Agreement Among Governors, President Bush on Medicaid Unlikely To Be Reached This Week

The nation's governors and the Bush administration are unlikely to reach an agreement soon on Medicaid changes, National Governors Association Chair and Virginia Gov. Mark Warner (D) said Monday, the New York Times reports. Administration officials said they hoped to reach an agreement with the governors this week during NGA's annual winter meeting (Pear, New York Times, 3/1). In his budget proposal, Bush recommended a $60 billion reduction in Medicaid spending, including $40.5 billion by eliminating "accounting gimmicks" used by states, $15.1 billion by lowering payments to pharmacists and $4.5 billion by implementing more stringent restrictions on nursing home eligibility. Bush also proposed $11.3 billion to expand children's health coverage, $1.8 billion to care for more nursing home residents at home and $1.9 billion to extend coverage (Kaiser Daily Health Policy Report, 2/28).

IGTs
According to the AP/Las Vegas Sun, the "one detail Bush emphasized" was his plan to eliminate accounting practices used by states to boost their federal Medicaid dollars (Tanner, AP/Las Vegas Sun [1], 2/28). Bush said, "We're worried about intergovernmental transfers, and so we put that on the table for discussion, so that the system works the way it's supposed to work" (New York Times, 3/1). According to the AP/Sun, "[m]any" governors say the funding obtained through the practice is "essential" (Tanner, AP/Las Vegas Sun [1], 2/28). Noting that his state cannot afford to pay its share of Medicaid costs, Mississippi Gov. Haley Barbour (R) said the federal government has not been clear what constitutes inappropriate or illegal accounting practices (New York Times, 3/1).

Possible Agreements Between NGA, Administration
Barbour said there could be consensus among the governors and Bush administration on several ideas, including closure of loopholes that allow higher-income people to transfer assets to qualify for Medicaid and a reduction in prescription drug overpayments. Other areas on which governors potentially agree include giving states greater flexibility to increase copayments for Medicaid beneficiaries, New Mexico Gov. Bill Richardson (D) said (Heil, CongressDaily, 3/1). According to CQ HealthBeat, there also is an "apparent agreement" between governors and the Bush administration on giving states more authority to determine benefits for optional beneficiaries. In addition, the idea of establishing a commission to more closely examine Medicaid and provide recommendations is "[g]aining momentum," CQ HealthBeat reports (CQ HealthBeat, 2/28).

Administration Comments
Bush on Monday indicated that he will work with states to control rising Medicaid costs, saying, "We want Medicaid to work. We also recognize that the system needs to be reformed, and we want to work with you to do so." HHS Secretary Mike Leavitt said he is working to negotiate a deal on Medicaid that he and the governors could present to Congress (New York Times, 3/1). A Bush administration official, speaking on condition of anonymity, said that an agreement could be "weeks or months away." He added, "It's only the beginning of the discussion." The administration and governors are expected to resume their talks today when Leavitt makes a scheduled appearance at NGA's meeting (Baker/Balz, Washington Post, 3/1).

'Encouraging' Meeting
According to the AP/Sun, some governors called the meeting with Bush "encouraging" (Tanner, AP/Las Vegas Sun [1], 2/28). Richardson said, "The administration was anxious for an agreement by Tuesday" (New York Times, 3/1). However, he added, "We are not going to agree to a deal that is concluded by reconciliation time. We're not going to be forced by artificial deadlines" (CongressDaily, 3/1). Arkansas Gov. Mike Huckabee (R) said, "[W]e really do believe we can find common ground when it comes to working out Medicaid reforms" (Reichard, CQ Today, 2/28).

NGA Proposals
According to the AP/Sun, a group of governors has been working to develop a Medicaid plan that would "counter Bush's cuts with changes that would save money without hurting state budgets" (Tanner, AP/Las Vegas Sun [1], 2/28). Governors are considering promotion of a plan that would allow states to provide a scaled-back benefits package to more low-income people, possibly through state-run purchasing groups that also would be open to small businesses. NGA also has discussed using tax credits to help low-income state residents purchase health care coverage through the purchasing pools (CQ HealthBeat, 2/28). In a draft statement, NGA said that states should have more leeway to determine eligibility and to prevent fraud. The statement also says that hospital medical rates should not be used "to measure state performance." In addition, the statement calls on Congress to assume total responsibility for residents dually eligible for Medicare and Medicaid (Wirzbicki, Boston Globe, 3/1).

Warner Comments
Warner said it would be unwise for the governors to propose changes to Medicaid before the Congressional Budget Office on March 4 releases savings projections from the Bush proposal. He said that doing so could result in governors' support for a plan that would fall short of congressional goals for Medicaid, which could prompt Congress to impose a Medicaid spending cap (CQ HealthBeat, 2/28). Warner said, "We ought to do this in a reform package, not in a way that's simply backing into a budget reduction number. Getting it right is more important than getting it quick. And I think that while we'd love to be able to resolve everything today, we don't anticipate that that's realistic" (CQ Today, 2/28).

Other Governors' Remarks
Ohio Gov. Bob Taft (R) added, "Governors are very anxious about signing on to a $60 billion number if we don't know how you will get there. We like ideas that save money for the federal government and the states through program efficiencies, but we do not support recommendations that would save the federal government money at the expense of the states" (New York Times, 3/1). Arizona Gov. Janet Napolitano (D) said that if Bush "wants Medicaid reform, then he needs to have a reform discussion that's not driven by an arbitrary budget number" (USA Today, 3/1). Barbour said, "Policy should drive the budget, but the budget shouldn't drive policy" (Tanner, AP/Las Vegas Sun [2], 2/28).

More Reaction from Governors
Iowa Gov. Tom Vilsack (D) said, "All of us understand that the current course of Medicaid is not sustainable. We need a partnership with the administration and Congress to create flexibility that will enable us to better manage this important program without limiting access to necessary care." Gov. Mitt Romney (R) said, "We have to come to grips with the explosive growth of our Medicaid costs. Nothing is being dismissed. Everything is being looked at with great interest on the part of the governors." He added, "Governors will argue en bloc that we want our Medicaid funding retained. We don't want reductions." Michigan Gov. Jennifer Granholm (D) said she trusts Leavitt to negotiate fairly with governors but added that states have "already cut services and raised taxes." She said, "I don't intend to cut pregnant women, children, seniors or people with disabilities off Medicaid" (New York Times, 3/1).

Additional Newspaper Coverage

• "Medicaid has Bush, Governors in Huddle" (Barton, Arkansas Democrat-Gazette, 3/1).
  
  
• "Governor Fears Bush's Plan To Cut Medicaid" (House, Arizona Republic, 3/1).
  
  
• "Governors Protest Medicaid Plans" (Shields, Baton Rouge Advocate, 3/1).
  
  
• "Riley Wants Flexibility in Medicaid if Cuts Are Made" (Orndorff, Birmingham News, 2/28).
  
  
• "Medicaid Consensus Elusive" (Herman, Cox/Atlanta Journal-Constitution, 3/1).
  
  
• "States Are at the Forefront of Reforming Medicaid" (Canon, Kansas City Star, 3/1).
  
  
• "Governors Oppose Proposed Medicaid Cutbacks" (Diaz, Minneapolis Star Tribune, 3/1).
  
  
• "Governors Fret Over Medicaid" (McFeatters, Pittsburgh Post-Gazette, 3/1).
  
  
• "Medicaid Reform Called Urgent" (Martin, San Antonio Express-News, 2/28).
  
  
• "Governors Seek Strategy for Medicaid" (Madden, Tennessean, 3/1).
  

Broadcast Coverage
APM's "Marketplace Morning Report" on Tuesday reported on the governors' discussions on Medicaid. The segment includes comments from David Cutler, a professor of economics at Harvard University, and Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured (Palmer, "Marketplace Morning Report," APM, 3/1).

The complete segment will be available online in RealPlayer after the broadcast.

In addition, PBS' "Nightly Business Report" on Monday reported on Medicaid discussions. The segment includes comments from Bush, Richardson, Romney and Vilsack (Woods, "Nightly Business Report," PBS, 2/28). The complete transcript is available online.