While House Republicans and GOP governors continue to hammer out details of their proposed Medicaid reform plan, some Senate Republicans, led by Nancy Kassebaum of Kansas, are considering a more modest proposal.
Under the Kassebaum plan, which was released earlier this month, states would take over complete responsibility for the major welfare plans, including Aid to Families with Dependent Children and nutritional programs for women, infants and children. States also would have responsibility for Medicaid acute care that goes primarily to those populations.
In exchange, the federal government would become solely responsible for the remainder of the current Medicaid pro-gram, consisting primarily of long-term care and care for disabled beneficiaries.
Currently, about 30% of Medicaid expenses go for acute care, while 70% of Medicaid spending is for elderly and disabled beneficiaries. According to the Congressional Budget Office, Medicaid is projected to cost the federal government about $100 billion in 1996.
The trade-off would take place after a five-year transition period. During that time, states would be required to spend all the federal funds they currently receive for Medicaid and welfare on those programs but could reduce the states' portion to 85% of what they now spend.
The Kassebaum plan is less ambitious than the plan being considered by House Republicans and GOP governors. Under that plan, states would be given complete control of Medicaid in exchange for a cap on the federal share of Medicaid costs. Recently, Wisconsin Gov. Tommy Thompson, a Republican, said Medicaid spending should be limited to 8% growth in the first year, declining over five years to a 5% growth rate.