Health Care

Commentary: Medicaid Block Grants for Administrative Flexibility

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Active marketplace, within existing program, to boost efficiency

With legislation intended to protect individuals against federal mandates, Louisiana lawmakers are well positioned to pursue additional reforms that expand consumer choice and lower costs. Christie Herrera, a health care specialist with the American Legislative Exchange Council, offers such a reform: Medicaid block grants, which enable greater administrative flexibility.

Last year Louisiana passed House Bill 1474 in an attempt to oppose insurance mandates of the Patient Protection and Affordable Health Care Act. Rep. Kirk Talbot (R-River Ridge), the bill’s sponsor, argued that a federal mandate violates the Commerce Clause of the U.S. Constitution. Now forty-two states have either filed or announced legislation similarly modeled after ALEC’s “Freedom of Choice in Health Care Act.”

Herrera encourages state legislation that contrasts with the restrictions and mandates of ObamaCare, and she cautions against complacency in light of recent Virginia and Florida court rulings. While these bolster the constitutional case against key provisions of the federal law, Herrera encourages state legislators continue to pursue reforms that open their markets to innovation.

Louisiana officials should now build on this achievement and pursue a Medicaid block grant – capped funding – from the federal government in exchange for greater flexibility. Specifically, that flexibility should mean allowing competition from private providers.

There is a “perverse incentive” rooted in the way Medicaid is funded that has lead to higher costs, Herrera explains. For every dollar a state spends on Medicaid, it gets two dollars back from the federal government.

Other states have already implemented reforms that result in lower costs, improved service, and heightened efficiency. For example, Florida’s Medicaid Managed Care Reform pilot program has opened the way for greater competition between health care providers, while lowering co-payments.

As Herrera explains, there is little choice. “States will be affected the most by ObamaCare, with the budget-busting Medicaid expansion, forced collaboration on federally-dictated health insurance exchanges, the unconstitutional individual mandate, and the federal takeover of state health insurance regulation… That’s why 28 states have stepped forward to challenge this law and reclaim state sovereignty.”

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at He can also be followed on Twitter.