Medicaid & CHIP Reform

• Fraud and waste run rampant, yet many people on Medicaid struggle to find a doctor. Even if they can, the quality of care is often substandard.
• States have to design their programs to satisfy a one-size-fits-all welfare bureaucracy in Washington. It can take months or years to get permission to enact their own reforms.
• Medicaid costs are growing even faster than Medicare. States now spend more on Medicaid than anything else, including K-12 education programs.
• ObamaCare would have states spend up to $118 billion more of their own money and offer Medicaid to an additional 17-25 million people.
• States have little incentive to rein in costs because the federal government matches 50-74% of every dollar they spend.

Overview of the State Health Flexibility Act:

• Many current and former governors, including Mitt Romney, believe that block grants provide the best opportunity for fixing Medicaid. In fact, the State Health Flexibility Act meets the seven principles for Medicaid reform adopted by 29 Republican governors in June 2011.
• It combines federal funding to the states for Medicaid and CHIP (the Children’s Health Insurance Program) into a single block grant that allows states to design their programs according to the needs and priorities of their own citizens.
• Because the states understand better than the federal government the needs of their citizens, states will have sole authority to determine eligibility, benefits, provider reimbursement rates, and to improve the quality of care and access to vital services.
• Based on the model set by the successful welfare reforms of 1996, federal funding for Medicaid & CHIP will be set at current levels for the next ten years. This change will encourage state innovation and reform while saving $1.8 trillion (revised to $2.0 trillion after review of CBO’s March 2012 baseline) compared to current law under ObamaCare.
• The states will be free to set their own funding at whatever level they choose, and the citizens of each state can hold their officials accountable for irresponsible decisions.
• Congress will retain the ability to temporarily or permanently adjust federal funding levels to account for changing needs. Spending will simply no longer increase on auto-pilot.
• As state reforms reduce dependence on government assistance, those affected are more likely to enter the workforce, get insurance, and be able to lift themselves up the economic ladder.
• Annual, independent audits of states’ use of federal funds will be provided to the U.S. Treasury Secretary, the state legislatures, and the general public. Misused funds detected by an audit will result in forfeiture of the funds with a 10% penalty to encourage proactive efforts to root out waste, fraud, and abuse.
• Current-law prohibitions will continue against abortion funding, health care services for illegal aliens, and discrimination based upon disability, sex, race, color, or national origin.