Not only did we get sparks at the vice-presidential debate last week, we got a good deal of substance. The social safety net inevitably came up, and Biden and Ryan sparred over Social Security (the one drawing a hard line on making changes to benefits, the other refloating the idea of privatization) and how to reform Medicare, with the word “voucher” tossed back and forth.
One major program that didn’t get much airtime, though, was Medicaid. Perhaps it gets less play because it’s targeted at those living in poverty, not necessarily the middle class politicians so love to love. The program provides healthcare for low-income people through both federal and state financing. Currently, the federal government gives states money with requirements attached for maintaining a certain level of benefits and eligibility. While Social Security and Medicare get the spotlight, this program is in serious danger, as past experience with Romney and Ryan’s preferred “reforms” shows.
Both Ryan and Romney are in favor of changes to Medicaid that would do it real damage. First, they would spend a lot less money on it. Romney and Obama basically agree on how much to spend on Medicare, but they differ sharply in the case of Medicaid. Obama’s healthcare law will expand the program. Romney, on the other hand, has said he’d support the spending levels in Ryan’s budget plan, which would eventually cut spending on the program in half.
But it doesn’t stop at starving the program of funds. Romney and Ryan would “reform” the program in such a way that could destroy it. They would block-grant it, which means giving the states lump sums of money and then basically handing over control. States would have far more freedom to do what they want with that money.
Sounds great, right? In theory, states could choose to get creative with how they spend the money to find ways to ensure more care at a lower cost. But past experiences with block grants don’t paint an optimistic picture.
The most obvious case study is TANF, the program formally known as welfare. After welfare reform passed in the ’90s, it became a block grant to states. What it did do: put a hard cap on federal spending on the program. What it didn’t do: help the families who rely on welfare. Every year, the federal government gives states $16.5 billion and requires that they maintain a certain level of their own spending depending on certain factors. But both of those pots of money can be put to a pretty wide variety of uses. Some states have put it toward the original purposes of welfare, such as childcare support and welfare-to-work programs. But as the Center on Budget and Policy Priorities reports, “over time, states [have] redirected a substantial portion of their TANF…funds to other purposes.” Those include plugging budget holes and freeing up money for other needs—wandering pretty far from the original program.
When the recession hit and an influx of people found themselves in need of TANF benefits, the program failed to expand in proportion. That’s because states were largely unable to get back the money that they’d moved around elsewhere and had to slash benefit amounts or shrink rolls. Less than 30 percent of the families living in poverty in 2010 received benefits, a major failing. Meanwhile, SNAP, or food stamps, which isn’t block-granted and wasn’t under such pressures, was successful in meeting demand: the number of beneficiaries shot up from 26 million pre-crash to 45 million in 2011, reflecting widespread economic pain.