Ryan proposes a fundamental change to Medicaid -- and it would be bad

The national budget debate is multi-directional. Most of the story, so far, has centered on this year’s federal spending, basically how to strip dollars from a fiscal year that’s roughly half over. Then, there is the fight over next year’s budget, the one that is supposed to start on October 1. And, at the same time, there is an argument about the role of the federal government and long-term spending promises.

I think of these issues a bit like a line from the movie, Ghostbusters. “Don’t cross the streams,” one of the characters warns. “Why?” asks another. “It would be bad.”

We’re at the point in our story where the streams are crossing. The flash of lights and heated rhetoric make it difficult, if not impossible, to explore the issues with either a methodical or strategic approach. We’re a captive to the budget as a show, played on so many stages.

But underlying the theatrics is a basic truth, that much of the growth of government spending stems from demographics, not out-of-control government agencies. Simply put: We have a large older population asking a smaller younger cohort to pay the bills. The cost of an aging society is not just a problem in the United States, it’s a global trend.

This is why health care reform matters: We have to lower the cost of health care if we want any chance at a real solution.

This week House Budget Chairman, Paul Ryan, R-Wisconsin, will propose sweeping changes to Medicare and Medicaid. “Starting 10 years from now, in 2021, Americans would no longer enroll in the Medicare program, but instead receive vouchers for private insurance,” says a report on CNN. “On Medicaid, Ryan’s plan calls for deep cuts, as much as $1 trillion. The program would also fundamentally change -- the federal share of the Medicaid system would become block grants to the states.”

The Medicaid portion of this plan has huge implications for Indian Country.  The Indian Health System has been improving its systems for collecting money from third-party sources, including Medicaid. Medicaid is a partnership with the federal and state governments (the federal government pays a range from about half to three-quarters of the cost) and states in recent years have complained about their share that arrangement.

Ryan’s proposal would give states money with few restrictions and let them design the system that works best for them.

The problem is that Medicaid is supposed to several things at once. One focus -- the one that gets most of the attention -- is a government health insurance program for the poor. Some 60 million children and adults are now covered and the expansion of Medicaid by at least another 16 million people is a key component of the Patient Protection and Affordable Care Act. (Medicaid already represents 16 percent of all health care spending.)

But another charge of Medicaid is paying for long-term care, primarily for the elderly. Roughly 40 percent of all long-term care spending is Medicaid.

That difference in mission is critical to the political support of Medicaid. State legislators might be eager to cut services, eligibility and other programs for the poor. But not quite so zealous when it comes to paying the cost of nursing homes and other long-term care facilities.

The big deal here is that now anyone eligible for Medicaid, young or poor, is supposed to be served. If the program shifts to block grants, that guarantee will disappear. The federal money will be capped -- and states will likely do the same. And in theory, state and federal budgets will be balanced. There is no way that politicians would kick elderly out of nursing homes to save money, so most of the block grant cuts would be at the expensive of children and poor people. Only people still get sick -- and without basic Medicaid coverage they will show up in another part of the system, such as emergency rooms, and health care costs will continue to explode.

We ought to be looking for ways to provide all Americans with universal health care coverage because it’s the only sure way to lower the overall cost of health care.