Governors oppose federal cuts in Medicaid

Governors of both parties are uniting to oppose President Bush's proposed cuts to Medicaid while also pushing for much larger changes, arguing that soaring costs have forced a fundamental re-examination of the program that provides health care to 52 million poor, elderly and disabled.

Hearkening back to the state-inspired reforms of the welfare system a decade ago, governors already are experimenting with approaches aimed at cutting costs: market-driven reforms, multistate cost-sharing on drugs, technology that can reduce medical errors.

Now they're hoping to convince Congress and the Bush administration that they should be given more freedom to alter the $300 billion federal-state safety net. Many stress that while cutting costs they also want to broaden access to health care.

"Medicaid as it currently exists is non-sustainable in the long run. If you do the numbers, they just don't add up," said Iowa Gov. Tom Vilsack, a Democrat. "If we don't get Medicaid solved, what you basically do is put governors in the position where they've got to pick between grandchildren and grandparents."

The governors are up against the Bush administration's effort to rein in costs as it seeks to cut the federal deficit, and also against advocates for the poor and for health-care providers who worry that a push to "flexibility" is just another way to cut people from care and shortchange the medical profession.

Medicaid has grown steadily -- state spending has risen 9 percent or more for each of the last four years. The fastest-growing share of Medicaid payouts are for the elderly, who are the most expensive to care for -- an ominous sign as baby boomers age.

Bush's budget proposes reducing federal spending on Medicaid for states by $40 billion, limiting some payments, reducing the federal match on some services, and, especially taking aim at states that the federal government says wrongly use Medicaid funds for other government purposes.

Governors as a group are adamantly opposed to outright cuts, and to caps on how much states and spend on Medicaid -- which many see that as a backdoor way of cutting that ignores the economic downturns that push more people onto Medicaid rolls.

In the last few weeks, a bipartisan group of governors has worked on a plan, aiming to bring the latest ideas to all the governors at their annual gathering in Washington next weekend, when they'll talk together, meet with Bush, administration officials and members of Congress.

Consensus has been easy to find on two main points, governors said: no cuts and greater flexibility. Beyond that, the working group has been struggling to find a common stance.

"One thing governors feel, Democrats and Republicans alike, is that we have a health-care system that, if you're on Medicaid, you have unlimited access to health care, at unlimited levels, at no cost," said Arkansas Gov. Mike Huckabee, a Republican. "No wonder it's running away."

Republicans have been the most sweeping in their push toward market reforms, aiming to encourage patients to spend Medicaid dollars more wisely. Democrats, however, also are turning to concepts that require people on Medicaid to bear part of the costs, through copays or deductibles. Most try to spare additional costs, or cuts, from children and the poorest of the poor.

Among some of the latest proposals:

-- Democrat Ed Rendell in Pennsylvania would raise copays on drugs, limit how often Medicaid would cover medical services, lower some rates paid to care providers and convince drug companies to grant discounts.

-- Republican Mark Sanford in South Carolina proposes giving Medicaid recipients control of a set amount of money through a debit card, letting them choose how to spend their health-care dollars on most services. The state would still cover big-ticket medical expenses.

The Bush administration values state innovation, said Mark McClellan, administrator of the Centers for Medicare and Medicaid Services. "We're going to work closely with (governors) to find ways to use flexibility to get better results," he said. "What we're focused on is making it more routine in Medicaid to adopt proven approaches at a lower cost."

The governors say the federal government must give them leeway to make changes that work in their states, tailored to each individual mix of rural or urban populations, elderly or immigrant, industrial base or service workers.

"I don't believe that any one state is going to come up with a panacea for all of America," said Republican Mitt Romney of Massachusetts. "Each state ... exploring new innovations, will find ideas that can be shared, that will both improve access and reduce costs. That's the only way it'll work."

Advocates warn that the changes will drive many of the poor and elderly out of health care and will force care to emergency rooms, which wind up driving up all health-care costs.

"The term flexibility is a euphemism," said Ron Pollack, executive director of Families USA, a nonpartisan group focused on affordable health care. "It's often a euphemism for cutting people off the program."

Medicaid has grown more slowly than health-care costs in the private sector, he noted. And the costs have been driven, in part, by job losses in the economy and private employers' unwillingness to provide health-care coverage.

Still, costs are rising. And for Sanford, South Carolina's governor, now is the time for Congress to get behind governors' willingness to try a new approach -- before things get even worse.

"If something's unsustainable, eventually it's going to stop. It'll come to an end. The question is, do we make those changes ourselves, or let them happen," he said. "The handwriting's on the wall."