Bush Medicaid Plan May Allow States to ‘Pocket’ Funds
President Bush announced a plan last weekend that would allow states to "trim" services and raise premiums for some Medicaid beneficiaries and use the savings to provide health coverage for the uninsured, but the AP/Nando Times reports that the proposal may have a "giant loophole." According to HHS officials, states "will not necessarily" have to spend the savings to provide health coverage for residents without insurance, and advocates for the uninsured fear that states may "pocket the savings." Leighton Ku, a Medicaid expert at the Center for Budget and Policy Priorities, said, "Contrary to the way this is advertised, states could reduce benefits and offer either no or a very small coverage expansion so they save state dollars." However, HHS spokesperson Bill Pierce said that he "doubts that states would want to cut benefits without providing new coverage," adding, "States would be under a tremendous amount of pressure if they took benefits away from someone. We're just trying to give them the ability to be as creative as they possibly can." Advocates for the uninsured "argue" that the plan may hurt low-income Americans, and others "wonder which Medicaid participants will see their benefits trimmed." While states must continue to cover those who are categorically eligible for Medicaid, the AP/Nando Times reports that states may require low-income children and their parents to pay more for coverage or reduce benefits, such as prescription drug and dental care coverage. Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, said that states may have to reduce benefits for seniors and the disabled -- the "most expensive people served under Medicaid" -- to "generate enough money to cover substantially more people." The Bush administration will implement the plan, which does not require congressional approval, "immediately" (Meckler, AP/Nando Times, 8/6). The template for the new Medicaid initiative is available online.