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Cybercast News Service - Santorum-End Medicaid as a Federal Entitlement Program

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Location: Washington, DC

By Terence P. Jeffrey

Former Sen. Rick Santorum, who says he is considering a run for the Republican presidential nomination, says that the second thing the next president should do to deal with the federal debt crisis--after signing legislation to repeal Obamacare--is end Medicaid as a federal entitlement.

Santorum likened his idea of ending Medicaid as a federal entitlement to the landmark legislation he helped push through a Republican-majority Senate in 1996 that ended welfare as a federal entitlement.

"So on Medicaid we need to do the same thing," Santorum said in an Online With Terry Jeffrey interview. "We need to repeal the federal entitlement, which is just a perverse incentive for the states to spend more money. And turn the program back" to the states.

Santorum said that ending Medicaid as a federal entitlement and giving states block grants to run the program themselves, according to state-based designs, could yield positive benefits similar to those that he says followed the 1996 welfare reform bill.

"What we did, we said: Look, welfare is a state issue," said Santorum. "It's something the states basically manage already. It's just a federal entitlement, and the federal government has a very prescriptive program on how the state runs it. But the state runs welfare policy. So what we said is we need to end the federal entitlement. We need to give a block of money to the states. We need to pare back some of these strings attached to this money, and let the states devise their own program.

"What happened?" said Santorum. "Welfare rolls decreased by over 50%, poverty levels went down, people who weren't working and were chronically unemployed went back to work, family stability increased--all positive benefits. Why do I say that? Because we need to do the exact same thing for Medicaid."

The 1996 welfare reform bill took the largest federal cash welfare program--Aid to Families With Dependent Children--and changed it into a block grant program to the states. States were required to impose work requirements on welfare recipients and drop most recipients from their welfare rolls after five years. Then-President Bill Clinton signed the bill on Aug. 22, 1996 despite protests from the left-wing of the Democratic Party.

The bill actually had significant bipartisan support in Congress. It passed the House 256-170 and the Senate 74-24. At the time, the Republicans controlled both houses of Congress. Clinton had run for president in 1992 promising to "end welfare as we know it," and was facing reelection in November of that year. In January of that year, he had vetoed a version of welfare reform.

Here is a transcript of what former Sen. Rick Santorum said about ending Medicaid as a federal entitlement:

CNSNews.com Editor in ChiefJeffrey: So the next President should sign legislation--

Former Sen. Rick Santorum: To repeal Obamacare. Number one.

Jeffrey: Repealing Obamacare.

Santorum: Number two: Again, staying with healthcare, because those are the big drivers, is Medicaid. Back in 1996, I took to the floor of the United States Senate, and through a quirk, really a quirk, of the fact that the chairman of the Finance Committee back in 1996 had to resign, Bob Packwood. And Bob Packwood, two weeks after he resigned, was to bring a bill to reform welfare to the floor of United States Senate. Well, he resigned, and the new chairman frankly didn't know anything about the bill that I had happily worked with Bob Packwood on. And the reason I worked with him on it was because when I was on the Ways and Means Committee in the House, I actually drafted the Contract With America welfare-reform bill. So, I knew a lot about this issue. So, I ended up managing that bill.

Now why do I talk about welfare? Because welfare was the only time in the history of this country where we ended a major federal entitlement. And what we did, we said: Look, welfare is a state issue. It's something the states basically manage already. It's just a federal entitlement, and the federal government has a very prescriptive program on how the state runs it. But the state runs welfare policy. So what we said is: Look, we need to end the federal entitlement. We need to give a block of money to the states. We need to pare back some of these strings attached to this money, and let the states devise their own program.

What happened? Welfare rolls decreased by over 50%, poverty levels went down, people who weren't working and were chronically unemployed went back to work. Family stability increased. All positive benefits. Why do I say that? Because we need to do the exact same thing for Medicaid.

Jeffrey: Back then you actually had a Democratic President.

Santorum:We had a Democratic President--

Jeffrey: Who was ready to sign the bill.

Santorum: And he did. It took--We had to bribe him. I mean that's the best word for it. We had to put more money in the pot, primarily for daycare. But we did. It was a matter of money, not policy. And for me, I'm willing to trade money for policy, if eventually we can get the money down the road. If you can get the right policy in place you can save the money, and I think welfare reform proved that. So on Medicaid we need to do the same thing. We need to repeal the federal entitlement, which is just a perverse incentive for the states to spend more money. And turn the program back.

I can go down the list. Medicare would be the next thing we'd have to deal with. Social Security after that--

Jeffrey: Well, let's talk about that for a second. So, the state of California is going bankrupt. Their Legislative Analyst's Office in November put out a report that said that they face a 20 billion dollar deficit every year for the next six years, and that they spend, there going to spend about 20 billion a year on Medi-Cal, which is their state Medicaid program. So, their deficit equals the Medi-Cal program. Of their 37 million people under the 2010 census 7 million of those are on Medi-Cal, so you would say to California, your own your own?

Santorum: I would say here's the money. Here's a block of money. Right now, as you know, the Medicaid funds are split between the federal and state level. And this was, again, a perverse incentive by very smart progressives in the 1960's figured out that if we cost-share with the states--let the states run the program but we cost-share with them and we pick up a percentage of whatever the cost is--that would incentivize them to grow the program. Why? Because they could get a dollars worth of benefit to their constituents for 50 cents on the dollar. So this perverse incentive to states to grow their program and the federal government is simply on the hook for it. And California--and New York is another one--is really case in point, where they dramatically expanded these programs and the federal government is picking up 50 percent of the cost of it.

Jeffrey: So, senator, you get rid of the federal entitlement, it all goes back to the states, you're giving them a block grant. Is the block grant frozen at the current level?

Santorum: That's what we did with welfare. What we said was: Look, we'll pretty much leave the money as it is. We didn't cut it, because then you get into where do you cut it and who do you cut. So we didn't cut it. We grandfathered everyone in and said: Okay, were not going increase it. So now you have to manage within this amount of money. That would be at least my initial proposal.

Jeffrey: Of course, as you know, under Obamacare, Medicaid is actually going to expand because they are going to take people up to 125 percent up the poverty level and stick them into Medicaid.

Santorum: It's going to explode, not expand. In states like Pennsylvania, we cover 75 percent of poverty. In other words, if you're at the poverty level but only at 75 percent--in other words, not even everybody who's even quote "poor" gets Medicaid in Pennsylvania. Now there going to go up to 150 percent of poverty. So there's going to be potentially even more than double the number of people who are on it. Initially, they said, well, the federal government is going to pay for it. But of course that's unsustainable and everybody knows it and the states are going to have to end up having to pick up their portion of it.


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