Governors battle Medicaid cuts

Benjamin Grove

Tuesday, March 1, 2005 | 9:38 a.m.

WASHINGTON -- Gov. Kenny Guinn says count him as one of the governors who aim to head off President Bush's proposal to slash the $324 billion Medicaid program by up to $60 billion in the next 10 years.

Governors gathered in Washington for an annual winter meeting said state budgets cannot absorb the cut. The cuts are "unacceptable," said Arkansas Gov. Mike Huckabee, a Republican and vice chairman of the National Governors Association.

The governors are compiling a short list of cost-saving strategies that they hope Bush and Congress would accept as an alternative to cutting the nation's largest health care program, which is paid for by both federal and state dollars.

The governors will lobby in the next three weeks the White House and Congress to consider other options, such as taking aggressive steps to control drug prices or perhaps instituting new Medicaid co-pays.

"We're moving as quickly as we can," Guinn said Monday.

A number of governors planned to meet with Health and Human Services Secretary Mike Leavitt, a former Utah governor, today.

Leavitt urged governors to embrace Bush's changes to reduce Medicaid costs, promising that the administration is listening to their concerns and is willing to provide some flexibility.

"If we don't do something, people in this country who are currently being served by Medicaid will lose their coverage," Leavitt said Monday.

Leavitt offered no comment on Bush's budget plan to cut the federal-state program. But he acknowledged the difficulties to state budgets caused by rising costs that now, on average, equal the amount that states spend on K-12 education.

Bush wants to set a cap on growth in the enrollment of Medicaid recipients in the next decade, which would amount to roughly $60 billion less spent on the program than otherwise projected under normal growth, White House budget officials have said.

Nevada officials are trying to estimate how much less federal Medicaid money Nevada could receive under the Bush proposal, said Charles Duarte, administrator of the Nevada Division of Health Care Financing and Policy, which manages Medicaid.

Bush has proposed a number of cost-saving plans. Two especially would hurt Nevada, Duarte said.

Bush's plan to cut federal money for Medicaid administrative costs is "short-sighted," he said. The state spends only about 6 percent of its Medicaid budget administering the program, and an important part of administering the program is identifying cost saving measures, he said.

Bush also wants to curb state use of what administration officials call a loophole in federal law. They say the loophole allows counties and states, through "intergovernmental transfers," to legally but artificially inflate their programs in order to receive more federal money.

In some states the transfers amount to "accounting gimmicks" that allow states to use federal Medicaid money for uses other than recipient payouts, Leavitt said.

"The governors are on the front line of Medicaid, I know full well," Bush said, empathizing with the governors gathered at the White House on Monday, according to a transcript. But, he 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."

Nevada does not have a problem with questionable intergovernmental transfers, Duarte said.

"There is not some capital improvement projects at the end of these dollars," Duarte said. "It's health care that is being delivered to poor people. We're not cheating anybody out of anything."

The Medicaid program serves about 52 million people nationally, roughly one in six Americans.

About 178,000 will receive Medicaid in Nevada this year, roughly 8 percent of the state's population, Duarte said. That's a smaller percentage than most states, Duarte said.

Guinn said most states face a far bigger Medicaid crisis than Nevada.

Still, Guinn has asked the Legislature for a 28 percent increase in Medicaid funding for the next two fiscal years to help the state pay its share of the $1.1 billion Medicaid program in Nevada. That's largely because of growth, especially in low-income and senior populations, Duarte said.

Medicaid was launched in 1965 and designed largely to offer support to low-income families and children, especially. But the disabled and elderly who also rely on Medicaid are partially responsible for the program's soaring costs, especially a large population of seniors in nursing homes.

The Associated Press contributed to this story.