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Medicaid block grants would be a disaster. One Missouri senator can't wait

St. Louis Post Dispatch

Thursday, March 2, 2017  |  Editorial  |  By the Editorial Board

Medicaid, Managed Care
House Speaker Paul Ryan, R-Wis., long has wanted to change the way the federal government allocates money to Medicaid, the federal-state health program for children, the disabled, the poor and nursing home patients. Instead of paying for everyone who’s eligible, Ryan wants to give states block grants and let politicians decide how to spend them.

Now that there’s a Republican in the White House — albeit one whose latest promise is to leave Medicaid and Social Security alone — Ryan’s block grant idea is getting some serious attention. It’s a terrible idea that would wreak havoc on millions of Americans.

But here in Missouri, Republican lawmakers are so eager for the havoc to begin that they want to jump the gun. Senate Bill 28, pending in the state Senate, would require the state to ask the feds to change funding for MoHealthNet, the state’s Medicaid program, from a federal-state matching system to a federal block grant. The state would gain more control over how the money is spent.

For lawmakers, the appeal of block grants is that they would begin to slow down the ever-increasing costs of Medicaid. The federal government spent about $570 billion, 13 percent of its budget, on Medicaid in 2016. Missouri spent $10 billion of its $26 billion budget on Medicaid, with about $1.7 billion of that coming from general revenue.

If the federal government caps its share, and the state government no longer has to cover programs that the feds say are mandatory, then the state can save money, too. The losers would be the children of the poor and working poor, very poor parents (earning no more than $77 a week), pregnant women, seniors in nursing homes and the disabled.

Another problem: Currently, the state gets the vast majority of its Medicaid money from what’s known as the federal reimbursement allowance, or provider tax. Hospitals and other providers voluntarily pay the tax to reduce the number of uninsured patients. The more provider taxes the state collects, the more federal dollars the state gets.

A block grant would mean less incentive for hospitals to pay the provider tax because it wouldn’t generate extra federal dollars. The state would have to make it up with general revenue — which is already $500 million in the hole — or cut eligibility.

Sen. David Sater, R-Cassville, the sponsor of SB 28, says it would allow the state to impose work requirements on a population that is mostly children, the elderly and the disabled. Plus the state could charge higher premiums or co-pays to people already too poor to afford health insurance.

Senate Bill 28 is simply a punish-the-poor measure that would give Missouri a head start on the block grant catastrophe. It makes zero economic sense. And on the compassion scale, less than zero.