Trimming the Sails on Health Care

LIKE dragon-slayers on a rampage, congressional Republicans are waving their swords at the next big federal entitlement program: Medicaid. As with welfare, which both houses of Congress have now voted to end as a nationally mandated system, Republicans plan to end the federal guarantee of health care for the poor that has existed for 30 years. And as with welfare, Republicans want to take the federal Medicaid money, limit the fund's growth, and distribute it among the states in lump sums, or block grants. States would set their own eligibility rules. More than 1,000 pages of federal regulations governing Medicaid would be tossed out. Over seven years, the GOP plan is projected to save $182 billion. In some ways, the proposed Medicaid overhaul, which was debated in the House Commerce Committee this week, is a more dramatic change than those proposed for both welfare and Medicare, the federal health-insurance program for the el derly. Medicaid helps many more people (37 million children, mothers, elderly, and disabled) than welfare's cash-benefit program, called Aid to Families with Dependent Children (14 million people). And the proposed Medicaid reform entails removing the federal safety net, which GOP plans for Medicare do not. There is little doubt across the political spectrum that Medicaid is in crisis. In the last 10 years, the federal government's outlays for the program have quadrupled, this year totaling $89 billion. States are balking at the $67 billion they are expected to kick in this year. But disagreement over how to fix the problem is fierce. ''Block-granting Medicaid will be disastrous,'' says Jim Weill, counsel to the Children's Defense Fund. ''There's obviously not enough money for states to do anything but cut into bone. Second, we know that block grants don't work. Recent history shows that, given the option to make choices, states will [take funds from] families and children.'' Third, Mr. Weill says, ''children are more politically vulnerable - especially poor children - at the state level than at the national level.'' The monied interests surrounding Medicaid care, including the nursing-home industry, have ''huge clout'' in state legislatures, he says. A push for innovation Many conservatives argue that giving the states more freedom will allow for innovation and cost-savings that will pay for a decrease in the growth in spending. ''I am not troubled by the overall concept of block-granting,'' says Gail Wilensky, a former Bush administration health official who had input into the proposed legislation. ''We've found ourselves in a position, despite well-intentioned efforts, of enormous regulatory structure.'' States can apply for waivers from federal rules to conduct pilot projects to improve Medicaid, Ms. Wilensky acknowledges. ''But it comes only at a substantial cost,'' such as hours filling out forms and months of waiting for approval, she says. Some of the federal regulations governing Medicaid are worthwhile, Wilensky says, but adds that so many are wasteful that it makes sense to strt over - either letting states establish rules or allowing Congress to pass new federal rules. Ed Howard, vice president of the Alliance for Health Reform, bemoans the possible demise of federal Medicaid regulation. ''It took Congress 20 years to enact a tough law establishing quality standards for nursing homes, and now it is explicitly being repealed,'' Mr. Howard says. ''Once again, nursing homes will not be required to have nurses.'' House committee members are quarreling over the formula for distributing federal money to states. In absolute terms, no state would see less money. But some would see a smaller increase than others. Northern states sound off Some Northern states, for example, provide more generous Medicaid benefits than Southern and Western states, and are also projecting lower caseload increases. So they may receive lower annual increases in their Medicaid block grants. Five Republican governors from Northern states object to the House GOP plan. President Clinton and leading congressional Democrats also registered opposition to the plan this week. Clinton threatened to veto ''Draconian'' cuts in both Medicaid and Medicare. Senate minority leader Tom Daschle (D) of South Dakota warned of ''extraordinarily devastating consequences'' in the GOP Medicaid plan. But interestingly, both men support the Senate's version of welfare reform, which is similar to the Medicaid plan: end the federal benefits guarantee, cap funding, and send the money to states as block grants.