Governors meet with Bush on Medicaid

The Associated Press

WASHINGTON -- Soaring Medicaid costs were on Missouri Gov. Bob Holden's mind when the nation's governors met Monday with President Bush.

Because of the economic downturn and the unemployment it brings, demand is growing for social programs such as welfare and Medicaid, the government health insurance program for the poor.

"That's really consuming every governor's budget," said Holden, a Democrat. "It's increasing by 10 percent to 15 percent every year. It's out of control."

At the annual National Governors Association meeting, which runs through today, governors said they need more federal funds for Medicaid and were trying to find consensus on a request to Congress and the president. They met with Bush Monday afternoon, but focused mostly on homeland security.

Accounting for one-fifth of state budgets, Medicare's exploding costs have combined with declining revenues to deliver budget shortfalls of about $15 billion to state budgets across the nation.

Part of Holden's solution is to pare $127 million from Missouri's Medicaid program, eliminating dental and eye-care coverage as well as payments for over-the-counter medicines, among other cuts. Holden is proposing millions of dollars in state spending cuts, but would boost funds for schools and for homeland security.

"My first priority is education; my second is to protect our most vulnerable citizens -- the elderly, children, the disabled," Holden said. "There's not an easy choice here."

He added that the atmosphere among the governors in Washington on Monday was utterly different from last year, when many states were not anticipating drastic revenue shortfalls.

"I don't want to say I was the Lone Ranger out there, but there wasn't a lot of company," Holden said. "This year, at least 44 other states are facing difficult budget situations."

Budget cuts aren't the only danger for Missouri's Medicaid program, which served nearly 840,000 patients in 2001, more than half of them children. State health officials are battling the federal agency that runs Medicaid, the Centers for Medicare and Medicaid Services.

Federal officials are pushing Missouri to change the tax it imposes on hospitals and nursing homes to help pay for Medicaid, because they say it is illegal to give back the tax payments to hospitals, which Missouri does. CMS is threatening to yank hundreds of millions of dollars in funding for Missouri and to sue for $1.6 billion it says the state collected improperly, unless state officials change how they collect the hospital taxes.

A handful of other states are facing the same demands. State and federal officials say they are working on an agreement that might avoid such drastic action.

"It's still being negotiated on a daily basis," Holden said. "We've feel like we've got very good ground to stand on. We're not backing down."

In the meantime, Sen. Jean Carnahan, D-Mo., is pushing legislation aimed at making the federal agency drop its case against Missouri. Mrs. Carnahan says CMS is ignoring its own rules, which say that such a tax is allowed if it is less than 6 percent, which Missouri's is.

The measure would put those rules into law: "Case closed," Mrs. Carnahan said when she introduced the bill earlier this month.

Kathy Martin, director of the Missouri Department of Social Services, said the measure would help state officials negotiate with the federal agency.

A CMS spokesman said Monday that the agency is working hard to resolve the problem with Missouri so that Mrs. Carnahan's legislation won't be necessary. However, a spokesman for Mrs. Carnahan said she would proceed with the measure, regardless.