A WOLF IN SHEEP’S CLOTHING

Mark B. McClellan, the Administrator of the Centers for Medicare and Medicaid Services (CMS), which is the federal department responsible for administering the Medicaid program, has written a letter to state Medicaid directors encouraging them to give Medicaid beneficiaries more control over the services they receive. Ostensibly, the letter encourages Medicaid directors to alter their Medicaid programs in order to permit more Medicaid beneficiaries to receive care at home.

The letter sounds nice. Since most people would prefer to receive care at home, the fact that CMS is encouraging States to change their Medicaid programs to facilitate home-care sounds like a good thing, but the fact of the matter is, in my opinion, this letter, like most of President Bush’s legislative and budgetary initiatives, is an attack on the Medicaid program as it currently exists.

Now, don’t get me wrong. I don’t think that Medicaid program is perfect, and I think it would be great if States changed their Medicaid programs to encourage home-care over nursing home care, but given the current Administrations previous attempts at modifying the Medicaid program, I have to view its current actions through a magnifying glass.

Essentially, the Bush Administration’s goal is to change the Medicaid program from an entitlement program to a block grant program. An entitlement program – which is what Medicaid currently is – allows people to access to the Medicaid program if they meet certain financial criteria. In other words, if the person meets the financial criteria, he is accepted onto the program.

A block grant program allots a certain sum of money to a given state – for example, ten billion dollars – and allows the State either great or complete flexibility over the manner in which the money is doled out to its Medicaid recipients. Since Medicaid typically accounts for 20 to 25% of a State’s overall budget, the various States have a tremendous interest in curtailing the amount of money spent on their Medicaid programs.

Block grant programs, unlike entitlement programs, do not guarantee a space in the program for all individuals who meet the financial criteria. In other words, under a block grant program, a person could qualify for Medicaid but fail to find a place in the program. The State’s Medicaid program – as the State crafted it under it block grant – might allow for only a limited number of individuals and that number might be achieved, preventing additional individuals from entering the program.

In President Bush’s 2005 budget, there is a proposal called Money Follows the Individual, which is designed to empower the Medicaid recipient by given him greater choices in how Medicaid-dollars are spent on him. The recent letter from Administrator McClellan is in this vein, by encouraging States to offer more choices to recipients.

In the end, the empowerment and choices rhetoric is a perpetuation of the block grant concept – a block grant offers choices to the States in crafting their Medicaid programs; the States should offer more choices to the recipients; recipients should have greater control over the Medicaid-money allotted to them, so they can have more choices. One thing that you have to admire about President Bush is his consistency, an attribute that he is selling big-time in the current election campaign.

President Bush has wanted to transform Medicaid into a block grant program since he entered office. By converting the program from entitlement to block grant, the federal government will be able to reduce the amount of money paid to the States, and the States will be able to reduce the services they offer to needy individuals. A win-win for fiscal conservatism. A lose-lose for the aged, frail, and disabled.

It’s important to know the context in which our government’s actions occur. Sometimes, a seemingly benign action can have a sinister undertone. Changing Medicaid to a block grant program is a bad idea that sounds good. It, like this most recent letter from CMS, is a wolf in sheep’s clothing.