GOP Governors Ask Washington to Give States More Flexibility on Medicaid

Frustrated with the rising costs of providing health care to their poorer constituents, Republican governors from 29 states sent a letter to lawmakers in Washington on Monday demanding greater flexibility in administering Medicaid dollars.

"About 20 years ago, it used to be about 5 percent of the budget and now it's four times that amount, so it’s a huge concern," Virginia Gov. Robert McDonnell said. "We've got to find ways to reduce Medicaid spending."

Governors of both parties have lots of ideas on how to better manage the program, which is used by 60 million Americans, with costs split between the federal and state governments. But as long as they're getting federal contributions, the Obama administration bans state from changing their programs without approval from Washington.

Monday’s letter urges Congress to establish Medicaid rules so states can "make necessary adjustments without constantly seeking permission from the federal government for changes we already know work."

The colorful policy chairman of the Republican governors puts it more bluntly: "We don’t think you oughta have to go kowtowing to Washington," said Mississippi Gov. Haley Barbour. "We think every state should have the right to choose to take their Medicaid money as a block grant."

That would allow the states to take federal money and run the program as they see fit. Many Democrats are skeptical of that, but Barbour argues that the Children’s Health Insurance Program, which is one of the left's favorite programs, is a block grant and he says no one objects to how that money is doled out.

Democratic governors aren't happy with the current Medicaid partnership either. Washington State Gov. Christine Gregoire, who announced Monday she will not seek re-election, is chair of the National Governors Association. She's in Washington, D.C., this week to request more flexibility for her state and all others as they search for savings. She meets with Health and Human Services Secretary Kathleen Sebelius on Tuesday.

The problem is that state budgets cannot run deficits, so when Medicaid costs rise, governors face painful choices. “What the Obama administration is giving us is ... you're going to have raise taxes or you're going to have to make huge spending cuts in order to pay for the Medicaid share of 'Obamacare,'" Barbour said.

"[Governors] first have to look at what they're going to do with their overall budget -- whether they're going to cut education or transportation," said Nina Owcharenko of the conservative Heritage Foundation. Education and transportation typically are the other two large state expenses. "Or whether they're going to focus their cuts in Medicaid directly."

But skeptics of giving states more flexibility argue there are few options for changes within Medicaid.

"The thing that we have to remember about the Medicaid program is that almost 70 percent of its costs go to the elderly for long-term care services and the disabled," Neera Tanden of the Center for American Progress, a Democratic think tank, said.

But Barbour said his state has a surefire way of saving money on precisely that by letting people avoid nursing homes and stay in their own homes with assistance from health aides paid by Medicaid.

"That care costs about one-sixth as much in Mississippi. And most of the people who are appropriate for home and community based care prefer it to being in a nursing home," Barbour said. "Yet we have to go beg Washington for our slots. That ought to be our decision and can be made quickly."

Barbour complains the waiver process is cumbersome and time-consuming and handcuffs the governors in their search for savings. He says his state also checks for eligibility once a year, cutting down on fraud.