Not two weeks ago Mike Leavitt had no idea what to do about Medicaid. And he certainly had no idea at all about any possibility of a move to block grants. No siree, not a clue, not a whiff of an idea. And he told the Senate committee that fawned all over him while confirming him as HHS secretary that he just didn’t know what the Administration might possibly do about those block grant things.

Well, to paraphrase a certain British prime minister (prize if you know which one), ten days is a long time in politics. Yesterday Leavitt laid out his ideas for the future of Medicaid:

Leavitt called Tuesday for sweeping changes in Medicaid that would cut payments for prescription drugs and give states new power to reduce or reconfigure benefits for millions of low-income people. Leavitt said that Medicaid could save $4.5 billion over the next 10 years if it restricted the ability of elderly people to gain Medicaid coverage of long-term care by transferring assets to their children.

Finally, he said, the federal government could save $40 billion in the next decade if it cracked down on "accounting gimmicks" that he said were used by states to shift costs to the federal treasury. The Government Accountability Office, an investigative arm of Congress, said last week that such moves by the states "generate excessive federal matching payments" and "cost the federal government several billions of dollars each year."

And how exactly might they put a stop to those "accounting gimmicks"? How about if they gave the states freedom to do whatever they liked to their own Medicaid programs and just gave them a big lump sum. But of course they can’t call it a block grant. How about just calling it a "big ol’ pile of cash" and hope that none of those irritating governor fellows notice that the pile will be a little (or, in some states, a lot) smaller than the one they ended up with in previous years by using those "accounting gimmicks." Yup that sounds like a good, and highly original, idea.

Meanwhile, I just hope no one at PhRMA was listening when Leavitt said that Medicaid could save money by paying less for drugs. I’m sure that wasn’t the thinking behind all those campaign contributions. Still I’m sure that the naive man from Utah will soon be taught the ways of Washington on that score!