[Congressional Record Volume 141, Number 12 (Friday, January 20, 1995)]
[House]
[Page H450]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATES ARE BEING SHORTCHANGED ON MEDICAID
(Mrs. THURMAN asked and was given permission to address the House for
1 minute and to revise and extend her remarks and include extraneous
material.)
Mrs. THURMAN. Mr. Speaker, all of us in this Congress should be
dedicated to making sure that our scarce resources go to those
Americans most in need of assistance.
However, this is not what is happening with Medicaid.
That is right, Mr. Speaker. When it comes to the Medicaid Program,
many of our States, including my own home State of Florida, are being
shortchanged. We are being shortchanged because the Medicaid funding
formula, which is 30 years old, is neither fair nor accurate. Under the
formula in use since the Medicaid Program was created, a State's need
is based solely on per capita income.
In 30 years, we have developed much more accurate ways to measure
true need and we should use them.
The General Accounting Office has recognized the shortcomings of the
current formula. In a report the GAO recommended a new formula that
takes into account the rate of poverty as well as per capita and
corporate income. The GAO has said this will be a much more accurate
reflection of a State's ability to finance Medicaid benefits. It would
also ensure that assistance went where it is most needed.
The Fairness in Medicaid Funding Act of 1995, which I am introducing
today puts in place the GAO's recommendation.
I would urge my colleagues to join me in correcting the Medicaid
funding formula.
Mr. Speaker, as is often the case in Washington, the Federal
Government does not always target its resources to those individuals
who need them the most. Unfortunately, when it comes to how the Federal
Government calculates the Medicaid matching fund formula, the existing
Federal formula creates an unfair distribution of Medicaid funding to
the States.
I am committed to continue the debate over the inequity until we
arrive at a fair remedy. Therefore, I rise today to reintroduce the
Fairness in Medicaid Funding Act of 1995.
My bill would update the Federal Medicaid funding formula and result
in a fair and accurate disbursement to the States. The General
Accounting Office [GAO] has evaluated the existing Medicaid formula and
has concluded that it does not meet the objectives established by
Congress in 1965. The GAO examined the objectives Congress was
attempting to achieve and developed an alternative formula to meet
these stated goals. My bill, the Fairness in Medicaid Funding Act of
1995, would use the GAO formula not to change policy but only the
process by which Medicaid dollars are allocated.
The essence of the existing Medicaid formula has been unchanged for
30 years. Congress had two intentions when they created the formula.
First, that Federal matching funds should reflect a State's ability to
pay benefits to those in need. And, second, Congress wanted to
determine how many residents of each State needed Medicaid benefits.
At the time, the best information available to measure these
objectives was an estimate of each State's per capita income. Thirty
years ago this information was the best available to Congress. But
during the last two decades, the Federal Government has collected more
and better economic data.
Mr. Speaker, today there are much better measurements available, and
we should use them.
A significant weakness of the current formula is that it does not
adequately reflect a State's ability to pay its share. The money a
State can pay in Medicaid benefits should also reflect the income its
residents and businesses produce. However, a measurement of per capita
income reflects only part of the total income produced by a State's
residents and businesses.
Per capita income does not include corporate retained earnings, which
is a significant share of a State's business income. Therefore, two
States with the same per capita income may actually have significantly
different capacities to fund Medicaid benefits.
Furthermore, the per capita income formula does not adequately
measure the total number of people in need of Medicaid benefits. That
need is determined by the number of residents with incomes low enough
to qualify for Medicaid. Again, two States with roughly equal per
capita incomes can have dramatically different percentages of residents
qualifying for Medicaid. Yet, both States would receive the same
matching rate from the Federal Government. This just does not make
sense any more and it needs to be changed.
My proposal, based on the GAO's recommendations, would base the
Federal share for Medicaid on: First, per capita income plus corporate
income produced within a State. This is a much more accurate measure of
a State's ability to finance Medicaid benefits. Second, the State's
poverty rate, which generally indicates the number of persons who are
potentially in need of Medicaid benefits.
All these statistics are already complied for other purposes by the
Federal Government. Moreover, this proposal does not cost the Federal
Government one dollar--it is budget neutral.
Mr. Speaker, the passage of the Fairness in Medicaid Act of 1995 will
ensure that States receive, not only what they need, but what they
deserve from Washington. This plan is based upon a fair, objective, and
contemporary evaluation of each State's needs and capacity.
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