Medicaid Tug of War

LOOKED at in isolation, the dispute between Washington and state capitals over Medicaid is about states' budgets and their prerogatives under federalism. But the controversy is part of a much larger issue: the future of health care in the United States.Congress created Medicaid in 1965 to provide health care for poor Americans. The cost of providing designated health-care services to people below the poverty line is borne jointly by the states and the federal government, through matching funds. Until a decade ago, the states - traditionally responsible for welfare programs - were largely left on their own to establish eligibility criteria and payment levels. Since the early '80s, however, many states have grown increasingly unhappy about Medicaid policies emanating from Washington. Medicaid eligibility has generally coincided with that for AFDC, the aid program for poor families with young children. But Congress has incrementally required the states to cover new services for the poor, notably prenatal care for pregnant women, nursing-home care for elderly patients, and certain services for poor teenagers. The increased demands on states' budgets have been exacted at a time when most states, like the federal government, are facing serious fiscal problems. Consequently, states have resorted to creative financing techniques to satisfy the expanded Medicaid obligations. Last week, however, the Department of Health and Human Services issued regulations barring two of the most widely used devices - special Medicaid taxes and "voluntary" donations paid by hospitals and other health-care providers. In the eyes of HHS, states are double-dipping, using previously provided federal funds to obtain more matching dollars. Nearly 40 states employ one or both devices, and the new rules were greeted with consternation by governors of both parties. The questions whether Congress was "fair" in mandating new Medicaid eligibility requirements, and whether financing techniques adopted by strapped states are "fair," raise difficult issues of federalism and statutory interpretation. Beyond these, however, lies a far bigger and tougher question: How will America, in the belt-tightening years ahead, provide affordable, high quality health care to its people, including its poorest? If Americans believe that poor mothers-to-be deserve prenatal care, or that the poor elderly deserve access to nursing homes - and who among us cannot believe so? - then as a society we must be more creative in our thinking about paying for such needs. Surely, this is one of the foremost issues for Americans in the '90s.