Reform, Don't Repeal, Medicaid

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CONGRESS is on the verge of tearing a big hole in our national safety net for medical care for poor children, the disabled, and seniors. Republicans who control Congress want to cut $163.5 billion from Medicaid in seven years, to help pay for $245 billion in tax breaks tilted toward the well-off.

Republicans in Washington want to ''block grant'' everything in sight, including Medicaid. Under the block-grant approach, Washington would punt Medicaid to the states. The mantra of block grants is ''state flexibility.'' But the Medicaid block grant would be a straitjacket that would not adapt well to population growth, recession, or disasters.

In the name of ''flexibility,'' block grants would lock in existing inequities in distribution of Medicaid funds. On a per-person basis, New Hampshire gets more than three times as much as California. Future disparities under block grants would be just as stark, if not more so.

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If Medicaid block grants are bad, is the only alternative ''business as usual''? No. There is a way to have the best of both worlds, to contain costs while maintaining the federal-state partnership.

The best of both worlds is the ''per capita cap'' proposal that is emerging as the ''win-win'' answer to the block grants' ''lose-lose'' proposition. The per-capita-cap approach provides that health care and coverage can be protected, and costs can be controlled by disciplining the program with an annual limit in federal spending per beneficiary. This approach maintains the individual guarantee to Medicaid coverage and creates incentives to maintain health-care coverage. Funding would follow the patient, not some bureaucratic entity.

The per-capita-cap approach that I have presented to the Senate would save $62 billion over seven years. It enhances state flexibility and reduces the rate of growth in federal Medicaid spending to a level that is sustainable for the states, the beneficiaries, and the federal government.

Here's how the per-capita-cap approach would work: Federal funding would be allocated to states on a per-person-in-need basis. If it costs $1,000 to cover a child in California, the federal government would allocate its share, or $500 in this case, for each child qualifying in the state. If needs increase because of population shifts, recession, natural disaster, or public-health calamity and more children become eligible for coverage, the federal contribution would be guaranteed - unlike a block grant, in which a fixed sum is allocated regardless of circumstances. The incentive would be to reduce costs, not cut people off coverage. If you arbitrarily cut children off, you lose the federal match.

The cap would be cumulative and thus allow states enough flexibility to apply savings under the cap from one year to the next. Caps would be applied separately to the elderly, the disabled, children, and their mothers. This separation into four distinct groups avoids the sinister ''zero sum game'' that is endemic to block grants, where one group's interests are pitted against those of other groups.

The per-capita-cap idea was supported in health-care proposals introduced by Republican Sens. Bob Dole, Bob Packwood, Phil Gramm, and John Chafee last year.

We should reform Medicaid, not repeal it. With per capita caps, we would maintain the national safety net for poor kids and seniors, and make sure the dollars follow need.

We should note that one of our national achievements in health is a lower infant-mortality rate, thanks in part to Medicaid. It would be a travesty to end the century by assaulting the safety net of the most vulnerable among us.

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