Block Grants = Better Medicaid

WHILE Congress and the president debate the future funding of Medicaid in the federal budget, the ''mother of all federal unfunded mandates'' could well be forced on the states - with state taxpayers picking up the tab. The Clinton plan would take what everybody agrees is a bad system and make it worse.

In contrast, the ''MediGrant'' plan promoted by many of the nation's governors, increases investment in health care for low-income Americans while reducing the very regulations responsible for driving up costs.

The president is considering the so-called Medicaid ''per capita cap (PCC),'' which caps the amount of funds each recipient may get without empowering the states to devise innovative ways to serve recipients. States will get less money to help recipients and will still have to deal with the mandatory entitlements, the mandatory benefits, federal lawsuits, and centralized micromanagement.

This is exactly the wrong direction. Medicaid costs already account for 20 percent of state revenues. How sharply have these costs increased? In Michigan, Medicaid consumed 8 percent of discretionary general-fund revenue in fiscal year 1980. In fiscal 1996, 21 percent of available general-fund revenue will be needed to support this program. When states have to deal with uncontrollable Medicaid costs, other critical priorities such as education, welfare, and public transportation are crowded out. The PCC proposal would limit Medicaid funding to states, forcing them to raise taxes to make up the difference.

But more money is not the issue. States need flexibility to meet the unique heath-care needs of residents. All the entitlements, mandates, and regulations in current law drive Medicaid costs at unsustainable rates. For example, because of federal regulations, Michigan must run 24 Medicaid programs - each with its own eligibility rules. In short, states need more money and less bureaucracy.

This past week, I and five other Republican governors called on the president to support the MediGrant block-grant proposal because it not only increases funding for recipients but it frees states from wasteful and bureaucratic Washington mandates. Block grants will work: Michigan, as a leader in welfare reform, has seen the success of state-based reforms when freed from cumbersome federal regulation.

Not only Republican governors agree with this approach. President Clinton, while governor of Arkansas in 1991 said, ''We need to get a handle on the Medicaid mandates, otherwise some of us are going to go broke.'' The MediGrant plan gives governors what President Clinton called for just a few years ago: an increase in per-capita expenditures (an increase of more than $1,500 per recipient over FY '94 spending) and the elimination of many of the rules and regulations to blame for skyrocketing costs. In addition, the MediGrant plan:

* Protects vulnerable Americans by mandating coverage of pregnant women and children under age 13.

* Earmarks funding for elderly and low-income Medicare beneficiaries, the blind and disabled, and low-income families.

* Establishes strong nursing-home standards by putting in place an extensive list of residents' rights to ensure high-quality care.

* Provides for essential preventive services by requiring states to give assistance for immunizations for eligible children.

* Protects spouses and adult children from having to liquidate all assets to meet the high costs of nursing care.

This MediGrant plan includes all of what Clinton wanted as governor of Arkansas. He understands what current governors know: Getting Washington out of the way is the first step of returning authority and responsibility to where they belong - to the states and to the people. The MediGrant plan would take a bad system and make it better - better for recipients, better for taxpayers, and better for state government to manage.

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