The State Health Flexibility Act (H.R.4160)

Earlier this month, Congressmen Todd Rokita (R-IN) Tim Huelskamp (R-KS) and Paul Broun, M.D. (R-GA) introduced the State Health Flexibility Act (H.R.4160), which would streamline federal Medicaid and Children’s Health Insurance Program (CHIP) funding into a single block grant to the states, allowing them greater flexibility in providing care for their most vulnerable citizens. From the Republican Study Committee (RSC), this bill:

  • Meets the seven principles for Medicaid reform adopted by 29 Republican governors in June 2011.
  • Combines federal funding to the states for Medicaid and CHIP (the Children’s Health Insurance Program) into a single block grant that allows states to design their programs according to the needs and priorities of their own citizens.
  • Gives states more flexibility. Because the states understand better than the federal government the needs of their citizens, states will have sole authority to determine eligibility, benefits, provider reimbursement rates, and to improve the quality of care and access to vital services.
  • Saves money. Based on the model set by the successful welfare reforms of 1996, federal funding for Medicaid & CHIP will be set at current levels for the next ten years. This change will encourage state innovation and reform while saving $1.8 trillion (revised to $2.0 trillion after review of CBO’s March 2012 baseline) compared to current law under ObamaCare.
  • Allows states the freedom to set their own funding at whatever level they choose, and the citizens of each state can hold their officials accountable for irresponsible decisions.
  • Allows Congress to retain the ability to temporarily or permanently adjust federal funding levels to account for changing needs. Spending will simply no longer increase on auto-pilot.
  • Reduces government dependence. As state reforms reduce dependence on government assistance, those affected are more likely to enter the workforce, get insurance, and be able to lift themselves up the economic ladder.
  • Increases transparency by requiring annual, independent audits of states’ use of federal funds to be provided to the U.S. Treasury Secretary, the state legislatures, and the general public. Misused funds detected by an audit will result in forfeiture of the funds with a 10% penalty to encourage proactive efforts to root out waste, fraud, and abuse.
  • Continues Current-law prohibitions against abortion funding, health care services for illegal aliens, and discrimination based upon disability, sex, race, color, or national origin.

H.R.4160 takes the Medicaid portion of last year’s RSC budget and introduces it as a separate bill, since no current budget addresses the insolvency of Medicaid. This bill will begin the process of devolving federal programs back to the states in order to reduce the control that the federal government has over our economy.

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