Next on the chopping block: Medicaid

Progressive, The, Jan, 2004 by Kai Wright

The Dillard family sits with dozens of other screaming kids and frazzled moms in the Bedford-Stuyvesant Family Health Center on a sticky Monday morning, part of the back-to-school rush for physicals and shots. Monica is enrolled in Medicaid, along with her three children. The whole family qualifies based on Monica's low income. Without public assistance, not only would the kids' routine medical care be prohibitively expensive, but Monica's asthma and diabetes would have to go untreated, as well.

A year ago, the family moved down to Brooklyn's Bed-Stuy from Yonkers, New York. Up there, Monica's asthma had been fine, but since moving she has to take a couple of doses a day from her steroid pump and swallow a pill before bed each night to help her breathing. "The airs just bad down here, I guess," she shrugs. She also takes two reeds every day for her diabetes. One of those drugs is affecting her cholesterol, so her doctor at the clinic put her on still another daily tablet to help keep that down. It's a lot of pills.

More than two-thirds of the patients waiting with Monica will pay with Medicaid. Forty percent of the clinic's patients are living below the poverty line; federal law requites all states to cover them in order to keep Washington's checks coming into their Medicaid coffers. New York State has recently expanded its Medicaid program, and other states have similarly Opened up in recent years, leveraging federal money to broaden access to health care for millions of families. They have raised the income level at which people qualify, added new disability categories, and covered more parents who used to be able to get care only for their children.

But this much-needed expansion of Medicaid coverage is about to shrink, if the White House gets its way.

Last January, just before turning its attention to privatizing Medicare, the Administration presented a plan that would turn the federal contribution to the Medicaid program into a block grant--a fixed, lump-sum payment each year. In return, the Administration would strip away nearly all of the federal rules that govern Medicaid programs, giving states "complete flexibility" to construct their health care safety nets as they see fit. The White House says that, with such freedom, states can craft innovations that will save them money and allow their programs to continue expanding. The reality is that, when cut off from open-ended federal support in the midst of historic budget crises, states are likely to make unpleasant decisions about who they can't keep covering and what benefits they must discontinue.

Most anti-poverty programs were conceived as "entitlements," meaning the feds dish out an agreed upon share of however much money a state needs to provide an adequate safety net. In turn, the states follow certain rules about how they spend that money--rules designed primarily to protect the beneficiaries. But from the Reagan-era forward, conservatives have slowly maneuvered to end those protections.

Block grants are the agents of this change, and the Bush Administration--anxious to build upon the momentum gained from Clinton-era welfare "reform," which brought us the Temporary Assistance for Needy Families block grant--is lobbing them at Congress like scud missiles.

The White House will surely try to ride the momentum from its recent Medicare victory, and it will be helped along by the fact that today's Medicaid system is unquestionably in critical condition. Twenty percent of states' collective spending annually goes to Medicaid. Meanwhile, Medicaid accounts for 44 percent of all federal grants given to states.

Those numbers are expected to keep getting bigger. Medicaid spending grew by almost 12 percent in 2002. The program has exploded from being a $161 billion effort in 1998 to a projected $310 billion in 2004. As the ranks of the unemployed continue climbing, the program's growth will eventually become unsustainable.

As Monica describes her burgeoning pill regimen, she tends to the kids surrounding her. She has more to worry about than the machinations of federal Medicaid funding and what they will mean for her.

"Most people aren't thinking about that sort of thing," laughs Albertha Brown, the clinic's patient care coordinator, whose job it is to keep everyone happy during their long wait. "They just know it's free."

That was the idea. Medicaid was the result of nearly a half-century's worth of Democratic efforts to create a public insurance system. Each failed miserably, until the Democrats' lopsided control of Congress in 1965 allowed Lyndon Johnson to usher in Medicaid and Medicare. The strategy was to start by offering basic health care to the most vulnerable groups--kids and pregnant moms living below or just above the poverty line, poor seniors, and people with disabilities--and then slowly grow into a national health insurance system.

But it wasn't until the 1990s, in the wake of the fiasco of Bill Clinton's health care reform efforts, that Medicaid began seriously expanding. The Clinton Administration, unable to move its larger health agenda through a hostile Congress, dusted off a tool that had been rarely used by Medicaid administrators: the rule waiver. Waivers allow for "demonstration projects" that are supposed to be pilots for reform, and the Clinton Administration encouraged states to apply for them. Washington overseers made it clear that they were interested only in waivers that were part of efforts to expand coverage. Governors, who had long clamored for more flexibility, responded enthusiastically. Today, more than one-fifth of Medicaid funding is spent on these nominal demonstration projects.