Obama offers truce in Medicaid battle with states

Medicaid is turning into a major political headache for proponents of the healthcare reform law, which expands the state-federal program to 15 million more people starting in 2014. Many states say they cannot afford it, and want more flexibility to pare down their rolls and cut benefits.

Arizona has been a bellwether in that regard, asking the federal government to be allowed to cut its rolls before 2014, which the healthcare reform law seeks to avoid. HHS said recently that Arizona could go ahead with the cuts.

Arizona Gov. Jan Brewer (R) called the president's proposal "very, very encouraging."


"We like to hear those kinds of remarks in a very bipartisan manner because we all know we have to work together to deliver the services our citizens need," she told reporters after the meeting. "But the bottom line is that we're really going to have to address the issue of Medicaid right now. Medicaid is the most pressing issue that we're all facing, and certainly it's devastating to Arizona."

Oklahoma Gov. Mary Fallin (R) also expressed hope that the commission would lead to substantive changes.

"I hope we do have a bipartisan commission," she said. "I'd be willing to serve on that, because Medicaid is a big cost driver in our state's budget."

One idea Republican governors have been pushing is for the federal government to give them block grants to spend as they want on their Medicaid program.

But the senior administration official seemed to douse cold water on the idea.

"At the end of the day, children need to be protected," the official said. "While we need to find a more sustainable path for Medicaid, [President Obama] raised concerns that a block grant could potentially leave children vulnerable and didn't necessarily think that was the best path."


Still, Gov. Jack Markell (D-Del.) took away from the president's speech that block grants were "on the table" despite the concerns.

"I thought it was a very good response from the president — his expression of interest in working with us, his invitation to the governors to come back to him with specific ideas, and his commitment to helping us figure it out." 

—Jason Millman contributed.