50 Governors Unite Against Federal Cuts to Medicaid
Their plan would add some restrictions and give states more say. The bipartisan effort goes against Bush's plan for reducing spending.
By Ricardo Alonso-Zaldivar
Times Staff Writer
June 16, 2005
WASHINGTON — Governors stepped up their campaign against the Bush administration's proposed cuts in Medicaid on Wednesday by presenting Congress with their own ambitious plan to restructure the safety-net health program that serves about 53 million Americans.
The new proposal, backed by all 50 governors, would give states more latitude in reshaping benefits and trimming costs. It would cut into drug company profits, but also would make it harder for middle-class families to shift assets in order to get the government to pick up nursing home bills for elderly relatives. It could force the poor to pay more for medications, but it would also help uninsured low-income workers get coverage.
"The Medicaid program is not sustainable in the long haul," Virginia Gov. Mark R. Warner, a Democrat, told reporters before he and Arkansas Gov. Mike Huckabee, a Republican, formally presented the plan to the Senate and House committees that oversee the program.
The proposal has "the support of the governors of America, no matter what state they live in or what party they're from," Huckabee added.
"We may be the only bipartisan game in town," Warner said.
The show of unity puts President Bush in an awkward political position. Cuts in Medicaid are an integral part of his plan to lower the deficit by cutting spending while making his first-term tax cuts permanent.
Congress has already reduced Bush's initial proposal for Medicaid cuts from $60 billion over five years to $10 billion, and Warner urged Wednesday that Congress make immediate cuts in other programs. Lawmakers should focus on modernizing Medicaid to make it more cost-efficient, potentially saving more in the long run, he said.
The governors' plan pointedly included no savings estimates. Even lawmakers who were sympathetic warned there would be cuts when Congress attempted to write a deficit reduction bill this fall. But several senators agreed with Warner that at least part of the $10 billion could come from other programs.
"It is a challenge to the administration," said Marilyn Moon, a health economist at the nonpartisan American Institutes for Research. "The governors have been fairly united in rejecting the idea of starting out with a $10-billion goal. They are essentially saying, 'If you want us to participate in any of this discussion, you can't dictate what the budgetary outcome will be.' "
Medicaid is a $329-billion-a-year program, jointly funded by federal and state governments. It serves a broader range of people than any other public or private health program. Beneficiaries include Alzheimer's patients in nursing homes, the healthy children of low-income working parents, families on welfare and severely disabled accident victims.
About 6.8 million Californians are served by Medi-Cal, the state's version of the program.
Expansions in coverage and a soft economy have turned Medicaid into the fastest-growing component of state budgets.
"We're getting hit with a triple whammy," said Warner. "We've seen the federal government try to shift costs to the states. We've seen employers who for economic reasons don't provide health insurance to their workers encourage them to go on Medicaid. And we've seen Americans trying to get rid of Mom and Dad's assets before they go on long-term care. We can't deal with all of them."
At the same time, a maze of federal and state laws and regulations — some dating back four decades — makes it very difficult to change the program.
Medicaid "is a 45 rpm program in an MP3 world," Huckabee said. "It's time to take a fresh look — not so we can undo it, but so we can better do it."
The governors' proposal has several major elements.
An arcane formula used to determine what Medicaid pays for medications would be changed to leverage the program's purchasing power and force deeper discounts from drug makers. The Bush administration has mainly been pressing for discounts from pharmacists. That change alone could save "multiple billions," said Warner.
Eligibility rules for nursing home coverage would be tightened to prevent families from shifting the assets of elderly relatives so they can qualify for Medicaid coverage. At the same time, the governors said Congress should promote the purchase of long-term-care insurance, encourage the use of home equity to pay for long-term care, and set threshold amounts that seniors can pass on to their heirs while still qualifying for Medicaid.
States would be allowed to charge higher co-payments for Medicaid prescriptions and other medical services, a proposal that brought sharp rebukes from several Democratic lawmakers.
"You are ready to ask for co-payments from poor children, but you are not willing to come here and say the federal government should stand with the states to meet its obligations," Rep. Henry A. Waxman (D-Los Angeles) told Warner.
Other parts of the proposal called for giving states more flexibility to design benefits, making it easier for them to obtain exceptions to federal rules, requiring federal officials to defend such exceptions in court if states are sued, and increasing Washington's contribution to Medicaid programs in U.S. territories, such as Puerto Rico.
The governors also said Medicaid reforms should be used as a springboard to reduce the number of uninsured people. They urged a broader menu of tax credits for health insurance than Bush has proposed.
The administration's point man on Medicaid, Health and Human Services Secretary Mike Leavitt, had no immediate reaction to the governors' proposal. Leavitt is overseeing a commission that will recommend savings to Congress in the fall, but Democrats in Congress have denounced the panel as partisan.
Families USA, a leading liberal advocacy group, called the governors' plan "a mixed bag." While denouncing increases in co-payments as "very destructive," it applauded the recommendations for savings on drug costs.
The Senate Finance and House Energy and Commerce committees, which oversee Medicaid, are expected to develop savings estimates for some of the governors' proposals. Discussion among committee members, the governors and the administration will continue through the summer.
"I think we can come up with policies that improve Medicaid's fiscal health without jeopardizing coverage and, in fact, we must," said Sen. Charles E. Grassley (R-Iowa), chairman of the Finance Committee.
The House is likely to press for bigger cuts. The chairman of the Energy and Commerce Committee, Rep. Joe Barton (R-Texas), said he was committed to preserving the healthcare safety net, but he also warned: "Without reform, Medicaid eventually will bankrupt every state in the nation. The only alternative is the collapse of the Medicaid program."