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Moving Beyond Rhetoric, Fantasy and Denial: Medicaid Reform and Unbalanced Budget Priorities

"Of all the forms of inequality, injustice in health is the most shocking and the most inhuman."
Dr. Martin Luther King, Jr.


  • Elimination of Medicaid as an entitlement by establishing a mega-block grant
  • Cuts in Medicaid spending by $182 billion over seven years
  • Transfer responsibility to states to make decisions about who should lose Medicaid coverage, which benefits should be eliminated, and which providers should be paid less


By printing time, the U.S. House of Representatives and the U.S. Senate had passed the Balanced Budget Reconciliation Act of 1995 which contained the Medicaid Transformation Act of 1995. On October 26,1995, the measure was approved by the House by a vote of 227 to 203 and the Senate passed the bill by a vote of 52 to 47 on October 27th. Both bills require that Medicaid be converted into a block grant for the states, which NMAC opposes. The bills differ as to how the MediGrant would operate in the States. For example, the Senate version would require:

  • States to cover pregnant women, children ages 12 or under and disabled persons
  • Federal nursing home standards would be maintained
  • An additional $12 billion would be allocated for Medicaid expenditures for Arizona, Florida, Georgia, Kentucky, South Carolina, Vermont and the state of Washington.

The legislation now moves to a House/Senate conference where differences between the two bills will be addressed. Following the conference, the bill will be reported to the House and Senate for a vote on the conference bill and if it passes, it will be sent to the President for his signature. The President has threatened to veto the bill, which NMAC supports. If this occurs, the legislative process will begin again at the subcommittee-level of the House and Senate Committees which have jurisdiction.


Although, we who know HIV/AIDS have been vigiliant, we have underestimated the extent to which the uninformed and the cruel have united to dismantle the largest health care safety line for people living with HIV/AIDS - Medicaid. But how did we get to this point of considering proposals that will have the effect of denying entitlement to health care services for those who need assistance most -- the poor, disabled, and elderly members of our society who have no other options but to get sicker quicker and die prematurely? In pursuit of the elusive balanced budget and tax breaks for those who don't need them, we have compromised the integrity of our nation. It is truly a sad day. But, perhaps, at some deep, subconscious level there is an acknowledgement that something is terribly wrong with this picture - that we do understand that the vitality of a nation is determined by the health and productivity of its members. However, in order to move beyond rhetoric, fantasy and denial about the human implications of proposals to reform Medicaid, we must first understand how the budget got so out of whack in the first place.


Tax Cuts

The federal government did not have to increase its borrowing rate in the 1980's to pay for additional spending on programs and services. On the contrary, the government borrowed heavily-to pay for the corporate and upper-income tax cuts that it enacted, particularly, the 1981 Kemp/Roth tax bill, which instituted the Reagan "supply-side" agenda. The supply-siders promised that when America's richest people got a break, everyone else would benefit as well. In truth, of course, exactly the opposite occurred. Rather than rising, incomes stagnated or fell for most family groups. America's national savings rate hit record lows. The trade deficit ballooned to previously unheard of levels. And far from a balanced budget, federal budget deficits soared almost beyond comprehension. Thus, the total 1992 cost of the supply-side tax reductions for the richest million families-adding up the $84 billion tax cut that they enjoyed in 1992 and the $81 billion in interest the government must pay on the debt incurred due to the rich's tax cuts in previous years-comes to a staggering $164 billion which is close to the $182 billion called for in proposed Medicaid cuts.

It is ironic that Senator Roth, co-author of the Reagan tax cut of 1981, has recently become Chairman of the United States Senate Finance Committee and he has already indicated his intention to push for another tax-cut bill. Senator Roth is also leading the charge to dismantle the Medicaid program.

Defense Spending

Redefining national security to include domestic activities needed to promote America's economic well-being can generate far more jobs than will be lost in the military-industrial establishment. Moreover, in a period of declining military need, defense businesses have five choices to maintain profits: find new markets for their military products; consolidate, downsize, be bought, go out of business. In this regard, we can learn a valuable lesson from Walter Jones. When Walter was asked why he robbed a bank, he said, "that is where the money is." Walter's logic was correct but his vision was short-sighted. Today, the same error is being made by many Pentagon officials and politicians. The difference between the two is that in Walter's case, the consequences of his actions were relatively limited. In the case of arms trafficking, "where the money is," thousands of people in our armed forces, millions of American taxpayers and billions of people around the world--pay for and suffer the consequences of th massive trade in military items.

Currently, one billion dollars in Defense Department spending yields 18,000 direct jobs compared to what one billion dollars will produce in the civilian economy - in energy, 22,000; municipal infrastructure and solid waste management, 23,500 jobs; education 30,000 jobs. Unfortunately, these are elements of the economic debate about which few Americans heard during the 1992 presidential campaign. The true sound bite of that campaign should have been "jobs, jobs, jobs." Additionally, the Pentagon is still receiving more money today than it did before the Reagan years. President Clinton's FY 1996 military budget request is a full $20 billion more in today's dollars than America spent on the military in 1980, prior to the fall of Communism. Despite the absence of any serious threats, military spending is at a rate of $5 billion every week, $700 million a day, $500,000 a minute, and $8,000 a second.

QUESTION: If you earned $1,000 every day, how long would it take for you to earn $1 billion?
ANSWER: 2,740 years

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This article was provided by National Minority AIDS Council. Visit NMAC's website to find out more about their activities, publications and services.