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Governors Wary of White House Medicaid Proposal

Cash-strapped states want more say in running health-care programs but balk at Bush's pitch to cap federal assistance.

February 25, 2003|Vicki Kemper and James Gerstenzang | Times Staff Writers

WASHINGTON — The nation's governors said clearly Monday that they wanted more flexibility to run their Medicaid programs but stopped short of endorsing President Bush's proposed cap on federal aid as the trade-off.

Though squeezed by huge budget deficits driven in part by skyrocketing Medicaid spending, the governors gave a cool reception to a Bush proposal that would give the states an additional $12.7 billion in funds over seven years and then reduce projected federal funding by an equal amount in the next three years.

"Anytime anyone says they are going to give you more money now and less later, that's a red flag," California Gov. Gray Davis said.

The jostling over Medicaid showcased some of the political resistance the administration faces as it attempts to restructure the government's largest social programs, which also include Medicare and Social Security.

If the administration cannot get governors to jump at a deal offering them billions of dollars upfront, its proposals are even less likely to make it through the narrowly divided Senate.

Health and Human Services Secretary Tommy G. Thompson appeared to win some cautious Democratic converts to the administration's Medicaid proposal when he told the governors at a White House meeting Monday morning that funding for some of Medicaid's neediest recipients would not be capped.

But at a public session Monday afternoon, Thompson and his staff could not say with certainty whether increased federal payments for "mandatory" beneficiaries would leave less money available for "optional" benefits. Thompson himself gave conflicting answers.

The law requires states to provide basic medical care for some poor residents, mainly families with children. States have the option of covering more people with wider benefits.

Most include the disabled and elderly poor in their Medicaid programs and cover prescription drug costs for all beneficiaries.

As a result, "optional" benefits now account for two-thirds of Medicaid spending, and Bush's proposal has raised fears that they will have to be cut as health inflation and a growing population of poor families drive up the cost of "mandatory" benefits.

Although the governors will be influential, it will ultimately be up to Congress to accept or reject Bush's proposal.

Rep. John D. Dingell (D-Mich.) repeatedly exhorted the governors to "read the fine print" of Bush's proposal.

"You don't have to agree to this proposal until you've read it," he said. "It is not in writing."

One person familiar with the governors' deliberations, who spoke on condition of anonymity, later said, "There has been no paper given to anybody on this. No one's seen anything."

At the end of the day, however, the National Governors Assn., holding its annual meeting here, agreed unanimously to form a bipartisan task force to examine a wide range of Medicaid proposals that would give states more flexibility to design their own programs.

Thompson had asked the governors to form the task force, said Republican Gov. Dirk Kempthorne of Idaho, vice chairman of the association.

More specifically, the governors called on the federal government to assume full financial responsibility, including the cost of prescription drug coverage and nursing home care, for so-called dual eligibles -- seniors enrolled in Medicare who are covered by Medicaid because of their low incomes.

"That's major," Kempthorne said in an interview. "We could retain the savings and use them for other health-care needs."

In the past, the governors' association has estimated that spending on services for dual eligibles consumes as much as one-third of Medicaid's combined federal-state budget of roughly $271 billion.

Arkansas Gov. Mike Huckabee, a Republican, cited a different figure Monday, saying 12% of states' Medicaid budgets are spent on dual eligibles, with half of that going to prescription drug coverage.

Using Huckabee's estimate of state costs, moving low-income seniors to the Medicare rolls could save the states as much as $15 billion a year.

The states face a combined deficit of $40 billion to $50 billion this year and a projected shortfall of $65 billion to $80 billion next year.

While the Bush administration has proposed committing roughly $400 billion over 10 years to a Medicare prescription drug benefit, it is unclear where the money to cover long-term care and other services for low-income seniors would come from.

Indeed, the governors came away from their White House meeting with one overriding message: Don't look to the president to help the states find new money for their fiscal problems.

"We did not receive a great deal of encouragement," said Iowa Gov. Tom Vilsack, a Democrat.

Yet governors from both parties were equally clear on a related point: They need more money from Washington for homeland security and education.

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