Senate Finance Committee Considers Possible Medicaid Cuts

The Senate Finance Committee on Thursday for the second day met with Senate Majority Leader Bill Frist (R-Tenn.) to discuss cuts to Medicare and Medicaid under the fiscal year 2006 budget reconciliation process, but no deal emerged from the meeting, CQ Today reports (Dennis/Higa, CQ Today, 10/6).

Committee Chair Chuck Grassley (R-Iowa) on Wednesday presented to Republican committee members a proposal that would reduce Medicaid spending growth by as much as $12 billion over five years, $2 billion more than the amount outlined in the budget reconciliation process. Grassley said that the proposal would not affect health care services for beneficiaries, but he did not provide specific details and expressed doubt that the committee will approve the measure (California Healthline, 10/6).

The finance committee is considering various proposals, and moderate Republicans "have made it almost a prerequisite on any budget reconciliation agreement that Medicare share the burden of cost-cutting" with Medicaid, CQ Today reports. Although the new Medicare law was "once considered to be untouchable" because of President Bush's support, lawmakers now are considering altering the prescription drug benefit, according to CQ Today. One possibility is eliminating an incentive fund for insurers. Because enough insurers have signed up, the $10 billion fund "appears less relevant" and is a "natural target" for moderates from both parties, CQ Today reports.

Lawmakers also are considering a freeze on payments for Medicare home health providers and smaller-than-expected increases to the Medicare physician payment rate. Changes to Medicaid are likely to be a combination of proposals offered earlier this year by the Bush administration and the National Governors Association, CQ Today reports. Sens. Gordon Smith (R-Ore.) and Olympia Snowe (R-Maine), who earlier this year balked at securing $10 billion in Medicaid cuts and have said that any cuts should not impact beneficiaries, said they are reviewing the various proposals (Schuler/Schatz, CQ Today, 10/6).

In related news, House Speaker J. Dennis Hastert (R-Ill) on Thursday introduced what he said was a plan by House Republican leaders that would increase cuts to mandatory spending programs to $50 billion from $35 billion, CQ Today reports. The plan would also cut discretionary spending across the board, including military spending, by an unspecified amount.

House Budget Committee Chair Jim Nussle (R-Iowa) earlier this week proposed a 2% cut across the board that would save about $17 billion. Hastert pledged to offset any hurricane-related spending, and added that leadership would introduce a package of rescissions to previously appropriated funds to offset reconstruction costs. Hastert said hurricane-related costs "will require some serious belt-tightening throughout the federal government" (CQ Today, 10/6).

Congressional Budget Office Director Douglas Holtz-Eakin on Thursday said at a House Budget Committee hearing that hurricane relief and rebuilding efforts would likely cost under $150 billion, considerably less than numbers mentioned during the past five weeks.

"There's nothing that we've seen so far that adds up to even approach $200 billion," Holtz-Eakin said in an Associated Press interview (Taylor, AP/South Florida Sun-Sentinel, 10/7).

A bipartisan bill (S 1716) by Grassley and Senate Finance Committee ranking member Max Baucus (D-Mont.) that would provide Medicaid benefits to Hurricane Katrina survivors "appears to be dying," Grassley said. Grassley added, "But the issue isn't dying because we have reconciliation" (CongressDaily, 10/6).

A group of fiscal conservatives have blocked the bill on the Senate floor, and an attempt by Grassley to scale back the bill to win their support was unsuccessful (CQ HealthBeat, 10/6). In addition, Grassley said he turned down a counteroffer from conservatives because it would have been unlikely to receive bipartisan support (CongressDaily, 10/6).

At the Senate Finance Committee hearing, Grassley said, "Unfortunately, the White House is working against me behind the scenes, and I resent that considering how much I've delivered for the White House." Baucus said the Bush administration was moving more slowly to help hurricane survivors than it did in the aftermath of the Sept. 11, 2001, attacks.

"It is slow-walking, it is opposing, it is obfuscating, it is delaying," Baucus said, adding, "What is the difference between New York and the Gulf Coast?" Treasury Secretary John Snow, who was testifying at the hearing, said he would bring up the issue with HHS Secretary Mike Leavitt (CQ HealthBeat, 10/6).

In other news, Senate Environment and Public Works Committee members on Thursday questioned whether the Environmental Protection Agency is minimizing health risks related to Hurricane Katrina, the AP/Philadelphia Inquirer reports. EPA officials have warned of serious health hazards from bacteria, chemicals and metals in floodwater and sediment, but they have taken no position on New Orleans Mayor Ray Nagin's plan to quickly repopulate the city (Heilprin, AP/Philadelphia Inquirer, 10/7).