- - Thursday, April 12, 2012

Obamacare is on the rocks, and the heart of the law - the individual mandate - or the whole thing could be struck down by the Supreme Court. Whatever the court does, the voters could finish the job in November.

In anticipation, a great deal of work is being done behind the scenes on Capitol Hill, in the states and in the think-tank community to talk about what’s next.

Medicaid reform is at the top of the list. Medicaid is the worst health care program in the country - a dismal program that finances care for low-income Americans but condemns them to long waits in emergency rooms to get even routine care. The program pays doctors so little and requires so much paperwork that few can afford to see more than a few Medicaid patients.

Instead of reforming this program, which will cost the federal and state governments a total of $457 billion this year for its nearly 60 million enrollees. Obamacare doubled down and will dump as many as 25 million more people into this expensive, fraud-ridden program.

Several members of Congress, including House Republican Study Committee Chairman, Rep. Jim Jordan of Ohio, have introduced the State Health Flexibility Act (H.R. 4160) to streamline federal funding for Medicaid and the Children’s Health Insurance Program into one block grant to the states. Rep. Todd Rokita, Indiana Republican, is the lead sponsor of the bill.

The legislation would give the states maximum flexibility to tailor the program to meet the unique health care needs of their citizens without having to plead with Washington for every minor improvement they want to make.

Importantly, the legislation meets the seven principles for Medicaid reform proposed by 29 governors in June 2011, and it also requires accountability to taxpayers. Annual audits are required in each state to report to the U.S. Treasury, state legislatures and the public to ensure the federal funding is spent properly.

That would be a significant step in bringing accountability and efficiency to Medicaid, which wastes at least 10 percent of state Medicaid dollars, according to an audit of New York’s Medicaid program.

There are outcries from those who want Washington to retain power and control over virtually every aspect of the health sector, but my personal experience as a member of the presidentially appointed Medicaid Commission in 2005 demonstrated that states can do a much better job of taking care of their most vulnerable citizens as well as making sure that mothers and babies get the care they need in the most appropriate settings.

Now we have new evidence of that in the Ocean State. Gary D. Alexander, who served as Rhode Island’s secretary of health and human services until 2009, wrested from the Bush administration a global waiver for the state’s Medicaid program. Rhode Island’s Global Consumer Choice Waiver exempted the state from many of Medicaid’s federal rules and mandates. It moved, for example, to managed care from traditional fee-for-service financing for medical services as it accepted a five-year spending cap of $12.1 billion, including federal matching payments.

A December 2011 study by the Lewin Group, a consulting firm, found that Rhode Island’s block-grant experiment allowed it to lower spending and improve the quality of care while maintaining the same enrollment levels. Patients had better access to doctors, reducing the need for expensive emergency room use. Costly long-term care patients who don’t need to be in nursing homes were switched to home and community-based care, for example. The savings total more than $55 million.

The Wall Street Journal wrote recently that Mr. Alexander calculates that taxpayers across the country could save $200 billion over the next decade if every state followed Rhode Island’s lead.

Rhode Island’s Medicaid spending, which had been projected to reach $3.8 billion, came in at $2.7 billion for the 18 months following the introduction of the waiver.

Lewin found that the Ocean State’s reform has been “highly effective in controlling Medicaid costs” and improving “access to more appropriate services.”

Those who are reluctant to turn over power and control to the states have criticized Rhode Island’s program in particular and the block-grant plan in general. The Center on Budget and Policy Priorities, for example, called the waiver a “radical” and “perilous” plan that would hurt the poor.

But that’s not what happened. Lewin found that the waiver ensures that “Medicaid members in Rhode Island receive the right services, at the right time, in the right setting,” maintaining and often enhancing the quality of care.

Rhode Island, Pennsylvania and the Republican Study Committee are on the right track with block-granting Medicaid to the states. The model works, and it provides a strong platform for the Medicaid part of the “replace” strategy post-Obamacare.

Republicans Rep. Todd Rokita of Indiana, Rep. Tim Huelskamp of Kansas and Rep. Paul C. Broun of Georgia are co-sponsoring the Medicaid reform bill with Mr. Jordan.

Grace-Marie Turner is president of the Galen Institute, a nonprofit research organization that focuses on patient-centered health reform. She is co-author of “Why Obamacare Is Wrong for America” (HarperCollins, 2011).

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