GOP's Medicaid plan features spending caps, state control Gingrich insists program won't be cut: Democrats say rising cost ignored

WASHINGTON — WASHINGTON -- House Republicans yesterday unveiled details of their sweeping plan to revamp Medicaid, the health-care plan for the poor, by turning it over to the states, eliminating most federal regulations and capping federal spending.

Although the plan provides $182 billion toward balancing the budget in seven years, House Speaker Newt Gingrich denied that Republicans want to cut Medicaid. Calling the proposal "absolutely historic," he said it would increase annual federal Medicaid spending by 39 percent over the next seven years.


"It is not a cut," he insisted.

Democrats contend that the Republicans proposal amounts to a cut because it would not take account of inflation, increases in Medicaid enrollment and rising health care costs.


Utah Gov. Michael Leavitt, chairman of the Republican Governors Association, welcomed the plan, saying, "It sets the states free to innovate."

"We have to slow the growth of Medicaid," he said. Republican governors are committed to that, but can't do it unless they get the freedom the GOP legislation offers them to run the program, he said.

But, Rep. Henry A. Waxman, a California Democrat, called the Republican proposal "breathtakingly heartless . . . an extraordinary abdication of federal responsibility for some of the most vulnerable people in our society -- poor kids, the elderly and disabled."

"Medicaid will be given to the states without any accountability," Mr. Waxman said.

The program, which pays health-care bills for 37 million poor Americans, will cost $155 billion this year, of which $89 billion is from the federal government. The Congressional Budget Office projects that the federal share would rise to $177 billion in seven years if the program is unchanged.

For the first time in Medicaid's 30-year history, the GOP plan would limit federal spending. In 2002, the outlay would be $124 billion -- $53 billion less than the budget office predicts would be needed under current law.

The Republican proposals give states wide latitude to make Medicaid recipients share in the cost of their care.

States now have power to levy "nominal" charges for Medicaid services, said Debbie Chang, director of legislation and intergovernmental affairs for the Health Care Financing Administration.


This proposal, she said, "is clearly talking about more than that. We are concerned about some people not being allowed to get medical coverage" as a result of any state decisions to charge them fees.

Governor Leavitt and his Republican colleagues were involved in crafting the plan. He said only five of the 30 Republican governors object to the proposal. His Democratic counterparts had not yet seen its details.

Governors of both parties have long complained that federal Medicaid regulations hamstring them. While asking for greater flexibility, some of them have balked at spending cuts.

Medicaid spending more than doubled between 1988 and 1993. The Congressional Budget Office predicts that, without changes, spending would grow about 10 percent a year for the next decade.

Currently, states must put up some of their own money to receive federal funds, with their share ranging from 20 percent of total spending in poor states to 50 percent in wealthier states. There is no limit on how much federal money states can receive.

The GOP plan would change all that, ending the state entitlement to Medicaid funds and replacing it with a fixed amount of federal money. To receive that money, however, states would have to put up some of their own funds, GOP aides said.


States now have wide discretion in setting eligibility and benefit levels. As a result, Medicaid spending on each poor person ranges widely -- from a high of $4,800 in New York to a low of $953 in Utah, according to the Kaiser Commission on the Future of Medicaid, a private organization that studies the issue.

The most contentious issue in negotiations between House leaders and Republican governors involved the formula for distributing Medicaid funds.

A formula that set a national per-capita standard for spending would have cost some states millions of dollars while bringing others a windfall.

Negotiators settled on a formula that will give each state a 7.24 percent increase next year. Increases would range from 2 percent to 9 percent the next year, then range from 2 percent to 6 percent in subsequent years.

Maryland, which will get nearly $1.3 billion this year, according to GOP figures, would receive 7.08 percent in 1997 and 3 percent each year thereafter.

"That would not even cover the projected enrollment increase," said Jeannette Duerr, a spokeswoman for the state health department.


"We would have to look at cutting somewhere."