an interview a week ago with HUMAN EVENTS, said that “with various components of the Medicaid law at the federal level, we’ve had the Medicaid spending level grow 1,600% over the last 27 years.  In that period of time, it’s gotten 5% of the state budget to now 21% of the budget.”

“And after ObamaCare, Medicaid will grow another $2 billion by the year 2022 and will be anywhere from 27% to 28% of the budget.  So this is just one of those unsustainable programs,” said McDonnell.

McDonnell also said that the mandates in the health care law make it difficult for him to control Medicaid costs.

“Unfortunately, this ObamaCare bill not only adds more spending, but it really hamstrings the governors with these maintenance of effort requirements, these eligibility requirements.  But you really can’t do anything creative or entrepreneurial or try to reduce Medicaid spending in your states,” McDonnell said.  “So it’s a bad situation, and the federal government doesn’t seem interested at this point in giving us the tools to control the costs.”

In Texas, Medicaid has a 9% annual growth rate, which will increase under ObamaCare.  According to Texas Gov. Rick Perry’s office, ObamaCare will add an additional 2 million people to Medicaid by 2012, costing Texas upwards of $27 billion over 10 years.

“This administration and liberals in Congress continue to push maintenance of effort [MOE] requirements on states,” Perry’s spokeswoman Catherine Frazier e-mailed HUMAN EVENTS.  “Under ObamaCare, states have little ability to manage their Medicaid and CHIP [Children’s Health Insurance Program] budgets because of the MOE requirement.”

Texas has already been forced to make up an estimated $9.1 billion to cover increased caseload growth and cost from the unfunded federal mandates from ObamaCare and Obama’s stimulus bill.

“These federal health care reform mandates are taking away resources that could instead go toward other programs important to Texans,” said Perry’s spokeswoman.  “Medicaid is unsustainable both for states and the federal government.”

On Tuesday, Ryan will formally unveil the details of the first budget put forth by the newly Republican-controlled Congress.  Ryan told Fox that the new budget will reform all entitlement programs, cut spending more than $4 trillion over 10 years, and put in place a statutory spending cap as a percentage of GDP.

Ryan conceded that the entitlement programs will still increase every year under his budget, however the programs will be reformed so they can be sustained.

“Medicare and Medicaid spending will go up every single year under our budget.  They just don’t go up as much as they’re going right now, because they’re growing at unsustainable rates,” said Ryan.  “And that’s why we’re coupling them with key reforms that are proven to stretch that Medicare, Medicaid dollar farther.”

Ryan was asked by Fox’s Chris Wallace whether the House Republicans’ plans to reform and cut spending on entitlement programs would play into the Democrats’ hands for the 2012 election.

“We are.  We are giving them a political weapon to go against us.  But they will have to lie and demagogue to make that a political weapon,” answered Ryan.  “We save Medicare, save Medicaid.  We save these entitlement programs.  We repair our social safety net, and we get our country a debt-free country for our children and grandchildren’s generation.”