08/31/2012 09:33 am ET Updated Oct 31, 2012

Ripping Up the Social Contract in Tampa

There has been a lot of talk about the federal government at the Republican National Convention this week. On Tuesday night South Carolina Governor Nicki Haley said the hardest part about her job "continues to be this federal government," and New Jersey Governor Chris Christie talked of putting federal bureaucrats between "an American citizen and her doctor" while calling for "a new era of truth-telling." Governor Nathan Deal of Georgia went so far as to announce to reporters at the convention that he is going to reject the Affordable Care Act's (ACA) Medicaid expansion, saying he doesn't trust the federal government to pay its share.

Well, governors, it's time to tell the truth about Medicaid: what it does, who it helps, and what proposals -- like Representative Paul Ryan's budget proposal and the move by some states to reject the Medicaid expansion -- would do to it.

You want to talk about trust? Medicaid is a necessary and essential part of our health care system. Over 62 million people in this country, including over 30 million children, depend on it for access to affordable health care. It keeps health care costs down for everyone and anchors our country's safety net of services for working families and vulnerable populations.

Here's how it works. Medicaid is in essence a contract between the federal government and the states. The federal government promises the states that if it gives certain low-income populations access to health care, the federal government will pay at least 50% of the costs of that care. And its been paying those bills for over 45 years. When it comes to the expansion of Medicaid in the ACA, the federal government promises to pay 100% for three years if states cover those newly eligible under the expansion, and then scale down to pay 90% of the costs associated with coverage. Within broad federal guidelines, states set the parameters and run their own programs with significant flexibility.

Some state governors (Haley and Christie, among others), and some Members of Congress (including Paul Ryan), want to do two things that will hurt the people Medicaid is designed to help:

1) "Block grant" the entire Medicaid program; and
2) Reject the Affordable Care Act's expansion of Medicaid.

Let's look at the effect of these proposals. First, block granting. This gives states a set amount of federal funds to run their own insurance program under their own rules, with no requirement that states provide matching funds. If more people suddenly qualify for the program (because, for example, the economy crashes) too bad; states will have to make do with the money provided unless the increase was due to inflation or a population increase for the state.

Under the House-passed Ryan budget proposal, the fixed amount is less than the federal government currently provides for Medicaid -- $810 billion less over the next 10 years, according to the Center on Budget and Policy Priorities. And the yearly increase would be less than the current rate at which healthcare costs rise so the screws would continue to tighten. This would seriously underfund Medicaid. States will have to decide whether to cover the difference from their own budgets or cut eligibility or services. In times of state fiscal crises, guess which they are likely to choose.

The last time the House adopted a similar block grant, the Urban Institute estimated that between 13.8 million and 26.8 million fewer people would receive Medicaid services by 2021, and that is without factoring in those newly helped by the Medicaid expansion.

Another 17 million working individuals who live on the edge of poverty could be denied access under the second proposal if states reject the Medicaid expansion. We'd get the same result if the House budget proposal -- or Republican presidential candidate Mitt Romney's promise to repeal the ACA -- became law (both repeal the expansion).

About that Medicaid expansion and its supposed horrible burden on states: for starters, it is fully funded by the federal government for three years. States chip in up to 50 percent for existing Medicaid coverage today, but until 2017 they won't pay a dime for the expanded coverage, and in the future the most they will pay is 10 percent of the costs associated with the expansion (see here for 49 more reasons why the expansion is a good deal for states).

Let's be clear about fiscal responsibility. The Medicaid expansion makes economic sense for states; risking program cuts through block grants does not. Health care is an investment in a state's most valuable assets: its people. Healthy workers are more productive workers. Healthy parents are better parents. Healthy kids are better students. Healthy restaurant employees ... well, you get the picture. This is not rocket science.

States expanding Medicaid will save spending state dollars on programs that are now fully state-funded. And providing health care coverage also saves the state money in the long run. Remember the old adage about an ounce of prevention? It's not that people without health insurance don't get sick. They just don't seek treatment until it's often too late, usually by showing up at an emergency room, where the hospital is required to provide coverage for "free." Guess who pays for that free coverage? That's right, the state and those of us who have private health insurance, and at a much higher cost than regular care.

A state that rejects free federal money to help its most vulnerable citizens -- more than 600,000 people in Georgia alone -- is making a base (and unconscionable) political calculation that puts its political party over its people.

The proposals we're hearing from Tampa aren't just heartless, they are short-sighted and costly. On Wednesday night, Paul Ryan said the truest measure of a society is how it treats those who cannot defend themselves. I hope some Republican governors take heed and remember that they have sworn an oath to represent all the citizens of their states, not just those who can afford private health insurance.