GOP Calls for $182 Billion in Medicaid Cuts : Entitlements: House proposal would replace program with direct block grants to states, who would have broad powers on eligibility and care.

Moving to end Medicaid as an entitlement program, House Republicans Tuesday unveiled their long-awaited plan to cut $182 billion over seven years from the federal-state health program for 36 million indigent Americans.

The proposal would replace Medicaid with direct federal block grants to the states, giving them broad and unprecedented authority to dictate who is eligible and what health coverage they would receive. Such a restructured program would have a capped dollar amount for the first time. The GOP-dominated Senate is expected to follow suit shortly with its own, similar proposal.

House Speaker Newt Gingrich (R-Ga.) called the Medicaid restructuring proposal “absolutely a historic event.”

Indeed, on a day when the Senate approved a sweeping welfare reform bill, the two actions marked another milestone in the unrelenting march by the Republican-controlled Congress to dismantle the programs of the Great Society.

But like so much of the GOP’s legislative agenda, the Medicaid proposal triggered an outpouring of strong reactions. Believers praised it as the salvation of a troubled government program that is creating huge federal and state budget deficits; critics predicted that the transformation would inflict new suffering on the poor and handicapped.

Rep. Thomas J. Bliley Jr. (R-Va.), chairman of the House Commerce Committee, and other Republicans said that the $182 billion in savings would be realized in part by slowing the rate of Medicaid’s explosive annual growth--from a projected 10% to 4%.

Even so, they said, actual federal spending can be increased by 39% over seven years, largely because of savings from channeling Medicaid recipients into less expensive managed-care settings.

But liberal citizens groups and some Democrats warned that the GOP approach could add 8 million or more indigent Americans to the ever-increasing number of those without health insurance, now estimated at 41 million persons.

“These cuts will undermine public confidence that nearby emergency rooms will be open when a child breaks a leg, a senior experiences heart problems or another emergency strikes,” according to the coalition, comprising Consumers Union and the National Health Law Program, a nonprofit public interest law center.

Rep. Henry A. Waxman (D-Los Angeles) said that the GOP plan is “a breathtaking proposal that will shred the safety net” and that it amounts to “an extraordinary abdication of federal responsibility for some of the most vulnerable people in our society.”

Enacted in 1965, Medicaid now covers about 58% of the nation’s indigent persons. To be eligible, one not only must be poor but fall into some other “category,” namely pregnant women, low-income children, the blind and disabled or seniors who get help with nursing home care and Medicare premiums.

Medicaid spending by states varies widely, depending on their demographics. For instance, New York and Connecticut have disproportionately large elderly indigent populations; thus their governors and congressional representatives have fought hard for greater funding since the per capita spending for an elderly Medicaid recipient is nearly $10,000, while it is only $1,400 for a child.

On the other hand, states like California have other pressing needs, namely an explosive growth in the number of mothers and children entering the program.

As a result of the competing demands, House Republicans, working with a special task force of GOP governors, came up with a complex formula based on the amounts each state now receives, adjusted for case-mix as well as for the cost of health care in that state.

Once the program had been put into effect, no state would receive annual increases of less than 2% or more than 6%, according to House commerce panel staff members who devised the formula. But to ease the impact of change, every state would receive a 7.2% increase in the first year. They said that they expect California to be “at 6% all the way” to 2002.

California, with about 5.75 million Medicaid recipients, spends more than $14 billion annually on Medicaid, roughly evenly divided between federal and state dollars. According to the House GOP proposal, the state would receive more than $13 billion in federal block grants by fiscal year 2002.

In all, states over the next seven years would receive $773.1 billion in “MediGrant” funding, or about 39% more in 2002 than they now receive--from the current $89 billion to $124 billion.