MS. DIANE REHMThanks for joining us. I'm Diane Rehm. More than $1.3 trillion of savings in Congressman Paul Ryan's budget plan would come from Medicaid. But, so far, those plans are attracting less attention than the budget's Medicare cuts. While many Americans know Medicaid primarily serves children and the poor, fewer realize it's also the way many middle class Americans pay for long-term care.

MS. DIANE REHMJoining me in the studio to talk about the consequences of cutting Medicaid, Norm Ornstein of the American Enterprise Institute, Julie Rovner of NPR, Ron Pollack of Families USA, Joy Johnson Wilson of the National Conference of State Legislatures. I hope you'll join us, 800-433-8850, your email to drshow@wamu.org. Feel free to join us on Facebook or send us a tweet. Good morning, everybody.

MR. NORMAN ORNSTEINGood morning.

MS. JULIE ROVNERGood morning.

MR. RON POLLACKGood morning, Diane.

MS. JOY JOHNSON WILSONGood morning.

REHMNorm Ornstein, talk about last week's special election in New York and what it could mean for the debate over Medicare.

ORNSTEINIt was big, Diane. This is a very Republican district. Of course, it's one that was vacated because of the scandal -- a member of Congress who had to resign immediately when he went on Craigslist with a racy picture of himself. A strongly Republican district, a three-way race, but the Democrat won handily with 48 percent in that three-way race. It's hard to make an argument that was anything other than the Medicare issue, which Democrats played to the hilt. And there's been a significant backlash.

ORNSTEINI wouldn't make projections from one special election to other elections, but it's having an enormous effect inside Congress psychologically. And Republicans are nervous about what will happen with the Medicare issue. And, of course, with the debate ahead on the debt limit, a desire, I think, now on the part of Republicans to try and find some way to get a deal where they can at least move the conversation in a different direction, this is going to be a dominant issue, even more so as Democrats get heartened by that result.

REHMJulie Rovner, talk about Medicaid and the misconception that some have, that it's only for the poor.

ROVNERWell, you know, the Kaiser Family Foundation does this monthly tracking poll. And they came out with a poll last week, and it was -- obviously, the headline from the poll was that the public doesn't want to cut Medicaid almost as much as they don't want to cut Medicare. But one of the -- I think the most interesting finding in that poll was that more than half of the respondents said they had a personal connection to the Medicaid program.

ROVNERAnd that was defined as having a respondent or a friend or family member having received assistance from Medicaid. That's a tremendous number of people. And I think the reason is not so much that the number of low-income children and moms, the people that we traditionally think of as being on Medicaid, but it's what you started out with. It's that long-term care component of Medicaid.

ROVNERA third of the nation's nursing home bills are paid by Medicaid. Seventy percent of every person in a nursing home is being paid for with Medicaid funds. That's pretty much, you know, more than two-thirds of everybody who goes into a nursing home will end up having that nursing home stay being paid for by Medicaid. Those are middle class people who go into nursing homes and then spend down -- end up spending all of their savings. And that becomes paid for by Medicaid.

REHMAnd, Joy Wilson, how did Medicaid become such a major player in this whole long-term care program?

WILSONWell, because nursing homes are very expensive and the expense has gone up tremendously over the last 10 years. And so most families cannot afford to pay out-of-pocket for nursing home care, and Medicaid is the only public program that pays for nursing home care over the long term. Medicare pays for a very small piece, so Medicaid is the primary funder, next to out-of-pocket, for long term-term care.

REHMAnd, Ron Pollack, you've got the average cost of a nursing home per year, $75,000. Who's got that kind of money? And do we prepare for -- do Medicaid recipients simply expect the government to cover it? What's happening?

POLLACKYou see, this is really a program that's helped people who all their lives were middle class. And then grandma goes to a nursing home, and, on average, it costs $75,000 a year. And you quickly impoverish yourself. You know, one of the questions you asked before, the relationship between coverage for children and coverage for people who need long-term care. One out of every six people in the Medicaid program are both participating in Medicare and in Medicaid, but they account for about half the costs in the Medicaid program.

POLLACKSo when we hear proposals about cutting back on Medicaid, look out grandma and look out for the family that takes care of grandma because someone is going to have to leave his or her job in order to be a caregiver to grandma if she can't stay in a nursing home.

REHMJulie Rovner, how come we've heard so much about Medicare, but very few people have been talking about Medicaid?

ROVNERBecause Medicare, traditionally, has been a political football. We've heard this sort of Mediscare proposal that, you know, that phrase going back, really, to the mid-1990s. Medicare has been this political football that each party has used as a cudgel against the other.

ROVNERThe Republicans actually ended up using it quite effectively in the 2010 elections because there is $500 billion worth of reductions in the health law that passed in 2010. And they used that against the Democrats and to ride to a new House majority. And, now, I hear Democrats saying that the Ryan budget, with its cuts to Medicare, is the biggest gift that the Republicans have given to the Democrats in this Congress. And, indeed, we saw the election last week in New York as the first bit of evidence to that.

ROVNERSo there's -- Medicare is always used as a weapon. Seniors vote. But, again, I think seniors even don't appreciate very much how important Medicaid can be to them. Most people, when you look at the polling, don't even realize that Medicare doesn't pay for long-term care. They don't understand that. As Ron just said, you've got a lot of these, what are called, dual eligibles, people who get Medicare and Medicaid. So, often, they don't realize that they're getting both programs.

REHMNorm Ornstein, when you think about Medicaid, how well does it work for the poor?

ORNSTEINIt's not a great program in a lot of ways, Diane, because it's an extremely inexpensive program. But providers get paid very little, and a lot of people with -- poor people with Medicaid now are even having difficulty finding providers. But it's the safety net out there for a lot of people. The majority of births in the country occur under Medicaid. There's another component to this we haven't talked about, not just the elderly. It's also the seriously disabled.

ORNSTEINAnd in that number that Julie talked about, of half of people being touched, I suspect a significant number of those who have relatives who are seriously mentally disabled. And it is the safety net for people who can't get by on their own. And for families, that's extremely important. I'd make one more point, Diane. I make a prediction. This is not just about the elderly, even the issue that we've been talking about. It's their children.

ORNSTEINThe Democrats are going to, at some point, have an ad that shows every 40-something's nightmare, which is mother-in-law and father-in-law arrive at the front door, you open when the doorbell rings and there they are with a suitcase in one hand and a carton of Depends in the other, saying, Medicaid won't pay for your father-in-law's nursing home anymore, and his dementia's getting worse.

ORNSTEINGet the back bedroom ready. This is where it's going to touch people. And I suspect that this is the big shoe waiting to drop, and it may have more of an impact politically in the end than Medicare.

REHMDo you agree, Ron?

POLLACKI do. I think there are some Republicans who feel they can cut Medicaid with impunity. They can't cut Medicare. But the reality is that Medicaid is the place where people get long-term care. And if you cut Medicaid -- that's where the dollars are, is with respect to nursing home and long-term care. So you're being consistent in terms of when you cut Medicare, and then you cut Medicaid. You're hurting seniors.

POLLACKBut one point, I think -- I don't want to slide over. We talk about this being a safety net program for children and families. And I think what most people don't know is that safety net for a good part of the poor -- under any circumstance would be considered poor -- is more whole than it is webbing. I'll give you some examples. For a three-person family, eligibility in Arkansas is $3,150 in annual income. In Indiana and Missouri, it's $4,633 in annual income for family of three.

POLLACKIn Texas, it's $4,818. In Pennsylvania, it's $6,300. All across the country, families, who, under any reasonable standards, are poor, do not qualify. And then one other thing, and that is that non-parental adults, singles and childless couples, in 42 states, you literally -- and I mean literally, not rhetorically -- literally can be penniless, and you're ineligible for Medicaid.

REHMJoy, what are state legislators saying and doing about all this?

WILSONI think one thing they'd say is that the program is underfinanced and that unless and until we address the financing -- the underlying financing of the program, we're not going to be able to do what the program is designed to do. I think one of the things that people have not addressed is the growing number of people with disabilities, that we save a lot of people.

WILSONAnd we have a lot of people that have brain injuries, and we have a lot of children that have mental disabilities that are not -- they don't need nursing home care, but they need a tremendous amount of care that their parents can't afford and is not covered by insurance.

REHMAnd the states can afford to continue...

WILSONWell, and if they do, it ends up coming out of education, K through 12, higher ed, and it comes out of the criminal justice system.

REHMJoy Johnson Wilson, she is with the National Conference of State Legislators. Short break. When we come back, I'll look forward to hearing from you.

REHMWelcome back. We're talking this morning about Medicaid, another program, a part of the entire Medicare health system that, apparently, is going to experience huge cuts come July 1. Here in the studio, Norman Ornstein, Julie Rovner, Ron Pollack, Joy Johnson Wilson. Why is July 1 such a crucial date, Julie?

ROVNERWell, the states were given extra money, actually, what they call extra matching funds to -- to start with, Medicaid is a shared expense. The federal government pays part of it. The states pay part of it. The federal government pays, actually, a little bit more than half and a lot more than half in poorer states. And in the stimulus bill that passed, when the president first took office in 2009, the states were given extra money to help them pay their burgeoning Medicaid costs.

ROVNERRemember, Medicaid is what we call a countercyclical program. When the economy goes down, people lose their jobs, they get poor, more people qualify for it. So we're in that ironic place where states have less money, but they have more people on Medicaid. So the federal government gave states this extra money. Well, that expires on July 1, and it hasn't been extended. So the states have not quite recovered although we're seeing some improvement in states' revenue situations. But they're going to lose a big chunk of money on July 1.

ROVNERAdding to this, we should point out, the states are required not to cut their eligibility for Medicaid because of the new health law. They have to maintain that eligibility until 2014. So the states are in kind of a world of hurt right now when it comes to Medicaid.

POLLACKWell, just to give you a sense of what this means, take the State of Texas. I know you're going to have Congressman Burgess on. Right now, for every dollar spent on Medicaid in Texas, 71 cents is paid for by the federal government. Come July 1, it's going to be 61 cents. And so that's a big drop, and that doesn't even count the various proposals that are now pending in Congress. You opened up by talking about huge potential cutbacks. That's almost $1.4 trillion over the next 10 years that's part of the House Republican proposal introduced by Congressman Ryan.

POLLACKAnd it does it in two ways. Number one, it converts Medicaid into a block grant with much diminished funding at the -- after 10 years. The cutback is about one-third of what the states would otherwise receive. That alone is going to cost the states over $770 billion in the next 10 years. The other way Congressman Ryan and the House Republicans proposed to cut Medicaid is that, in 2014, the Affordable Care Act, the health reform legislation, is designed to expand coverage.

POLLACKAnd 100 percent of the cost of those people newly eligible will be picked up by the federal government. That will result in the states getting about $600 billion less than they otherwise would be if they allow that legislation to go into effect.

REHMOkay. So here we are at a moment when the Congress is about to vote on lifting the debt ceiling. How does all of this play into it, Norm?

ORNSTEINWell, keep in mind that the public doesn't really quite grasp what the debt limit is. They think that it amounts to a family that's maxed out on its credit cards and wants to increase their credit card limit. In fact, it's paying for existing debts. But what we have is a situation where, never in our history, since we've had a debt limit have we defaulted. And if we do, we have no idea what the consequences will be in the marketplace for interest rates and otherwise.

ORNSTEINAnd you've got Republicans taking a very tough line, saying, not a dime in taxes, but we need to make big cuts here. And the place -- they're looking everywhere. But the place where they're looking the most is in the health care entitlements. So we've got a lot of pressure now to make very significant cuts. And as Ron said, you've got states -- Texas, just to pick one example.

ORNSTEINGov. Perry, who's now considering a presidential bid, ran for re-election the last time, saying, look at the surplus we've had because we've had real conservative governance. Oops, $4.3 billion deficit. The deficit for the next two years appears to be $15 to $27 billion. That's without these cuts in Medicaid, and it's the 50th in states in terms of what they provide to citizens. So we've got havoc out there and the federal government looking to make that worse.

REHMDo you believe that the federal government moving toward a block grant plan is going to affect state legislatures all over the country, Joy?

WILSONWell, there's two ways to look at it. From some state perspective, a ceiling on what you have to do, you have your money, this is what it is, with the flexibility to decide what it is you're doing has some cache right now where we've got maintenance of effort and huge budget deficits. And they're cutting K through 12, and they know that's not a winning solution.

REHMSo...

WILSONBut on the other side, if you have a block grant and the entitlement continues, there's no way to finance that without doing great damage to the other things that states have to do outside of Medicaid. And so there's a problem.

REHMIt sounds as though all states are going to be caught between a rock and a hard place...

WILSONAnd a hard place.

REHM...if, in fact, they're going to get a certain amount of money from the federal government in the form of a block grant, and yet the number of recipients who are currently eligible for these benefits keeps growing. How are states going to pay for it? Are they simply going to knock people off the eligibility list?

WILSONWell, they can't if they're going to stay with the program. And I think the question becomes, at what point does the requirements of the program outstrip a state's ability to pay and they decide not to participate?

POLLACKYou know, we're ready -- as I indicated before, the eligibility standards are miserly to begin with. I mean, where are you going to cut? We're not talking about superficial cuts here. We're talking about, really, cutting to the bone. What we need to do is understand a couple of things. First, with respect to the expansion of coverage that the Affordable Care Act establishes, all those people who will be newly eligible, that will be picked up 100 percent by the federal government from 2014 to 2016. That's very important.

POLLACKSecondly, we could go back if there was the political will to do it without cutting back this matching formula that goes into effect on July 1. My hope is that state legislators and governors will express to members of Congress, particularly on the Republican side of the aisle, that this is really troublesome and work together to get this changed.

REHMHere's an email from Jim, who says, "If families can't afford it, how is the government supposed to afford it? It comes out of the taxes families pay. So families end up paying for the cost in the long run."

ORNSTEINWell, you know, that's part of what you have as a societal bargain. Of course, our revenues come not just from poor and middle-class families. They come from wealthier people. They come from corporations. They come from other kinds of revenues. You've got to figure out a way that you can match your revenues to your expenditures. We have to keep in mind that we had $5.6 trillion in surpluses as we approached 2000.

ORNSTEINAnd then Alan Greenspan, the chairman of the Fed, was talking about what do we do if we pay down all of our debt? Why have we gone to $14 trillion in deficits that's causing this great turmoil, along with the economic downturn? The largest component is tax cuts that continue -- that have driven us into a big hole.

REHMHere's another email from Peter in Tarrytown, N.Y., who says, "What are the general guidelines to qualify for Medicaid? Is it income-based only? Or does the state you live in define the income level?" Julie.

ROVNERThe states define the levels, and there are asset tests also. But it's defined within federal guidelines. And this is one of the things that -- why the block grant appeals to some states is that they would get more flexibility to decide about the rules, that there are federal guidelines that the states have to apply about who is eligible. And the states would have much more flexibility to decide. But, yes, you have to -- basically, what Ron was talking about is you have to fit into a certain category.

REHMRight.

ROVNERYou have to either be a child or a pregnant woman or elderly or disabled. So if you're not in that certain category -- and that's what's going to change when the new health law takes effect in 2014 -- you would simply have to be low income in order to qualify.

REHMBut then there are a lot of people out there who are saying -- and certainly Republicans and Democrats, Ron, who are saying -- you got to cut spending. You just have to cut spending. Why should Medicaid be exempt?

POLLACKWell, there are two different approaches to dealing with the cost of the Medicaid program. The approach that the Republicans have chosen to use is, we're going to cut people from the program. We're going to cut them by creating block grants that are not sustainable by the states, and the states are going to have to cut back. We're going to allow the states to reduce miserly eligibility standards even further. So that's one approach.

POLLACKThere is another approach that I'm happy that the Obama administration has adopted, and that is, let's strengthen the efficiency of the program. For example, there are a significant number of people who are eligible both for Medicare and Medicaid. Heretofore, there was no coordination between the two, and there were a lot of unnecessary expenditures because of that lack of coordination. That is being changed. Or people who may have multiple health conditions.

POLLACKI mentioned the people who are eligible for both Medicare and Medicaid. Two-thirds of them have at least three chronic health conditions, and they're seeing different specialists. And one specialist doesn't know what the other specialist is doing. And so there is a lot of ways and things that are not improving the quality of care that people are receiving. As we have more coordinated care, I think we can create higher quality, and we can diminish cost.

ORNSTEINYou know, one of the things we have to consider here is that if you just cut the spending, it doesn't mean you're going to save over the long run. Medicaid, to a considerable degree, is also an investment in the future. If you don't provide prenatal care to pregnant women, you're going to end up with babies that are not going to function to their full capability. It means the workforce down the road is going to be very different.

ORNSTEINThe cuts that we're making in women's, infants' and children's feeding programs in Head Start have a comparable impact. And at the same time, if we look at health care cost, if people don't have insurance, we know what happens. They go to the emergency room. They do not get any preventive care. We're finding, even now, people with insurance, as their incomes go down, are not taking medications. It adds to the cost for the society of health care.

ORNSTEINAnd a part of the tragedy of the way we debated or didn't, the Affordable Care Act in 2009 and 2010, is it became one party against the other. No conversation about the kinds of things that Ron has been talking about, about how we can build some kind of an integrated system to reduce cost while also providing better care.

REHMBut, Julie, it can't just be that Republicans are all bailing us and simply don't care about what's happening to the poor or young children. I mean, how does one resolve these issues?

ROVNERNo. The argument and, you know, the proposal to make -- to block grant the Medicaid program goes back several decades. And it's always, you know, this is part of the devolution ideology of the Republican Party that, you know, the government that's closest to the people governs best.

ROVNERAnd they think that Medicaid should be run by -- more by the states. That's simply what this is. To some extent, the cost saving part of this is similar to the Medicare proposal in the Ryan budget, which is that -- and it's been called by sort of nonpartisan analysts, a cost shift. Whereas the Medicare proposal would cost shift to beneficiaries, the Medicaid proposal would cost shift to the states. It would say the block grant part of it is -- could be a revenue neutral thing. If it's a...

REHMAnd the states can handle it.

WILSONWell, I think the important thing that we haven't done as a country is address what we do about long-term care financing. Having Medicaid be the only option is not going to work as you have an aging society. And, secondly, we don't have, in the Medicaid statute, a countercyclical provision. So when there's a recession, the state has to come, hat in hand, and say, please, please, please, Congress, we're in a recession, and we're -- that's not appropriate. And then Congress goes where the money is.

WILSONAnd then Social Security, not happening. Medicare and Medicaid are the next big pots. But we have to figure out a way to control health care cost and to figure out how to finance long-term care will always be here.

REHMJoy Wilson of the National Conference of State Legislators. You're listening to "The Diane Rehm Show." We're going to open the phones, 800-433-8850. Let's go first to Pensacola, Fla. Good morning, Tina. You're on the air.

TINAGood morning. My 25-year-old daughter with Down syndrome is on the Medicaid waiver here in Florida. We just went through this. I'm just out here trying to work and it's paying for her to have a place to go every day. If I can't have some place for her to go, I won't be able to work. I'm paying my taxes. And, plus, this population, the disabled, they do not vote. That's all. And I'll just take my comments off the air.

REHMJulie.

ROVNERMedicaid is incredibly important for the disability population, including, I might add, many disabled children and adults who have insurance. Medicaid provides what are called wrap-around services that private insurance often doesn't.

ROVNERThere is a law that finally passed, after years and years of effort several years ago, that allows people often -- who often have private insurance to buy into Medicaid in order to get some of these wrap-around services that, as this caller points out, allows them to go to work and earn a living and pay taxes. This is something that, you know, Norm was saying, that, you know, Medicaid is often, you know, talked about as not a very well functioning program.

ROVNERBut there are many ways in which Medicaid functions extraordinarily well and does things that no other health program does. It may be one of the things that makes it, you know, "expensive," but it's also one of the things that makes it an amazing investment and allows, you know, for investments -- allows for people to be functioning and for the rest of their families to be functioning participants in society.

REHMTo Peoria, Ill., good morning, Carol.

CAROLHi. My situation is that I am a caregiver to a -- my husband has got dementia. He's on disability, which -- on Social Security disability. He has Medicare and Medicaid. As the caregiver, A, I cannot work because I got to take care of him. So I have -- when I hit 65 or 62, whatever, I will no get anything or -- because I can't -- I haven't put money in the system. And, two, in 2014, I'm worried about the private insurance I have to buy because I don't get $600 a month by taking care of him. We don't get that much money in our household.

REHMSure. Yeah, Ron Pollack.

WILSONWell, Carol is a perfect example of a family that has done all the right things. They work hard, and they take care of family members. They're middle class. And then, all of a sudden, something hits where a loved one has a significant disability. And unless Medicare, Medicaid is there to help them, they're in real trouble.

REHMRon Pollack, he is executive director of Families USA. When we come back, we'll take calls from Martinsburg, Ohio, Baltimore, Md., Chapel Hill, N.C.

REHMAnd joining us now from his office on Capitol Hill, Congressman Michael Burgess. He is Republican from Texas, chairman of the Congressional Health Care Caucus. Thank you for joining us, sir.

REP. MICHAEL BURGESSGood morning, Diane. It's so great to be with you this morning.

REHMThank you. Talk about the eligibility criteria for Medicaid. Do you believe that that is fair?

BURGESSWell, as you know, the law that was signed a little over a year ago, called the Affordable Care Act, kind of changed the equation with Medicaid in a big way because in -- I think, in a year-and-a-half, there will be significant, new mandatory populations that will be covered under Medicaid. And, unfortunately, as that all rolled out, there really wasn't any structural change in Medicaid itself.

BURGESSYou have to ask yourself, well, if you're going to have a blank sheet of paper and cover 30 million Americans who aren't covered now, is, really, the best we could do to put half of them into the Medicaid system, a Medicaid system that requires 1,300 waivers to work? I mean, the eligibility requirements for this new population are all well-established. Those are people who earned at or below 133 percent of the federal poverty level.

BURGESSAnd I think that that has been -- there was a 5 percent sort of margin for error. So, now, it's 138 percent of the federal property level...

REHMAnd excuse me...

BURGESS...will be covered under the new Medicaid.

REHMWhat would that be in terms of dollars? I think it's something like $4,800 for a three-person family?

BURGESSYeah, it's not generous. But, at the same time, it's a population which heretofore has never been covered at states like mine that -- in Texas, which tends to be rather minimalist as far as the covered population, children, adults with disability and women who are pregnant. Up to 150 percent of the federal poverty line are covered under Medicaid now.

REHMOkay. Let me ask you, if you can give me a figure, how many Texas seniors and people with disabilities who now use Medicaid as the key funding source for nursing homes and other long-term care? How many would you estimate in Texas?

BURGESSDiane, I don't know the answer to that question. But I do know this. When you talk to Dr. Berwick over at the Center for Medicare and Medicaid Services, he will tell you that 20 percent of his population spend 80 percent of his dollars. And he is basically talking about that population that is -- what is called the dual eligible population. They're eligible for both Medicare and Medicaid.

BURGESSAnd those are the individual seniors who do have long-term care requirements that are being met by the Medicaid program, as Medicare itself does not really provide a long-term care benefit. So the numbers are significant. They are -- the dollar numbers that are spent are high. And, in fact, when I talked to Dr. Berwick about this, I said, why don't we get more clever about how we take care of that population?

BURGESSIn fact, I challenged him one time at a conference, you know, if you bought each of those individuals a concierge position to look out it -- for them and manage their care, you might find their care costs a lot less. He didn't take me up on the proposal, but it is something that I continue to look at. At some point, perhaps, we'll have it refined enough to offer a demonstration project. But you've got to have a better way to deal with the cost -- the real cost drivers in Medicaid. If you don't, it's going to consume everything.

BURGESSAnd, you know, the real problem with Medicaid and, you know, I hate to bring this up 'cause I am a physician, but your biggest problem with Medicaid is you're not going to have doctors willing to see the patients. Because what is the easiest thing to cut in Medicaid? It's provider reimbursement. It happens all the time...

REHMAll right. Let me, if I may, ask you about any concerns that you might have about block grants, perhaps leading states like Texas, to throw people off the books.

BURGESSWell, you know, the states are asking for it, and I think it is a legitimate ask. They're asking for a great deal more flexibility in the House. They take care of their populations. And if there's one thing we've learned from all the hearings we've done this year, the population of Massachusetts is different from the population in Texas.

REHMSure.

BURGESSAnd what works in one state, will not work well in another. So I don't think there is a problem with giving states more flexibility. Yes, they will have accountability. They'll have accountability both to the federal agency that is responsible for administering Medicaid, and they will have direct responsibility to the populations of their state, the voters of their state.

REHMBut if they're...

BURGESSAnd that is ultimately going to be the, perhaps, the bigger stick for people to carry, is if the state is not doing a good job, if, indeed, you go to a much more flexible system -- and that could include block granting -- and the state is not doing a good job of providing that care, then you will see the appropriate backlash (unintelligible)...

REHMAll right. But let me ask you, suppose the block grant is simply insufficient and then states have to resort to take money from other pots, for example, education, in order to cover those people who are now eligible for Medicare, Medicaid.

BURGESSI think you're describing the situation as it exists today. And I know in my own state, where they were just now finishing up their two-year session and dealing with the budgetary problems, the enormous amounts of money that goes into state Medicaid does crowd out transportation. It does crowd out education. And, in fact, in Texas, we also have a modicum of border security to be concerned about that is administered by the state.

BURGESSAnd that also is being crowded. So it is -- it's happening now. It is not something that might happen in the future. It is a very real phenomenon today, which is why...

REHMAll right.

BURGESS...if I may, which is why we do have to look at, are there better ways to take care of the problems? Is there a better way to handle the safety net population? And can some states actually do things differently because of the unique aspects of their state?

REHMAnd...

BURGESSAnd that is simply the questions being asked right now.

REHMSo, in your view, people need to save more toward their own long-term care and rely less on government. That could be the answer for 10, 20, 30 years down the line. But what happens...

BURGESSWell, I didn't say that, but that's not a bad idea. And one thing I do like to bring up whenever I have the bully pulpit is that people -- middle-class individuals who are thinking about it should seriously look into purchasing private long-term care insurance. I did myself when I turned 50, long before I ever decided to run for Congress because it is the smart and sensible thing to do.

REHMBut that only covers $15,000 a year. Isn't that correct?

BURGESSWell, it depends on the policy that you buy. But even covering only $15,000 a year, if you're not relying on the state for that $15,000 -- I mean, again, different people have different levels of disability.

REHMSure.

BURGESSNot everyone requires in-home institutional care. And that is one of the things -- one of the lessons that's been learned over the last 10 years in the Medicare -- Medicaid system. Medicaid was so inflexible that you were either institutionalized in the nursing home, or you did not go -- you did not have the benefits.

REHMAll right.

BURGESSWell, now, with the expansion of home health agencies, while all of that requires significant oversight to ensure the proper expenditure of funds and the proper care of our senior population, it does not -- there are cheaper ways of doing things, as it turns out.

REHMAll right.

BURGESSThe one-size-fits-all program was, in fact, not doing the job that we all intended for it to do. But I would just say this, people who are able to handle the expense of a long-term care insurance policy really ought to consider doing that because there will be a time in this country where all of the benefits will cease being as generous as they are today.

REHMI want...

BURGESSAnd it's just a fact of life.

REHMI want to thank you so much for joining us. Congressman Michael Burgess. He is Republican from Texas, chair of the Congressional Health Care Caucus. Thank you so much for joining us, sir.

BURGESSThank you, Diane.

REHMAll right. And I know, Ron Pollack, you'd like to comment.

POLLACKWell, there were a number of things that you asked questions of, that Congressman Burgess slid over. First of all, the number of people in Texas who are receiving long-term care right now is over 311,000 people. Those people are in real danger if we see significant cutbacks. Now, the proposal that Congressman Burgess and his Republican colleagues voted for would wind up cutting funds to the state of Texas by $111 billion over the next 10 years. And so that does not provide a whole lot more flexibility.

POLLACKHe indicated that he thought that the Affordable Care Act is going to make some significant change. Well, in Texas, as I mentioned before, the eligibility for a three-person family is now $4,818 in annual income. Under the Affordable Care Act, it makes a significant improvement. It would go up to about $25,500. It's still not a huge amount of money, but at least it would provide much greater safety.

POLLACKAnd one last thing. He lamented that there isn't adequate coordination between Medicare and Medicaid. Well, that's something that the Obama administration is fixing, and that is changed in the Affordable Care Act.

REHMJoy.

WILSONJust to clarify, under the existing Medicaid program, there is no real requirement for a state to cover a single childless adult that's not disabled. And so when you put their income into -- there's no -- that's zero 'cause there's no income for them. And so the big change is bringing single childless adults into the Medicaid program. That's what the Affordable Care Act does.

WILSONAnd so, I think, it's not fair to say because the state is not covering those people. They're covering pregnant women and children maybe up to 200 percent of poverty or maybe even higher, so, you know, they're working under the current Medicaid statute. I just want to clarify.

REHMNorm.

ORNSTEINYou know, if we look at the struggles that states are having before they lost the stimulus money, look at Arizona, which cut out most organ transplants for Medicaid patients. And we had this bizarre case of a 29-year-old man with a wife and family, waiting for a liver transplant, finally got it approved after years of waiting. And, basically, while the liver was on ice in the ambulance heading to the hospital, they diverted it away and said, oops, sorry, you can't get this anymore.

ORNSTEINYou know, we're getting death panels, actually, but they're not coming from the Affordable Care Act.

REHMAnd now...

ORNSTEINThey're coming from states who are struggling with this issue.

REHMIs Arizona actually suggesting that obese people and those who smoke will not be eligible?

ROVNERNo. What they are suggesting is that they will have to pay $50. There will be a $50 fee for smokers and people who are obese. That's not been approved yet, but that is under consideration. They want them to kick in an extra $50 on the basis of -- apparently, there's some private insurance plans are charging extra. Many private insurance plans charge extra for smokers. So they want to add that to the Medicaid program.

ROVNEROf course, the idea is if you have Medicaid, you already don't have a lot of money. So where they would come up with this $50 is unclear.

REHMJulie Rovner of NPR. And you're listening to "The Diane Rehm Show." Let's go to Duncanville, Texas. Good morning, Jim. You're on the air.

JIMGood morning, Diane. What seems to be coming across in a lot of discussion this morning is the mean-spiritedness of cutting the Medicare and Medicaid money. And the other side of this is the people who say, hey, we don't have money, we need to cut things, and things like that. So there's a contrast there. And what I'm anxious, you know, the Republicans and the Democrats oscillate in getting elected on those two arguments.

JIMWhat I'm waiting for is somebody who will say, hey, here is what we need to spend, and here is how we're going to pay for it, even if it means additional taxes.

REHMJulie Rovner.

ROVNERWell, I think what everybody is looking for is a way to bring down health care costs, which is, of course, what, you know, we're all sort of nibbling around the edges.

REHMBut we've been trying to do that since Califano.

ROVNERYes. We -- that is, in fact, true. We have been trying to do this since before that, I mean, really, since the 1960s, which is when they really started going up. And everybody has different ways of doing it. I mean, one of the ironies is that what Congressman Burgess was just talking about, some of the ideas about getting, you know, ways to better coordinate care for people who are dually eligible for Medicare and Medicaid, who are among the most expensive patients in the entire health care system, are in the Affordable Care Act that he is working very hard to repeal.

ROVNERThey are the beginnings of ways to -- that people hope will start to, as they say, bend the cost curve. But nobody really knows how to do that. And in the meantime, you know, costs keep going up, and they are affecting Medicare and Medicaid and private insurance.

ORNSTEINYou know, Diane, the great tragedy here is that we are in a partisan era where what matters is not the message but the messenger. And so the Affordable Care Act includes virtually every proposal that nonpartisan and ideological figures who have worked in the health policy vineyards for decades have come up with. That includes, by the way, this independent panel to try and look at ways to change Medicare, which was not a democratic or liberal ideal in the past.

ORNSTEINBut because it was proposed by Obama and Democrats, you got a knee-jerk reaction. And we're getting the same, I think, just in terms of the overall dialogue, and it's taking us away from having a rational discussion. Republicans now are talking about -- and conservatives' Michael Gerson in The Post today -- you can't have bureaucrats or others doing this. It's been done by politicians.

ORNSTEINAnd what politicians have done is to respond to pressure from seniors and, basically, not found good ways of moving the fee-for-service issue off the table.

REHMIs the only way to satisfy everybody in this argument -- is it to raise taxes?

POLLACKWell, that's got to be a part of a balanced approach. And no one is saying that raising taxes is the only piece of the equation. But, right now, you've got -- some will say taxes are totally off the table.

REHMOff the table.

POLLACKAnd you can't solve our deficit problems just on cutting programs. And when it comes to health care, we can do a better job in coordinating care, paying for quality of services rather than quantity of services. There are some ways that we can get costs down without hurting the people who depend on these programs for their lifeline.

REHMRon Pollack of Families USA. Joy Johnson Wilson, she is with the National Conference of State Legislatures. Julie Rovner of NPR. Norm Ornstein of the American Enterprise Institute. Thank you all so much.

POLLACKThank you, Diane.

ROVNERThank you.

REHMThanks for listening. I'm Diane Rehm.

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