Governors’ Negotiations on Medicaid Reform Proposal Fail
The Medicaid reform plan proposed by a bipartisan 10-governor National Governors Association taskforce has failed because of "aggressive lobbying" by Democratic senators who oppose the changes, according to governors on the taskforce, the Washington Post reports. The breakdown in talks between Republicans and Democrats on the taskforce could make it more difficult for Congress to pass President Bush's plan to control Medicaid spending because administration officials had thought that a bipartisan proposal from governors would be more likely to win congressional approval, according to the Post (Connolly, Washington Post, 6/13). Under the Bush administration proposal, states would have to maintain comprehensive Medicaid coverage for the two-thirds of beneficiaries whose income levels are low enough that the federal government mandates that they be covered, but for beneficiaries covered at the states' discretion, states could change Medicaid rules and regulations, simplify and alter eligibility requirements and revise or reduce benefits. States would no longer have to apply for federal waivers to deviate from federal standards for Medicaid eligibility and benefits. The proposal also would give states a fixed amount of money, rather than matching funds, for the beneficiaries whom they choose to cover.
Some governors objected to the Bush administration proposal because they said it would not protect states against unexpected Medicaid costs that could arise from changes in the economy, natural disasters, disease outbreaks, terrorist attacks or the development of expensive drugs and other treatments. The governors had supported the proposal to give states more power to alter Medicaid benefits, eligibility rules and copayments. Under the governors' proposal, which was proposed by Iowa Gov. Tom Vilsack (D) and Florida Gov. Jeb Bush (R), federal funding for Medicaid beneficiaries whom states are required to cover would have continued unaltered, but states would have received a fixed annual allotment for beneficiaries covered at their discretion. Unlike the Bush administration proposal, the governors' proposal would have allowed that cap to be increased to cover unexpected costs. The proposal also called for the federal government to pay for costs associated with seniors eligible for both Medicaid and Medicare -- a provision not included in the Bush administration proposal. The governors' proposal also would have given all states new power to alter their programs (California Healthline, 6/6).
Sen. Edward Kennedy (D-Mass.) and other congressional Democrats did not support the annual allotment and "waged an attack on the White House approach" and convinced Vilsack to pull out of the negotiations, the Post reports. In addition, while both Democratic and Republican governors on the taskforce agreed that the federal government should pay for those eligible for both Medicare and Medicaid, Vilsack said that Democrats left the talks after it became clear that Republican governors "could not deliver a promise from Congress or the administration" that the federal government would pay for the dual-eligible beneficiaries (Washington Post, 6/13). The Democratic governors and the Republican governors ended up each sending separate Medicaid reform proposals to HHS Secretary Tommy Thompson, the AP/New York Times reports (AP/New York Times, 6/12). In a three-and-a-half page letter to Thompson, Republican governors wrote, "It is unfortunate that with health coverage for millions at risk -- with virtually every state making wholesale cuts in Medicaid benefits and populations -- that some would choose to forfeit an opportunity to protect health care for our neediest populations" (Washington Post, 6/13). Democrats responded, "We have a true philosophical difference of opinion with our Republican colleagues on the issue of limiting the federal government's role in the partnership of providing health care to our nation's most vulnerable citizens" (AP/New York Times, 6/12). According to the Post, the issue of Medicaid reform is "destined for sharp partisan debate -- or indefinite postponement" (Washington Post, 6/13).
In related news, prompted by "ballooning Medicaid expenses," the House Energy and Commerce Committee has begun an investigation into waste and fraud by all 50 states in the program, the Associated Press reports. In a letter sent to all 50 governors, committee Chair Billy Tauzin (R-La.), Health Subcommittee Chair Michael Bilirakis (R-Fla.) and Oversight and Investigations Subcommittee Chair Jim Greenwood (R-Pa.) said that states will be held accountable for any Medicaid reimbursements they seek. Some states "have created the illusion that they have made large Medicaid payments to certain providers, such as county health facilities, in order to generate federal matching payments," the letter said, adding, "In some cases, states have used these federal payments for purposes other than Medicaid" (Jakes Jordan, Associated Press, 6/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.