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Bloomberg: Romney-endorsed proposal could cut $1.26T from Medicaid

GOP Medicaid proposal would establish a block-grant system

Topics: Medicaid, Reimbursement, Finance, Payer and Regulatory Policy, Market Trends, Strategy

September 12, 2012

A proposal endorsed by GOP presidential candidate Mitt Romney would reduce Medicaid funding by as much as $1.26 trillion over nine years, according to a new Bloomberg Government study.

The proposal—included in the House GOP-approved fiscal year 2013 budget proposal, which was developed by GOP vice presidential candidate Paul Ryan—would turn Medicaid into a block-grant system. Specifically, states would receive a lump sum, which would increase at the rate of inflation, and be responsible for establishing eligibility and benefit requirements.

The Ryan-Romney Medicaid proposal could take effect as soon as 2014, but Romney has said the changes would not affect beneficiaries until 2022.

According to the Bloomberg Government study, the federal government's payments under the proposal would grow at one percentage point above inflation annually, which would create the funding reduction. In exchange, states would be subject to fewer rules on how they can use the funds, Bloomberg reports.

Christopher Flavelle—a Bloomberg Government analyst and the study's author—said enacting the block-grant proposal could lead to lobbying fights in state capitols between physicians, hospitals, home health agencies, and nursing homes vying for the smaller pool of Medicaid funding. Home health agencies and nursing homes would experience the biggest reductions in Medicaid funding as a proportion of their revenue if the proposal is enacted and the cuts are distributed according to the program's current framework, Flavelle noted.

According to Bloomberg, the Romney campaign cooperated with Flavelle on the study by giving him access to an unidentified campaign adviser who provided insight into Romney's health care proposals. However, Jonathan Burks—deputy policy director for the Romney campaign—said the new study "incorrectly describes major elements of [Romney's] reform plan and ignores the ongoing failures of ObamaCare." Burks did not identify the errors, Bloomberg reports (Wayne, Bloomberg, 9/11).

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