October 20, 2014

Branstad calls Medicaid a “rusted out Cadillac” that needs new model

Iowa’s Terry Branstad is among 11 Republican governors who’ve asked President Obama to scale back the planned expansion of Medicaid — and the group sent Obama a letter asking for a face-to-face meeting with the president. 

“The governor signed onto that letter simply asking for greater flexibility in managing a state entitlement program that is consuming a greater and greater portion of our budget every year,” says Branstad advisor Michael Bousselot. 

Branstad says when he was governor in the 1980s and ’90s, less than 12 percent of the state budget was spent on Medicaid. Today, Medicaid “consumes” nearly 18 percent of the state budget according to Branstad.

“It is a significant burder on the taxpayers of Iowa and now we’re concerned about the federal government mandating an expansion and promising to pay a lot of it, but they are broke,” Branstad says. “And they have a fiscal cliff.”

The Affordable Care Act calls for expanding the number of uninsured Americans who qualify for Medicaid. Medicaid is a joint state-federal program and Governor Branstad says it becomes an even bigger problem in Iowa, with its aging population.

“This is a Cadillac program. The problem is it’s a rusted out Cadillac,” Branstad says. “But we’d like to be able to have a sleek, new program that we could put together…where we partner with people and people contribute some to their own health and then the state also assists them as opposed to where it’s the government’s responsibility…and I have no obligation for my own health.”

In the short term, Branstad says the state of Iowa will have to come up with an extra $45 million in the current budgeting year to cover Medicaid costs, plus another $57 million in the following year.

“That doesn’t deal with expansion, that’s just the change in the mix because every year they adjust how much the federal government pays and how much the state pays, based on how well you’re doing in relation to other states,” Branstad says. “Well, we’re doing better in relation to other states and we’re proud of that, but we’re getting penalized by it to the tune of $57 million in the Medicaid formula.”

If Iowa’s economy were doing worse, the federal government would pick up more of the costs of providing health care coverage to Iowans who qualify for Medicaid.