Governors balk at Medicaid cuts State leaders worry Bush plan would diminish access to health care

WASHINGTON – The Bush administration’s proposal to cut some $40 billion from Medicaid would reduce access to health care for the poorest Americans, governors said Monday after meeting with the president.

“His budget would have a dramatic effect on the health care of millions of Americans,” said Democrat Mark Warner of Virginia.

Added Republican Bob Taft of Ohio: “The governors are very nervous about agreeing to any spending cuts.”

Some governors, however, said they realized they eventually must compromise. But their bigger desire was to win freedom to experiment in order to lower costs. Many were encouraged by parts of the administration’s budget proposal that would give states more flexibility.

Maine Gov. John Baldacci is to be represented by state Health Policy and Finance Director Trish Riley in follow-up Medicaid discussions today. Baldacci was forced to cancel participation in the governors’ conference after reinjuring a rib Friday night and staying in the hospital overnight. He had broken the rib in a fall in mid-February.

Baldacci was represented by state Education Commissioner Susan Gendron during the weekend, when the governors discussed education issues at the conference, spokesman Lynn Kippax said Monday.

At the meeting, President Bush promised to work with governors to restrain soaring Medicaid costs and revamp the program. But he also indicated he would keep trying to eliminate some federal aid.

“We want Medicaid to work,” Bush told the governors before an hour-long, private question-and-answer session. “The system needs to be reformed and we want to work with governors.”

But the one detail Bush emphasized was his plan to cut federal dollars in an effort to stop state Medicaid accounting practices that the administration contends cheat taxpayers.

Many state leaders say the money derived this way is essential. Federal officials say the practice artificially inflates health care prices to bring in more federal cash, which states sometimes use for other purposes.

“We’re worried” about the transfers, Bush said. “We put that on the table for discussion, so that the system works the way it’s supposed to work.”

In Alabama, Bush’s proposed cuts would cost upward of $150 million over the next six years. Meanwhile, the number of Alabama residents on Medicaid has climbed from one in 10 to nearly one in five. Cuts will leave officials with either serving fewer people or providing less benefits, Republican Bob Riley said.

Medicaid costs have soared in recent years, driven by rising health care costs, an aging population that relies largely on Medicaid to pay for nursing homes, and a recession that sent more people to state-supported health care.

This year, Medicaid will pay for care for 53 million people – women and children, poor, elderly, disabled. It will cost an estimated $329 billion. Enrollment has increased by 40 percent over the past five years.

A group of governors has spent the past month hoping to develop a plan to present to the administration and Congress that would counter Bush’s cuts with changes that would save money without hurting state budgets.

A deal, either among governors or in discussions between them and Health and Human Services Secretary Mike Leavitt, has proved elusive.

Governors said Bush was encouraging; though Republicans were more welcoming of the administration’s stance than Democrats, partisan lines did not define them. There were signs that governors recognized the need for compromise. “There’s opposition to any reduction, but we have to be realistic,” said Democrat Bill Richardson of New Mexico.

“It’s not about this week,” said Virginia’s Warner. “Getting it right is more important than getting it quick.” Warner said the struggle over the final budget numbers will rest with Congress.

Even the impact of the budget was in dispute. Governors complained of $60 billion in cuts over 10 years. But the administration, and the National Governors Association analysis, said reductions were offset by additional spending, leaving the cut at about $40 billion.

Governors from all sides of the political spectrum say now is the time for a significant re-examination of Medicaid. But what that means has not become clear.

Democrat Tom Vilsack of Iowa talks about preferred drug lists. Republican James Douglas of Vermont emphasizes keeping people on the Medicaid rolls, but reducing the program’s costs. Republican Mark Sanford of South Carolina wants to let patients and their families decide how to spend a set amount of health care dollars.

Bush’s budget would make it more difficult for older people to transfer their assets to family members so they qualify for Medicaid coverage for nursing home care, one of the large cost-drivers of the system. The president’s spending plan for the fiscal year beginning Oct. 1 also would affect an effort to lower drug prices, which several governors said showed promise, and a change to taxes on providers, which governors said would shift costs to them.