HHS Secretary Asks Senate Leaders To Oppose Bill To Provide Medicaid Coverage for Hurricane Survivors

HHS Secretary Mike Leavitt on Tuesday in a letter to Senate Majority Leader Bill Frist (R-Tenn.) and Senate Minority Leader Harry Reid (D-Nev.) said a bipartisan bill that would provide temporary Medicaid benefits for survivors of Hurricane Katrina should not be approved, CongressDaily reports (CongressDaily, 9/28).

The bill, which was introduced on Sept. 14 by Senate Finance Committee Chair Chuck Grassley (R-Iowa) and ranking member Sen. Max Baucus (D-Mont.), would have the federal government for five months pay 100% of Medicaid costs for survivors from Louisiana, Mississippi and parts of Alabama who have relocated to other states, with the option of extending the coverage for an additional five months. The federal government also would pay 100% of Medicaid costs through the end of 2006 for all beneficiaries in Louisiana, Mississippi and counties in Alabama that have been designated as disaster areas.

Senators concerned about the bill's cost -- estimated to be $8.7 billion over five years -- on Monday blocked a floor vote (California Healthline, 9/27).

Leavitt in his letter said the Bush administration's strategy of negotiating waivers with state Medicaid programs "largely precludes the need for the activities" the bill proposes. Leavitt wrote that the bill would require "a new Medicaid entitlement for Katrina survivors, regardless of whether that will work best for those survivors or the states," adding, "This new program is unnecessary."

Leavitt also wrote that the bill "would create uncertainty and delay progress being made right now." In addition, Leavitt wrote that the proposal would spend "significant amounts" on adjustments in Medicaid "for individuals who are not survivors of Hurricane Katrina." Further, Leavitt said that waivers address the issue of providing uncompensated care to hurricane survivors.

Grassley and Baucus, replying to Leavitt's letter, wrote that Medicaid waivers do not provide the same eligibility that was provided to New York City residents following the Sept. 11, 2001, attacks. "Could you please explain to us why the Katrina evacuees do not deserve the same assistance provided the people of New York?" they asked.

They said that it is "fairly obvious" that HHS does not have the statutory authority to provide funds for uncompensated care. In addition, they stated that the waiver process would result in states most affected by the hurricane being responsible for covering Medicaid costs, and many of them would have difficulty paying.

Grassley and Baucus on Tuesday said they were "redoubling their efforts to pass their bill after a handful of conservatives blocked a vote on it Monday," CongressDaily reports. Grassley said, "Some of their complaints are pretty specific and can be addressed. We want to see if we can take care of their objections or, on the other hand, to get them to be reasonable from the standpoint that this is just a five-month bill."

Sen. John Ensign (R-Nev.), who objected to the bill's immediate consideration, said he will discuss the measure but added that he still is concerned about the cost. He also said he opposes a provision that would prevent changes in states' Federal Medical Assistance Percentages, which are used to determine federal Medicaid matching funds.

Under the FMAP change, 29 states would experience a reduction in their federal Medicaid matching rates starting Oct. 1 (CongressDaily, 9/28).

In related Medicaid news, a report for the Joint Center for Political and Economic Studies that was released Tuesday says that an expansion of Medicaid could improve the nation's economy during a recession, CQ HealthBeat reports. Stan Dorn, an analyst from the Economic and Social Research Institute who co-authored the report, said that a cap on Medicaid enrollment or federal Medicaid spending could negatively impact how the country would recover from a recession.

The report was released as Congress continues to consider reducing Medicaid funding as called for in the fiscal year 2006 budget resolution, and some lawmakers have proposed reducing Medicaid spending to offset the cost of hurricane recovery. According to Dorn, when the economy is weak, more people have low incomes and qualify for Medicaid, and when state Medicaid programs expand, state and federal spending rises, which in turn stimulates the economy (CQ HealthBeat, 9/27).

The center concluded that if lawmakers increased Medicaid matching rates when unemployment reached a certain level -- 6% for example -- "economic stimulus could be much better timed, beginning promptly when necessary and expiring immediately when no longer needed." The center said, "Such spending stimulates the economy, limiting further job loss and contributing to economic recovery."

However, Nina Owcharenko, a health care analyst for the Heritage Foundation, said, "When you increase federal funding, it's very difficult to rescind it" (AP/CNN, 9/27).

The report is available online. You will need Adobe Reader to view the report.