Over the last seven years, since she was burned from her chin to her toes in a house fire, 12-year-old Teresa Canarte has undergone 16 operations.
Her mother, Monica, a 34-year-old unemployed teacher’s aide, has had to rely on Medicaid to pay the huge bills for Teresa’s skin grafts and for the physical therapy sessions that helped her walk again.
“Medicaid has meant everything to us. I don’t know how we would have gotten along without it,” said Monica Canarte, who lives here with her four children in a townhome decorated with a tinseled Christmas tree and neat lace curtains.
The $158-billion-a-year Medicaid program, a federal-state partnership, is the primary source of health coverage for 37 million of America’s most vulnerable citizens, including indigent families such as Monica’s, the disabled and elderly in nursing homes.
Over the last five years, through program expansions, the ranks of Medicaid recipients have swelled by 13 million. The program now finances health care for one in every four American children, one in three births, more than two-thirds of AIDS patients and half of all nursing home bills for frail elderly and the disabled.
Medicaid also figures large in the federal budget battle, where the Republican-controlled Congress is seeking to cut the program’s growth by about 15 percent, or $133 billion, over seven years.
While disagreements over the Medicare health program for seniors and cash welfare for the poor have gotten more attention in the fiscal warfare, the gulf between the White House and Congress over Medicaid may well be the hardest to bridge.
The dispute over Medicare “is more a matter of dollars than philosophy,” said Gail Wilensky, a senior fellow at Project Hope, a health policy group, and former federal health programs administrator. But differences over Medicaid are so profound, she said, that they cut to the “heart and substance of the program. Medicaid is what will make a budget deal difficult.”
The GOP budget bill would reduce Medicaid spending by repealing the open-ended federal entitlement of health care for all eligible needy people. The program would be converted to a block grant providing each state with a fixed pot of federal dollars and flexibility to decide who gets medical coverage and what types of benefits they receive.
Republicans say that if states were freed from Medicaid’s rigid rules and red tape, they could be more efficient and creative in finding ways of serving the poor’s health needs. As it stands now, the program is so complicated that there are 60 different rules under which an applicant may qualify for the program, critics say.
If it were simplified, states might even be able to expand coverage to more low-income uninsured people, advocates insist.
Gov. Jim Edgar, in Washington as part of a team of Republican governors working with Congress on the budget crisis, insisted Friday that the states want flexibility on Medicaid, not cutbacks.
“President Clinton is wrong when he says pregnant women and children are threatened,” Edgar said. “There are guarantees of coverage for pregnant women and children in there (the Republican plan). There are safeguards for the elderly. We’re saying, give us the flexibility to deal with problems we find on the local level.”
But opponents, including Clinton and congressional Democrats, argue that just the opposite could happen, particularly in a recession.
If states got limited federal funds for running Medicaid and were no longer required to provide a broad array of medical services as a quid pro quo, they say, there would be pressure to make substantial cuts in Medicaid rolls and to scale back benefit packages to bare-bones levels.
And that’s unacceptable, said Vice President Al Gore, assailing the GOP plan last week. The guarantee that the poorest and most severely disabled have health care is a principle “that ought to be honored in this country,” Gore asserted.
As written, the GOP Medicaid plan could result in up to 8 million recipients losing Medicaid benefits, according to White House estimates.
Nonetheless, it’s not hard to see why governors are so intent on getting control of the 30-year-old Great Society program, which is eating up state budgets. With its double-digit growth rate, it now accounts for almost 20 percent of total state spending.
Its costs spiraled out of control partly because of medical inflation. But Congress also used Medicaid as a vehicle for broadening health care to more categories of low-income people.
So far, GOP leaders have insisted that scrapping Medicaid as an entitlement isn’t negotiable. And Clinton has drawn a line by threatening to veto any bill that ends the guarantee.
Liberals welcome Clinton’s support for Medicaid entitlements, although they criticize him for giving in to Republicans on the issue of guaranteed aid to low-income families under the major cash welfare program, Aid to Families with Dependent Children. The GOP welfare reform plan would do away with AFDC entitlement, a proposal the White House isn’t fighting.
If Clinton believes poor people should automatically receive health-care services, they ask, why doesn’t he also want to preserve the entitlement for minimal shelter, clothing and other basic needs?
One difference is that while almost no one defends the current cash welfare system, Medicaid is a program that, despite its bureaucratic flaws, is largely viewed as unbroken. Without Medicaid, defenders say, the number of Americans without health insurance would skyrocket to 50 million from the current 41 million.
With a downsized Medicaid, the ranks of uninsured are likely to grow, said Edward Howard, executive vice president of the Alliance for Health Reform in Washington, a nonpartisan group.
The GOP plan would hold the growth of Medicaid’s per-capita spending to about 2 percent annually, a figure Howard predicted would be impossible to achieve without reducing benefits or participation.
“The squeeze on Medicaid would be inevitable,” Howard said. “No health-care plan has had that kind of restraint in costs.
“In the area of long-term care, for instance, you could create more humane and less costly alternatives to nursing homes, such as home health care or buying a ramp for someone,” said Patricia Riley, head of the National Academy for State Health Policy.
