December 26, 2004

Governors Unite in Fight Against Medicaid Cuts
By PAM BELLUCK

BOSTON, Dec. 25 - Fearful that President Bush plans to shift more Medicaid
costs to the states, the nation's governors are mounting a bipartisan
lobbying
effort to stave off new federal limits on the program.

Medicaid, the nation's largest health insurance program, is costing the
states and the federal government more than $300 billion a year. The growth
of the
program, which covers the poor and disabled, has outpaced state revenues,
and Medicaid is now a larger component of total state spending than
elementary
and secondary education combined, according to the National Governors
Association.

Showing rare bipartisan unity, governors of both parties said in interviews
this week that they would press hard in the coming months to preserve or
even
increase their current Medicaid allotments.

"I certainly understand the need to balance the federal budget," said Gov.
Mike Huckabee of Arkansas, a Republican and the vice chairman of the
governors
association. "But people need to remember that to balance the federal budget
off the backs of the poorest people in the country is simply unacceptable.
You don't pull feeding tubes from people. You don't pull the wheelchair out
from under the child with muscular dystrophy."

The association's chairman, Gov. Mark Warner of Virginia, a Democrat, said
the governors were "much more in unanimity on this issue than they are on
most
issues." He added, "We do see on a regular basis that unless the governors
step up, you will see cost-shifting done because it relieves the federal
problem."

The governors could find themselves on a collision course with Mr. Bush, who
has pledged to cut the federal budget deficit in half in the next five
years.
A bipartisan lobbying effort would also put pressure on the
Republican-controlled Congress.

The White House has not tipped its hand on its new budget and would not
comment on its plans for Medicaid. Federal officials, however, have said
they are
sending auditors to state capitals to review Medicaid programs and cracking
down on methods that states have been using to try to get as much federal
Medicaid
money as possible.

The governors, who will be forming a committee to press their Medicaid
agenda, say they are determined to avoid repeating their experience the last
time
they tried to negotiate Medicaid changes with federal officials, in 2003.
Mr. Bush at that time proposed giving each state a fixed amount of federal
money
each year for 10 years, instead of basing federal payments on actual health
costs and enrollment.

"They tried to cap it the last time around," said Gov. Bob Taft of Ohio, a
Republican. "Then, you're asking the states to take a risk - what if the
caseload
grows?" That effort to make major changes in the program collapsed after
lengthy negotiations between federal officials and a bipartisan group of
governors.

The governors say Medicaid, which insures a quarter of the nation's children
and two-thirds of its nursing-home patients, has become so expensive that it
now, on average, makes up 22 percent of states' budgets, compared with 10
percent in 1987.

"It's just a huge problem for Ohio and almost every other state that I know
about," said Mr. Taft, adding that he had titled a recent speech "Medicaid:
The Monster in the Middle of the Road."

"We're going to have to do cuts in services, cuts in people on the
caseload," Mr. Taft said. "We're going to have to freeze or possibly even
cut some provider
rates just to restrain the growth. It's squeezing what we can do for
schools, what we can do for higher education. We're constraining and
tightening our
belt in every way, cutting the number of state employees. If we could
control Medicaid we wouldn't have budget problems in Ohio."

Gov. Mitt Romney of Massachusetts is among several governors battling the
Bush administration's efforts to eliminate a practice some states use to get
more
federal Medicaid money. The federal government says these states' practice
of transferring money to county governments or local hospitals is a way to
get
more federal Medicaid money by making it appear that they are spending more
on Medicaid than they are.

In Massachusetts, the Bush administration says $580 million in federal
Medicaid money obtained using such a practice was an improper grant. Mr.
Romney disagrees.

"This was a practice approved by the federal government, and it's one of the
ways that we provide health care to the poor and needy," said Eric
Fehrnstrom,
Mr. Romney's press secretary. "Discussions are going on now between us and
the federal government so that we can find a way to continue with this
practice."

Mr. Romney recently announced plans to change his state's Medicaid system,
and Mr. Fehrnstrom said the governor was counting on the federal government
not
to slash its Medicaid budget in any way. "Governor Romney is about to embark
on Medicaid reform," Mr. Fehrnstrom said. "We're determined to do that
without
raising taxes, but it's extremely important that we be allowed to rely on
the money that's already in the system."

Making their case in a letter to the White House and Congressional leaders
this week, the National Governors Association urged federal officials not to
reduce Medicaid financing in an effort to cut the deficit. In their letter,
the governors also said that the Medicare program, which covers health care
for the elderly, should pay the health care costs for those people who are
both elderly and poor, and therefore eligible for coverage by both Medicare
and Medicaid, as a way to reduce the states' Medicaid burden. Medicare,
unlike Medicaid, is fully financed by the federal government.

"Medicaid currently accounts for 50 percent of all long-term-care dollars
and finances the care for 70 percent of all people in nursing homes," the
letter
said. "Furthermore, 42 percent of all Medicaid expenditures are spent on
Medicare beneficiaries, despite the fact that they comprise a small
percentage
of the Medicaid caseload and are already fully insured by the Medicare
program."

Both the Bush administration and the governors are examining ways to give
states more flexibility in how they run their Medicaid programs.

Some governors would like, for example, to be able to rein in costs by
restricting the list of drugs covered by Medicaid, by contracting with
third-party
providers or by allowing the poorest people to get more benefits than those
who are better off. They would like to be able to make these changes without
applying for federal waivers, which often take months or years to get
approved.

In Wisconsin, Gov. James E. Doyle, a Democrat, said his state would like the
ability to put more Medicaid dollars into services that could help elderly
people stay in their homes longer, instead of having to go into nursing
homes.

"We really need to sit down at the table and figure out how to better design
a Medicaid system," Mr. Doyle said.

Some governors said they hoped Mr. Bush's selection of Michael O. Leavitt to
be secretary of health and human services was evidence of the
administration's
willingness to allow states a greater say in any changes in Medicaid. Mr.
Leavitt, the administrator of the Environmental Protection Agency, is a
former
governor of Utah and used federal waivers to save money and expand coverage
in Utah's Medicaid program.

Governor Huckabee of Arkansas, where nearly a quarter of the population is
on Medicaid, said the governors' objective in the coming months would be to
ask
the federal government to "first do no harm."

He said the soaring federal budget deficit had made federal officials
realize "their house is on fire, and they're probably so consumed with the
flames
around them that they're unaware as they look to us for water that our tanks
are empty.

"Folks, our house is on fire too," Mr. Huckabee added, "and asking us to put
out your fire is probably not the solution."