Medicaid to Lose $1.26 Trillion Under Romney Block Grant

Republican presidential nominee Mitt Romney would strip Medicaid of $1.26 trillion over nine years as part of a plan to do away with the open-ended approach to funding the U.S. health-insurance plan for the poor, a Bloomberg Government study found.

Romney proposes to convert Medicaid to a fixed allotment of money from an entitlement tied to economic indicators and a state’s caseload. Payments from the federal government would grow at 1 percentage point above inflation a year, creating the funding reduction, in exchange for fewer rules on how states use the money, according to the study released yesterday.

The Medicaid proposal has drawn less attention in the campaign than Romney’s ideas for Medicare, the U.S. health plan for the elderly and disabled. The Medicaid plan could be implemented as soon as 2014 and involves more money. Romney has said Medicare beneficiaries wouldn’t face changes until 2022.

“The impact on our nation’s low-income children, people with disabilities, and seniors would be devastating,” said Bruce Lesley, president of First Focus, Washington-based group that concentrates on children’s issues, and a former aide to Senate Democrats. Losing $1.2 trillion “will eliminate coverage for millions of people, reduce access to necessary care and create a system of health rationing.”

Medicaid covered about 62 million Americans in fiscal 2009, according to the Kaiser Family Foundation, a Menlo Park, California-based research group. About 49 percent of enrollees were children. It is a joint federal-state program.

Money Grab

The Romney campaign cooperated with the study’s author, Bloomberg Government analyst Christopher Flavelle, providing access to a Romney adviser who discussed some of the health proposals, on condition that the person not be identified.

The study “incorrectly describes major elements of the governor’s reform plan and ignores the ongoing failures of Obamacare,” Jonathan Burks, Romney’s deputy policy director, said in an e-mail sent through campaign spokeswoman Andrea Saul. Burks didn’t specify any errors.

If Romney wins the presidency and enacts his block-grant proposal, he would spark lobbying fights in state capitols among nursing homes, home-health agencies, hospitals and doctors over a reduced pool of Medicaid money, Flavelle said.

If Medicaid funding cuts were distributed according to health industries’ current exposure to the program, home health agencies and nursing homes would face the steepest reductions as a proportion of their revenue, Flavelle found.

Program Efficiency

Greg Crist, a spokesman for the American Health Care Association in Washington, which represents nursing homes, didn’t immediately comment. Megan Rose, a spokeswoman for the National Association for Home Care and Hospice, which represents home health agencies, didn’t immediately comment.

“Romney’s plan to block grant Medicaid and slash its funding would have devastating consequences for the millions of seniors in nursing homes who have exhausted their life savings, people with disabilities, pregnant women and low-income families that rely on it for lifesaving care,” said Adam Fetcher, a spokesman for President Barack Obama’s campaign.

Romney’s campaign hasn’t said what restrictions on Medicaid spending might be retained. He and his vice presidential running mate, U.S. Representative Paul Ryan of Wisconsin, have said that freeing states from federal obligations will let them target spending on people that need the most help.

Medicaid’s administrative costs were $17.9 billion in fiscal 2010, about 4.5 percent of the program’s total spending, according to Kaiser.

“That idea that more efficiency is somehow connected with less federal restrictions is maybe conceptually appealing, but really hard to back up with evidence,” Flavelle said.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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