What's going to happen to Medicaid?

What's going to happen to Medicaid?

About 2.3 million people in Illinois depend on Medicaid. A quarter of them are children. But with talks of deficit reduction and the looming apocalypse surrounding the debt ceiling, words are being thrown around in the media about possible cuts, reductions and revisions to our nation's health insurance system for the low-income. I wanted to find out what's on the table and what it could mean for the millions of poor people in Chicago depending on Medicaid for everything from routine check-ups to major live-saving interventions.

To find out more, I got in touch with Margaret Stapleton, senior attorney at the Shriver Center on Poverty Law, for the low down on what's being talked about with regard to Medicaid. She said there's three proposals on the table for how to reshape the program--block grants, caps on Medicaid spending and blending the federal match rates. So, I asked her, are these proposals good or bad. She had a pretty straightforward answer.

"The first two are terrible," Stapleton said. "The third is probably terrible, but it's hard to actually say."

Why? And what would these ideas mean practically? Here's a quick explanation:

Option 1: Block grants

A block grants means the federal government gives each state a chunk of money to run their own Medicaid program, however they want to. Stapleton said, in reality, these block grants probably wouldn't be enough to run the program well, meaning cuts to who can be served and how they can be treated.

"Block grants just aren't a good for the people of the state because it takes all the responsibility to the states for running the programs without regard to changes in economic conditions," Stapelton said.

And changes in economic conditions can be wild, as we've seen with this recession. Illinois has seen 24 percent increase in parents who have minor children in the program enrolling in Medicaid, and a 12 percent increase in elderly and disabled people needing the program during the recession.

Option 2: Capping Spending

Stapleton explained this option like this: "The federal  government only going to spend X amount, capping the money. Okay, have a nice day. Figure it out."

Again, she said this wouldn't be a good idea because need for medicaid isn't static.

"It's just irresponsible to not have the possibility that there would be more money if there's greater need,"  she said.

Option 3: Blending the Match Rates

This one is a little more confusing and the reason I called Stapleton for help in the first place. The way Medicaid works is that the federal government pays in some, and each state pays in some. Whatever the federal government pays is called a "match rate." Different states have different match rates, with more affluent states getting less from Uncle Sam. For example, Illinois' match rate for 2011 is 50.2 percent, according to Kaiser Health Facts, while Alabama's is 68.54 percent.

And the match rate is different for the different Medicaid programs - the regular medicaid program, which covers adults with children in their care, and elderly and disabled adults, and the Children's Health Insurance Program, which covers kids.

So what's being proposed is that there's just one match rate for each state. Is this a bad thing? Maybe, Stapleton said.

"Adminstratively, it makes some sense to have one match rate," Stapleton said. "But since it's being rolled out as saving money, people are very worried about it--lower match rates."

What people are worried about is that this talk of blending match rates is just a smokescreen for one of the first two options--reducing the amount of money that the federal government spends on Medicaid.

So, three options, and Stapleton likes none of them. What does she propose? An answer so simple it made me laugh out loud. Not because it was funny--just because it surprised me.

"If you really want to cut spending on Medicaid, do something so there's fewer poor people," she said. "Raise the minimum wage. Get people back to work."

She said she told this to a House committee awhile back, while she was testifying on the Medicaid program. They didn't seem to like her answer as much as I did.

So what do you think? Should Medicaid funding be reduced? If so, how? And if not, how else can we reduce the deficit and avoid financial armageddon? Tell us your thoughts.

Photo credit: Rochelle Hartman

© Community Renewal Society 2011

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    If any of the three proposals became law, the United States would sadly imitate its education policy--private schools for the wealthy; pauper schools for everyone else. Why does almost every country in the world have universal health care covering everyone in spite of their socio-economic status in life? Yes, those systems aren't perfect, but can our publicly elected lawmakers be serious when they want to throw the poor "babies out with the bath water?" Where's the compassion?

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