THE DISASTROUS IMPLEMENTATION of the new federal prescription drug benefit has cost the states hundreds of millions of dollars, as they have had to foot the bill for millions of low-income seniors and the disabled who have been left without coverage. But as the states and the federal government argue over
reimbursement terms, a far larger battle looms over the troubled new program.
On Wednesday, Atty. Gen. Bill Lockyer announced that California and four other states -- Kentucky, Missouri, New Jersey and Texas -- will file a lawsuit later this month against the federal government to block payments that Washington is demanding from states to fund the new drug plan. Gov. Arnold Schwarzenegger has endorsed the move.
The disagreement stems from one of the most controversial aspects of the 2003 law that authorized the new federal benefit, a provision evocatively called the "clawback."
Until this year, those eligible for both Medicaid and Medicare received prescriptions under Medicaid, whose costs are split between the states and the federal government. Since Jan. 1, however, Medicare -- solely a federal program -- has covered the drug costs of the low-income elderly and disabled. But when the federal government changed the Medicare program, it also changed the way it pays for it: States must send a monthly check to Washington for roughly the amount they would have had to pay if they were still splitting the cost of Medicaid. This amount is the clawback.