One Way Or Another, People Will Get Hurt

For those who follow the interminable battle of the budget closely enough to sort substance from rhetoric - there may be 27 of them in the whole universe - things are getting to be interesting.

A real question has emerged, an issue big enough to justify the partisan propaganda and posturing that is taking place: Whether the income support and health services of the most vulnerable Americans - children, the indigent and many of the disabled - should be guaranteed by the federal government or left to the individual states.

Republicans are on one side: Leave it to the states, they say.

President Clinton, characteristically, is on both sides. He says he would sign a budget transferring control of welfare or income-support programs to the states, provided certain stipulations were met. But he is threatening to veto any budget that shifts the Medicaid program of health services for most of those same people to those same states.

When I pointed out this seeming contradiction to Vice President Al Gore on last Sunday’s “Meet the Press,” he argued that the “contexts” of the two programs were “completely different.” Medicaid works, he said, while everyone agrees that welfare is a mess.

That claim will come as news to the former governor of Arkansas who now sits in the White House. In his former life, Bill Clinton, like every other governor, was complaining that federal Medicaid mandates were wrecking his state budget. Three years ago, in fact, Arkansas was being sued in the federal courts for jeopardizing the health of expectant mothers by slashing Medicaid spending - a policy which Clinton then defended as necessary to save state funds for schools, roads and other important projects.

Most of the governors now are Republicans and they are much more keen to take control of Medicaid than they are of the main welfare program, Aid to Families with Dependent Children (AFDC). The congressional Republican budget would convert both Medicaid and AFDC into lump-sum grants to the states, for them to use as they deem best, until the money runs out, as it probably would in the next recession.

When that happens, you’ll probably see these same governors - or their successors - come running back to Washington asking to be bailed out. That is one reason why many scholars of federalism - including Republicans such as Richard Nathan of the State University of New York in Albany - argue that these basic “safety-net” programs ought to remain Washington’s responsibility.

But if you were going to choose which one to convert from a federal entitlement to a state-controlled block grant, you would probably choose Medicaid over AFDC if you were guided by the evidence.

More than a dozen states - including Gore’s home state of Tennessee - have conducted successful experiments with their Medicaid programs, providing coverage to many more people while controlling the costs. They have done so by getting the Department of Health and Human Services to grant them waivers from some of the federal regulations that stand in their way.

The governors find the waiver process demeaning, even though Clinton has made it quicker and easier than it used to be. They complain about having to play “Mother, may I?” with Washington bureaucrats.

A similar waiver process has allowed some state experimentation with welfare programs, but the examples are fewer, and the results far less persuasive.

With Medicaid, the evidence suggests that shifting people to managed-care programs in HMOs or similar hospital-doctor networks can provide enough savings to expand the protected populations and the list of covered services.

With welfare, on the other hand, evidence suggests that unless the states are willing to spend more money (at least for a time) on child care, job training and health insurance, it is very difficult to move welfare mothers into the work force.

Few states are willing to make such expenditures. Indeed, the record of the last decade strongly supports Clinton’s earlier contention that turning welfare over to the states likely would lead to “a race to the bottom” in guaranteeing benefits to needy children and their mothers.

That was Clinton’s position before he decided that welfare was such a political loser that he should no longer argue against getting it out of Washington.

Medicaid has a wider - and more politically connected - constituency of middle-class families with relatives in nursing homes, so he is battling to keep it intact.

Meanwhile, Republicans would dump both onto the states, with much less federal help in future years.

Real people get hurt either way. The question is the extent of the damage.

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