Medicaid costs controversy continues

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A leading Democratic governor on Thursday lashed out at the U.S. federal government’s efforts to force states to pay more of the bill for the shared federal-state Medicaid health program for the poor.

President Bush’s budget for the coming fiscal year calls for some $20 billion in federal savings by cracking down on state accounting mechanisms for Medicaid. The nation’s governors are currently in discussions with Congress and the Bush administration on ways to stem rapidly rising Medicaid costs.

But Virginia Gov. Mark Warner said at a Medicaid discussion sponsored by the Henry J. Kaiser Family Foundation that it is unfair to say that the states are not paying their fair share.

"Nobody comes to this debate with clean hands,” said Warner, who also chairs the National Governors’ Association. Not only have the mechanisms states are using “been blessed by the federal government,” he said, the federal government has not kept up its share of the financing deal made when Medicare and Medicaid were created 40 years ago.

Under that deal, Warner said, states were supposed to help pay the costs of poor single mothers, children, and the disabled, but the federal government, through the all-federal Medicare program, was supposed to underwrite the costs of those over age 65.

Medicare, however, does not cover the costs of most long-term care or, until next year, most prescription drugs. As a result, poor seniors have relied on Medicaid, with states footing much of the bill.

In Virginia, Warner said, “65 percent of the folks in nursing homes are on Medicaid,” and it is those long-term care costs that are rising most rapidly. If the federal government “wants to throw stones,” said Warner, “they come with equally unclean hands.”

Warner declined to characterize the progress of talks between governors and Health and Human Services Secretary Mike Leavitt. “We are kind of grinding through it,” he said of the discussions. But he said the governors are in agreement that something must change or else the cost of Medicaid “is going to bring states to their knees.”

Meanwhile, Congress continues to struggle with whether or not to order Medicaid spending cuts.

The budget plan passed by the House last month calls for up to $20 billion in federal Medicaid reductions over 5 years, but the Senate voted to strike a proposed $14 billion cut from its version of the budget. Earlier this week, more than three dozen House Republicans wrote to their top budget negotiator, Budget Committee Chairman Jim Nussle of Iowa, asking him to drop the House’s Medicaid cuts, as well.

The House has delayed formally appointing budget negotiators—likely because the Republicans who oppose the Medicaid cuts could produce the margin of victory for a non-binding resolution calling for the cuts to be dropped. That vote would be in order when negotiators are appointed. 

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