Medicaid as Sacrificial Lamb in Federal Budget Cut Negotiations

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June 16, 2011; Source: Wall Street Journal | What a non-surprise! The bipartisan group of federal budget negotiators meeting with Vice President Joe Biden aren't going to touch Social Security at all. Democrats are aiming to protect Medicare at all costs, and Republicans are nervous about Medicare after Rep. Paul Ryan's (R-WI) budget proposals brought out the big guns defending Medicare against any changes. Whether you like their positions or not, the senior citizen lobby in this country has drawn a virtual line in the sand around Social Security and Medicare and neither party appears to have the political wherewithal to suggest changes without taking it in the neck at the polls in November. 

So what entitlement program looks like it will be subject to cuts? Medicaid, of course! Medicaid costs $400 billion a year to the federal treasury. Medicaid covers 68 million people, and added to the Children's Health Insurance Program, it covers roughly one in four Americans. But they're poor and often minority. They don't have an AARP defending their Medicaid program interests. So no surprise, both parties seem to be open to Medicaid changes.  

The Republicans want to block grant Medicaid funds to states with very limited regulatory strings. Democrats seem to be open in the name of bipartisanship to allowing states to reduce the numbers of people who would be eligible for Medicaid assistance. Two months ago, President Obama gave a speech calling for $100 billion in Medicaid cuts, though economic advisor Gene Sperling said that the White House was averse to "asking those who are most unfortunate or those with the least economic and political power to take the overwhelming bulk of this sacrifice." Somehow the numbers and the words don't quite jive there. Senator Jay Rockefeller (D-WV) has been complaining about the "unsettling" silence even from his Democratic peers regarding Medicaid. 

It seems like that Medicaid will be, as Rockefeller put it, the sacrificial lamb in the budget negotiations, but there are other lambs in the flock. As Medicaid is truncated and shrunken, the unmet health needs of America's poor will become the uncompensated challenges faced by nonprofit health and human service agencies. It is a return to the past, where providing health services to the poor becomes the onus of charity, not of the public. The federal budget really seems like it's "back to the future."—Rick Cohen