Senate, House Committees Prepare for Markups of Budget Plans With Medicaid Spending Reductions

The Senate Finance Committee and the House Energy and Commerce Committee on Tuesday are scheduled to begin marking up fiscal year 2006 budget reconciliation packages that include cuts to federal health programs, CQ Today reports (Schuler, CQ Today, 10/24).

The House Ways and Means Committee -- which shares jurisdiction over Medicare with the Energy and Commerce Committee -- is scheduled to begin its markup on Wednesday (CQ HealthBeat, 10/24). Summaries of news on the committees' reconciliation packages appear below.

The committee's package is expected to include cuts of as much as $12 billion from Medicaid over five years, CongressDaily reports (Cohn/Heil, CongressDaily, 10/24).

Under the plan, states would be given the option to charge beneficiaries higher copayments. The maximum for copayments would be raised gradually to $5 per service in 2008 and afterward would match increases in health care inflation. The copayments could not exceed 5% of a family's income (AP/Arizona Daily Star, 10/25).

The package, which was still being revised on Monday, also would increase from three to five years the "look-back" period for beneficiaries who transfer assets to gain eligibility and would change the starting point of the disqualification from the date of the transfer to the Medicaid application date. Seniors who have equity in their houses of $500,000 or more would be ineligible for Medicaid.

In addition, the formula used to reimburse pharmacists for drug costs would be changed so that the average manufacturer price, rather than the published average wholesale price, would be used.

The package also includes "space for a provision to provide health care relief for victims of Hurricane Katrina," but the committee offered no details," CQ Today reports (CQ Today, 10/24). The bill also would create a demonstration project to test "health opportunity accounts," which would be similar to health savings accounts under the 2003 Medicare law.

The markup of sections of the package dealing with Medicaid and relief for Hurricane Katrina survivors is scheduled for Wednesday.

The committee on Monday announced that its reconciliation package would cut spending in the Supplemental Security Income program, federal foster care and child support programs by $8 billion. The committee's reconciliation target earlier this year was $1 billion (CQ HealthBeat, 10/24).

Like the Energy and Commerce proposal, the Ways and Means Committee "left the [Medicare] program intact," CQ Today reports (CQ Today, 10/24).

Committee Chair Chuck Grassley (R-Iowa) "appears to have quelled last minute objections" from conservative Republicans and is moving forward with a package that would cut about $10 billion from Medicaid and Medicare, CongressDaily reports (Heil, CongressDaily, 10/25).

The plan includes $25.1 billion in proposed spending reductions and about $15 billion in spending increases for Medicaid and Medicare. It would provide a net savings of $4.26 billion in Medicaid costs and a new savings of $5.76 billion in Medicare costs (California Healthline, 10/24).

Democrats have prepared 93 amendments for the markup, and Republicans have 41 amendments, but "most ... are expected to be shelved or defeated," CongressDaily reports (CongressDaily, 10/24).

"Stark differences" between the Finance Committee and Energy and Commerce Committee's proposals "foretell a difficult House-Senate conference," CongressDaily reports. Whereas the Finance Committee avoided cuts that would affect Medicaid beneficiaries, costs for Medicaid beneficiaries could increase under the Energy and Commerce Committee proposal (CongressDaily, 10/25).

According to CongressDaily, the absence of Medicare cuts -- which make up a significant proportion of the Finance Committee's cuts -- in the Ways and Means Committee proposal "demonstrat[es] the conference pitfalls ahead" (CongressDaily, 10/24).

NPR's "Morning Edition" on Tuesday reported on criticism of proposals by some state governors and the Bush administration to restrict the transfer of assets by U.S. residents to qualify for nursing home care covered by Medicaid. The segment includes comments from Arkansas Gov. Mike Huckabee (R), chair of the National Governors Association; HHS Secretary Mike Leavitt, who mentioned the issue in his first public statement in February; John Rother, director of policy and strategy at AARP; and Vincent Russo, past president of the National Academy of Elder Law Attorneys (Rovner, "Morning Edition," NPR, 10/25). The complete segment is available online in RealPlayer.