Congress needs to block-grant Medicaid to states

When President Lyndon B. Johnson signed Medicaid into law in 1965, it was pitched as a joint partnership between the states and the federal government, in which the federal government would subsidize state programs that provide medical care for the very poor.

Predictably, that pitch was false, and today we have a Medicaid program that is patently unfair to those it purports to serve, those who provide service and those who actually pay for the programs: today’s taxpayers and the children of the future. Medicaid is dominated by the federal government, which alternately bullies or bribes the states to accept an ever-larger percentage of their population into an increasingly insolvent and dysfunctional system. The end result is a Medicaid program that is failing taxpayers, providers and those who need health care services the most.

Under Medicaid’s current structure, states are required to meet one-size-fits-all mandates from the federal government. Washington determines who receives Medicaid, the benefits they are eligible for and how much money their government-approved doctors can make. After dictating the program’s requirements, the federal government then makes a contribution to the states and leaves them to pay the balance. Any states that attempt to modify their program or initiate reforms to balance their budgets must go through a lengthy federal approval process that can take years.

There is no better example of this than my state’s Healthy Indiana Plan (HIP), which provides an affordable health insurance option for uninsured adults. Despite this program’s incredible popularity, Indiana was denied a federal waiver to continue. Now Hoosiers in need, and the taxpayers who support them, are faced with being thrown back into the federal Medicaid program.

ObamaCare will soon add as many as 25 million more Americans to state Medicaid rolls, overwhelming state budgets that already spend more on Medicaid than they do on any other program, including transportation and education.

This crush of new patients also makes the entire program ripe for fraud.

Give states Medicare block grant, like welfare in ’96

There is only one way out of this morass of spending, dependency and corruption: Return Medicaid to the states where governors and state legislators are free to innovate and to create programs that meet their states’ needs and budgets.

That is why I have introduced the State Health Flexibility Act. Modeled after the successful welfare reforms of 1996, this bill would give states back the authority to run Medicaid and the Children’s Health Insurance Program (CHIP) programs as they see fit while receiving predictable and responsible funding from the federal government. Health in the form of a single federal block grant to each state, based on current Medicaid funding levels. By giving states a set federal contribution and freeing them to finally reform their programs, we would save the federal government $1.8 trillion over the next 10 years. It would also be fairer to the patients currently getting substandard care, the providers who currently have too little pay and too much bureaucratic red tape, and much fairer to the children of tomorrow, who, without this reform, have to pay for the current nonsense.

For years, Republicans have come to Congress pledging to return power to the states. The State Health Flexibility Act represents a commitment to finally follow through on a generation of promises, and stop pushing debt and a broken system on to the next generation.