Washington Post Examines Governors’ Medicaid Reform Proposal
The Washington Post today examines a proposal being considered by a bipartisan team of 10 governors that would "fundamentally redesign" Medicaid by giving states "vast new powers" to alter health benefits for beneficiaries in return for allowing federal caps on portions of Medicaid spending. The plan, proposed by Iowa Gov. Tom Vilsack (D) and Florida Gov. Jeb Bush (R), is similar to President Bush's proposal but has some "significant -- and expensive" differences, according to the Post (Goldstein, Washington Post, 6/3). Under Bush's 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. States that decide to join the new optional Medicaid program would receive additional federal funding of $3.25 billion in 2004 and $12.7 billion over seven years, but federal funding would decrease for the three years after that, resulting in a net of no cost to the federal government.
Governors objected to the Bush 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, however, have offered support for the plan to give states more power to alter Medicaid benefits, eligibility rules and copayments. Under the plan, federal funding for Medicaid beneficiaries whom states are required to cover would continue unaltered, but states would receive a fixed annual allotment for beneficiaries covered at their discretion. Unlike the Bush administration proposal, the governors' plan would allow that cap to be increased to cover unexpected costs, such as increases in unemployment, natural disasters, disease outbreaks or the development of expensive medical treatments. The plan also calls for the federal government to pay for costs associated with seniors eligible for both Medicaid and Medicare -- a provision not included in the Bush plan. The governors' plan also would give all states new power to alter their programs (California Healthline, 6/2). According to the Post, HHS Secretary Tommy Thompson has been pushing the National Governors Association to create a Medicaid reform plan that "dovetails enough with Bush's thinking" to give "impetus to the issue in Congress." CMS Administrator Tom Scully added, "If [the governors] don't want to do it, it's not going to happen." However, Scully disagreed with a provision in the governors' plan to transfer from states to the federal government about $40 billion per year in spending for individuals who are eligible for both Medicaid and Medicare. Although NGA task force members New Mexico Gov. Bill Richardson (D) and Missouri Gov. Bob Holden (D) have opposed the plan publicly, sources familiar with the negotiations said the governors will try to reach a consensus on a plan this week and submit it to the administration (Washington Post, 6/3).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.