WASHINGTON — Sen. Lamar Alexander’s contention that rising Medicaid costs drain money away from public colleges and universities drew a challenge Thursday from Iowa Sen. Tom Harkin.
The issue arose at a hearing of the Senate Health Education Labor and Pensions Committee on the affordability of higher education.
Alexander, a Republican on the committee, repeated his argument that spending on Medicaid, the federal-state health care program for the poor, deprives states of funds they could use to support their higher education systems and reduce costs for students and their families.
Over the last 30 years, Alexander said, the share of state budgets devoted to Medicaid has increased from 8 percent to 25 percent.
“That’s true everywhere in the country. This is not President (Barack) Obama. This has been going on for 30 years,” the second-term senator said.
Alexander said states should propose a swap where the federal government would take over all Medicaid costs and the states would handle all education costs. It would leaves states better off, he said, by $92 billion a year.
Afterward, the Tennessee senator said he is drafting legislation to be introduced next year that would offer several options for helping to reduce state Medicaid costs, including his swap idea.
But with Alexander gone from the hearing, Harkin, a Democrat and the committee chairman, took issue with blaming higher education’s financial problems on Medicaid.
Many factors have caused Medicaid costs to soar, Harkin said, including the fact that poverty has been increasing.
“We have a growing number of poor people,” he said. “Just look at the data.”
And, Harkin said, there is a moral responsibility involved.
“They (the poor) still have to be taken care of,” he said. “I hope we are not trying to pit poor kids against college kids.”
States have also hurt themselves, the Iowa senator said, by repeatedly cutting taxes in good times, putting a greater squeeze on their budgets during bad times.
Further, Harkin said, states have been turning to lotteries and other forms of gaming for new revenues.
“Who plays these lotteries and casinos? Poor people,” he said.
Earlier in the hearing, there was a discussion of how higher education systems are responding to a financial environment that put more and more of the cost burden on families.
Tennessee students now pay about 67 percent of the cost of their education at public institutions, with the state covering the other third. Go back 20 years, and the state was paying two-thirds, said John G. Morgan, chancellor of the Tennessee Board of Regents.
A relative decline in state funding combined with rising enrollments are forcing Tennessee institutions to operate in a new way, Morgan said, one that puts an emphasis on “outcomes” — the number of people getting degrees, diplomas and certificates awarded.
Morgan said state planning calls for 43,202 Tennesseans to be earning credentials by 2025, a 60 percent increase over 2010. State officials, he added, view such an increase as critical to economic development, Morgan said.
And population trends, he said, indicate that many more of those students will come from minorities who have traditionally had a harder time financing college.
Programs also have to become more flexible to meet the needs of students who have significant “life commitments” away from campus.
In his written testimony, Morgan added, “It is no longer sufficient for the Board of Regents to view its responsibility as one of policy management and the safe guarding of assets.”