Illinois Republicans ask Super Committee for Medicaid flexibility

by Jonathan Ingram Earlier today, Republican members of the Illinois House of Representatives filed a resolution in the General Assembly urging the federal Super Committee to recommend granting the state greater flexibility in administering its Medicaid program. In particular, they ask that the Super Committee and Congress repeal the “maintenance of effort” requirements in ObamaCare. As you...

by Jonathan Ingram

Earlier today, Republican members of the Illinois House of Representatives filed a resolution in the General Assembly urging the federal Super Committee to recommend granting the state greater flexibility in administering its Medicaid program.

In particular, they ask that the Super Committee and Congress repeal the “maintenance of effort” requirements in ObamaCare. As you may recall, the Obama administration used this requirement to block Illinois’ bipartisan anti-fraud reforms earlier this year.

As they note in their letter to the Super Committee, Illinois will face a backlog of $2.4 billion in unpaid Medicaid bills at the end of the fiscal year. They report that the backlog will grow to $5.4 in 2013 without reform or additional funding. Indeed, this is exactly what the Institute predicted earlier this year, when the General Assembly passed a budget that substantially underfunded Medicaid and pushed this year’s bills into next year.

Although Illinois ultimately will have difficult choices to make about the Medicaid program, the Institute supports greater flexibility and believes this will be a valuable first step in achieving both a balanced budget and a sustainable Medicaid program. States should be given wide flexibility in pursuing all known cost-saving measures for their programs. They should be permitted to design and administer new Medicaid programs from the ground up that are tailored to the unique needs of their residents.

The Institute has long advocated for capping federal funding in exchange for this kind of flexibility. The current system is designed with a perverse incentive that rewards states for spending more taxpayer money. By capping federal funding, states will be rewarded for reducing costs, not for wasting health care dollars. To reduce costs, however, states must have the kind of flexibility needed to innovate and serve the unique needs of their communities.

The federal government already permits one state, Rhode Island, to manage its Medicaid program in this manner. The Super Committee should learn from Rhode Island’s success and recommend Congress block-grant Medicaid funding for all states in exchange for wide flexibility in administering the program.