Governors Ask Federal Government Not To Shift Medicaid Costs to States in Effort To Reduce Deficit
The National Governors Association on Wednesday sent a letter to congressional leaders urging the federal government not to shift additional federal Medicaid costs to states in an effort to lower the national deficit, the AP/Las Vegas Sun reports. The letter, signed by NGA Chair Mark Warner (D-Va.) and Vice Chair Mike Huckabee (R-Ark.), said, "We agree that maintaining the status quo in Medicaid is not acceptable. However, it is equally unacceptable in any deficit reduction strategy to simply shift federal costs to states."
A congressional aide speaking on condition of anonymity said the president is considering a plan that would give states more independence in choosing how to spend Medicaid funds in exchange for reducing federal expenditures for the program. State officials, however, have "complained in recent years that their financial burden for the program has mushroomed, thanks to growing caseloads and Medicaid spending for patients in nursing homes," the AP/Sun reports. The NGA in its letter said Medicaid expenses -- which account for an average of 22% of states' budgets -- are "a strain on funding for other crucial state responsibilities" (Fram, AP/Las Vegas Sun, 12/22).
The Bush administration reportedly is considering a wide range of initiatives to curb Medicaid spending by eliminating improper payments and restricting eligibility and benefits. Federal officials are sending auditors to states to investigate techniques used to shift costs to the federal government. In addition, a proposed rule would require states annually to prepare estimates of total improper payments and error rates for Medicaid and SCHIP, identify the causes of errors and recover excess payments to health care providers.
Other initiatives include proposals to link Medicaid payments for prescription drugs to actual market prices, which are lower than the amounts some states pay based on average wholesale prices reported by pharmaceutical companies; to allow states to make changes to the programs, such as increasing copayments and limiting eligibility, without first obtaining federal waivers; to allow local officials to provide different benefits in different parts of a state; to allow states to charge higher fees to higher-income recipients; and to limit Medicaid payments for prescription drugs.
Forty-seven Democratic senators and one Independent on Dec. 14 sent Bush a letter outlining Medicaid changes they would not approve, including an initiative that would cap spending for parts of Medicaid. "Arbitrary limits on federal Medicaid spending fail to automatically adjust for economic recessions, demographic changes, health care inflation or disasters, including terrorism," they wrote (California Healthline, 12/20).
In addition, a letter sent to Bush last week by associations representing health care providers, hospitals and others stated that any cuts to Medicaid "would drastically unravel an already frail health care safety net." The Bush administration faces "political hurdles ... in paying for its priorities in the 2006 budget," which it will unveil in February, the AP/Sun reports (AP/Las Vegas Sun, 12/22). The NGA's letter to Congress is availabe online.