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Governors Getting Ready To Fight Medicaid Costs

By ROBERT PEAR
Published on 2/27/2005

Washington — Alarmed by soaring Medicaid costs, the nation's governors say they are enchanted with some of President Bush's proposals to restructure the program, but they adamantly oppose budget cuts sought by the White House and Republican leaders of Congress. Governors and state legislators, already cutting back Medicaid benefits and eligibility, said they needed every federal dollar they could get. State officials, arriving Saturday for the winter meeting of the National Governors Association, immediately began work on a bipartisan strategy opposing Bush's plan to cut $60 billion — about 2 percent — from projected federal Medicaid spending over the next decade.

Some of the Bush proposals, they said, would endanger prescription drug benefits promised to millions of low-income elderly people under the new Medicare law.

Instead of federal budget cuts, governors of both parties said they wanted more freedom to manage and reconfigure Medicaid. In many ways, they said, the program is too rigid. They welcomed Bush's proposal to give states vast new discretion to decide who gets what benefits. State officials received similar authority under the 1996 welfare law.

Gov. Tom Vilsack, D-Iowa, said he wanted to be able to charge co-payments to Medicaid recipients, based on their income.

“For many parents,” he said, “it's a matter of dignity and pride. They want to help pay a portion of the health care costs for their children.” More generally, Vilsack said, “I should be given the opportunity to redesign our Medicaid system, and other states should be allowed to try experiments, too.”

Governors also want more leeway to pay for long-term care in the community, rather than in nursing homes. The Medicaid program now favors institutional care. States generally need a federal waiver to cover home and community services on a large scale.

Gov. Jeb Bush, R-Fla., and Gov. Mark Sanford, R-S.C., have proposed radical changes intended to inject market forces and competition into Medicaid. Under their proposals, the state would give Medicaid recipients a fixed amount of money to buy health care or private insurance.

Sanford wants to establish a “personal health account” for each Medicaid recipient. The state would make regular deposits in the account, and a Medicaid recipient could withdraw money by using a debit card to pay doctors, hospitals, drugstores and managed care organizations.

Under Jeb Bush's proposal, Florida would contribute a fixed amount toward coverage for each Medicaid beneficiary. Patients could use the money to “opt out of Medicaid altogether and purchase health care insurance in the private market,” Bush said.

Republican governors, like Democrats, reject the president's proposals to cut back federal contributions to Medicaid.

, which is financed jointly by the federal government and the states, at a cost exceeding $300 billion a year.

“Simply cutting the Medicaid budget is unacceptable,” said Gov. Mike Huckabee, R-Ark., who is vice chairman of the governors association.

The National Conference of State Legislatures said, “The budget, as proposed, would merely export the federal deficit to the states” and could increase the number of people without health insurance.

More than 50 million people rely on Medicaid, a bedrock of the nation's health care system, which pays for one-third of all births, covers more than one-fourth of all children and finances care for two-thirds of nursing home residents.

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Particularly galling to governors is President Bush's proposal to cut federal payments to the states for the administrative costs of state Medicaid agencies. These costs will soon surge as a result of the new Medicare drug law. Under the law, states must help the federal government identify low-income people who qualify for extra assistance with their drug costs.

“That's a very substantial piece of work,” said Anne Marie Murphy, the Medicaid director in Illinois.

Low-income people can apply for the assistance at Social Security offices or at state agencies. Maggie Tinsman, a Republican state senator in Iowa, predicted that many people would come to the Iowa Department of Human Services to see if they qualified.

Negotiations over the future of Medicaid could take months. Without waiting for Congress to act, governors have moved in the last six weeks to rein in Medicaid costs.

Gov. Matt Blunt, R-Mo., and Gov. Jennifer M. Granholm, D-Mich., differ in their politics, but agree that Medicaid in its current form is unsustainable.

About 89,000 of the 1 million Medicaid recipients in Missouri would lose coverage under Blunt's proposals, according to the State Department of Social Services.

In Missouri, parents of children on Medicaid now receive coverage if their family income is less than 75 percent of the federal poverty level. Blunt would lower the ceiling to 30 percent — about $4,800 a year for a family of three.

While protecting children, Blunt would reduce Medicaid benefits for adults by eliminating coverage for medical equipment like crutches and wheelchairs, ambulance services, hospice care and prosthetic limbs. The proposals have touched off protests at the state Capitol.

In Michigan, where the number of Medicaid recipients has been rising for 50 consecutive months, Granholm proposed numerous changes, intended to cut costs while preserving coverage for “those who need it most.”

She would freeze enrollment for 19- and 20-year-olds and reduce Medicaid benefits for adults who are not pregnant or disabled. Such adults would lose coverage for hearing, vision and therapy services. Their hospital coverage would be limited to 20 days a year. Drug coverage would be limited to four prescriptions a month. And Medicaid would charge a $10 co-payment for each emergency room visit.

Granholm said she also wanted to “close loopholes” that allowed people to obtain Medicaid coverage for nursing home care while shielding their own assets. President Bush and Gov. George E. Pataki, R-N.Y., have made similar proposals.

Gov. Bob Taft, R-Ohio, described a major goal for governors of both parties when he said, “We must tame the Medicaid monster.”