Governors’ Medicaid Proposal Supported by GOP Lawmakers

Virginia Gov. Mark Warner (D), chair of the National Governors Association, and Arkansas Gov. Mike Huckabee (R), NGA vice chair, on Wednesday discussed with the Senate Finance and House Energy and Commerce committees the group's proposals to slow Medicaid spending growth, marking the "opening move in this year's debate over" the program, the Wall Street Journal reports. Some of NGA's preliminary recommendations "closely" mirror proposals that Congress is considering to reduce Medicaid spending by as much as $10 billion over five years, the Journal reports (Lueck, Wall Street Journal, 6/16). Congress in April approved the spending reduction in its fiscal year 2006 budget resolution (California Healthline, 6/14).

The NGA recommendations include:

• Allowing states flexibility to establish different benefits packages for different beneficiaries, including the ability to charge copayments above current limits and establish other premiums and deductibles within certain limits;
  
  
• Including "authorized generics" -- or medications licensed by brand-name companies to generic drug makers when patent protection is about to expire -- in Medicaid rebate calculations;
  
  
• Increasing states' ability to direct patients toward less-expensive treatments;
  
  
• Creating tax breaks and credits to help people buy private long-term care insurance, as well as incentives for seniors to take reverse mortgages on their homes to pay for long-term care (Wall Street Journal, 6/16);
  
  
• Tightening restrictions on the transfer of assets to achieve Medicaid eligibility;
  
  
• Increasing rebates drug makers pay to states;
  
  
• Collecting rebates earlier, which Huckabee said could save the federal government $1.1 billion and states $1 billion.

Warner and Huckabee, who said they were speaking on behalf of at least 35 governors, did not estimate how much their proposal would save overall (Connolly, Washington Post, 6/16). Warner, speaking before the House Energy and Commerce Committee, said, "We've got to deal with this issue now. It's going to get exponentially worse over the next decade" (CQ HealthBeat, 6/15). Warner added that NGA "may be the only bipartisan game in town."

Huckabee said the proposals have the "support of the governors of America, no matter what state they live in or what party they're from" (Alonso-Zaldivar, Los Angeles Times, 6/16).

Republican lawmakers "embraced many of the ideas as a basis for bills they hope to pass in six months," the New York Times reports. House Energy and Commerce Committee Chair Joe Barton (R-Texas) said, "I applaud the governors and generally support the reforms they are bringing to us" (Pear, New York Times, 6/16). Barton said, "We have reached a point where there just are not enough taxes or taxpayer money to keep Medicaid going," adding, "Medicaid eventually will bankrupt every state in the nation" (Washington Post, 6/16).

Senate Finance Committee Chair Chuck Grassley (R-Iowa) said, "I think we can come up with policies that improve Medicaid's fiscal health without jeopardizing coverage and, in fact, we must" (Los Angeles Times, 6/16).

Sen. Gordon Smith (R-Ore.) said that higher premiums and copayments for Medicaid beneficiaries in Oregon, which were implemented in 2003, resulted in thousands of people losing their coverage, a 17% rise in hospital admissions and an increase of people with mental illnesses receiving care in jails or hospitals. Smith said, "In the end, people got the care -- they just didn't get it in a very efficient way" (Washington Post, 6/16).

Democrats, in "unusually sharp and angry attacks," said Republicans have launched "an 'immoral' attempt to fund tax cuts for the rich by increasing the suffering of the most vulnerable Americans," CQ HealthBeat reports (CQ HealthBeat, 6/15). Sen. John Kerry (D-Mass.) led the "most contentious" part of the hearing when he said that federal and state tax cuts depleted revenue needed to fund Medicaid.

Sen. Jay Rockefeller (D-W.Va.) said, "We wouldn't have a Medicaid problem if we didn't have the tax cuts" (Patashnik, The Hill, 6/16).

Rep. Henry Waxman (D-Calif.), speaking to Warner, said, "You are ready to ask for copayments 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" (Los Angeles Times, 6/16).

Marilyn Moon, a health economist at the nonpartisan American Institutes for Research, said, "The governors have been fairly united in rejecting the idea of starting out with a $10 billion goal," Moon said, adding, "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'" (Los Angeles Times, 6/16).

Pharmaceutical Research and Manufacturers of America spokesperson Ken Johnson questioned NGA's proposals about prescription drugs, saying that drug spending "is not the major cost driver" for Medicaid (Wall Street Journal, 6/16).

Warner said that Virginia and other states will be adversely affected when the Medicare prescription drug benefit takes effect because the program will charge more for drugs than some Medicaid programs. Under the 2003 law, six million beneficiaries currently covered by Medicaid for prescription drugs will have their drug benefits moved to Medicare.

Warner said, "States like mine are penalized for doing a better job of negotiating drug prices," adding, "There's also a hidden cost to this, which is a new set of administrative functions for states and no transition help" (Bloomberg/Richmond Times-Dispatch, 6/16). The NGA recommendations are available online.