Governors Urge Congress, Bush to Reform Medicaid
The nation's governors yesterday "demanded" that Congress and President Bush "take immediate action to slow the explosive growth" of Medicaid and "sounded a note of desperation as they sought ways to control health spending," the New York Times reports. Medicaid reform dominated discussions yesterday during the second session of the four-day winter meeting of the National Governors Association. According to the governors, Medicaid has "been eating up all the additional revenues" that states have collected in the past few years. In a new policy statement, the governors said, "The current fiscal crisis for states, compounded by unsustainable growth in the Medicaid program, is creating a situation in which states are faced with either making massive cuts in programs or being forced to raise taxes significantly." Medicaid represents the largest program after education in most state budgets. Revenues "were stagnant or declined" in many states last year, while Medicaid costs increased 11%. In addition, many states reported that prescription drug spending under Medicaid increased more than 20% last year. The governors yesterday offered a number of proposals to help control Medicaid costs and "pleaded with the federal government for financial help." The governors have asked the federal government to:
- Cover a larger share of Medicaid costs;
- Give states the option of providing Medicaid coverage to legal immigrants who have not become U.S. citizens;
- Expand Medicare coverage of home health care, which would reduce state costs for home health care provided under Medicaid;
- Increase discounts that drug companies must provide to state Medicaid programs;
- Freeze or increase federal Medicaid reimbursements, scheduled for reduction next year, to hospitals that serve large numbers of low-income patients;
- Eliminate reductions in federal Medicaid reimbursements to public hospitals, which are scheduled to take effect in March;
- Allow states to charge higher copayments for prescription drugs and services provided to Medicaid beneficiaries. Under federal law, states may charge Medicaid beneficiaries a maximum $3 copayment for prescription drugs, doctor's visits, hospital care or other services.
According to Kentucky Gov. Paul Patton (D), vice chair of the NGA, increased Medicaid costs represent a "major crisis" for states. "We have universal agreement that something needs to be done," he said (Pear, New York Times, 2/25). Patton added, "When the economy was stronger, states were able to pay for Medicaid, even though it was a stretch. We can no longer afford Medicaid the way the benefits package is structured today" (Balz, Washington Post, 2/25). Arkansas Gov. Mike Huckabee (R) added that health care providers, who have sought to expand Medicaid to cover additional services, have prompted "spending increases that have caused Medicaid to spiral out of control" (Barton, Arkansas Democrat-Gazette, 2/25). The New York Times reports that Congress may provide some assistance to states, but lawmakers, who have been focused on Medicare reform, are not likely to make "fundamental changes in the structure" of Medicaid this year (New York Times, 2/25). Noting that neither Congress nor President Bush has placed Medicaid reform on their agendas this year, the governors said that "restructuring Medicaid is at least as urgent" as Medicare reform (Washington Post, 2/24). The governors will meet with Bush today at the White House to discuss their Medicaid proposals (Riskind, Columbus Dispatch, 2/24).
In addition to Medicaid concerns, the governors yesterday urged Congress to investigate the operation of the 1984 Hatch-Waxman law, which regulates competition between brand-name and generic prescription drug makers (New York Times, 2/25). Under the law, drug companies are granted three years of exclusive marketing rights if a new use for a drug is discovered (California Healthline, 12/7/01). According to a resolution adopted by the NGA Committee on Human Resources, Congress should hold hearings this year to determine whether the law has contributed to the "high cost of prescription drugs." Vermont Gov. Howard Dean (D) said that brand-name drug companies have used the law to "prolong patent protection for their products, making it more difficult for generic drugs to enter the market" (New York Times, 2/25). Dean said, "Pharmaceutical companies are exploiting loopholes in a 1984 law to extend their patents unfairly, and this is costing states millions and millions of dollars" (Pear, New York Times, 2/23). However, New Jersey Gov. James McGreevey (D) said that patents offer an incentive for drug companies to conduct research and develop new treatments. "Patent protection encourages investment in intellectual property. It's essential to economic growth," he said (New York Times, 2/25).