Beware Medicaid Expansion, Even If It Is Billed as Reform

As first appearing in the Columbia Missourian:

“Beware the Greeks bearing gifts” is one of the better-known sayings in classical literature, a reference to the Trojan Horse of antiquity. Its meaning: When someone offers a gift that looks too good to be true, be careful. It may be filled with hidden menace. This is the case today with Senate Bill 419 (SB 419), a bill before the Missouri General Assembly that would expand—and supposedly “reform”—Medicaid.

The text of the proposal pays lip service to a cadre of good market reforms: health savings accounts, private option insurance plans, and setting new standards for maximizing cost-sharing obligations, to name a few. But all of that is just eye candy. Nothing in the language of the bill guarantees that any reforms will actually occur. SB 419 supporters (incorrectly) portray the plan as a “block grant” that would provide the state with maximum flexibility to craft a “Missouri solution” to Medicaid’s cost and quality problems. The bill, however, actually calls for Missouri to request a waiver from the federal government—so that it actually can be allowed to receive funds as a block grant. The difference between a waiver and a block grant is not simply an issue of semantics. Block grants are financial aid packages the federal government awards to states. These grants can be applied to general areas of social welfare instead of specific programs. Block grants sound good, and they generally are good because they maximize state flexibility. SB 419, however, isn’t a block grant. Missouri does not have the power to block grant Medicaid funds from the federal government, hence the need for the waiver.

Even if the federal government approved a waiver today that included all of the market reforms we could dream up, the federal government could simply deny the waiver’s renewal in the future—leaving the state with the Medicaid expansion of SB 419 but none of the reform. Take Florida for example. It’s being coerced into Obamacare’s Medicaid expansion after the federal government revoked their waiver agreement, which actually predated the Affordable Care Act. SB 419’s suggested reforms may not last even if approved, but the costly expansion it puts into motion might very well remain, tucked neatly inside Troy’s—that is, Missouri’s—doors.

Moreover, there is no reason for “reform legislation” to concentrate power for future eligibility determinations for the Medicaid program in a 10-person committee—as SB 419 inexplicably does—rather than with the general assembly, as is the case today. Is it really a ”reform” to make future Medicaid expansions achievable through a small cadre, rather than through all of the elected members of the general assembly? Is that who we want making multibillion-dollar state commitments with the metaphorical credit cards of our kids and grandkids?

In fact, the bill’s subtle legislative craftsmanship not only cloaks the cost of the plan in the garb of conditional and ultimately temporary reform, but it also shifts decision-making power so that legislation won’t even have to be passed to make expansions in the future. That should worry us all.

Medicaid really does need to be reformed, both for beneficiaries and taxpayers, and to be clear, many of the ideas articulated, but not guaranteed, by SB 419 are quite good. But Missourians need to be very cautious before embracing a plan that purports to “fix” Medicaid’s problems when it is simply more likely to exacerbate them. Better to leave a wooden horse outside the door.

Michael Rathbone is a policy researcher at the Show-Me Institute.