Governors give Congress plan for revamping Medicaid


WASHINGTON - Governors stepped up their campaign against President Bush's proposed cuts in Medicaid yesterday by presenting Congress with their own ambitious plan to restructure the safety-net health program that serves about 53 million Americans.

The new proposal, backed by all 50 governors, would give states more latitude in reshaping benefits and trimming costs.

It would cut into drug company profits but also make it harder for middle-class families to shift assets to get the government to pick up nursing home bills for elderly relatives. It could force the poor to pay more for medications, but it would also help uninsured low-income workers get coverage.

"The Medicaid program is not sustainable in the long haul," Gov. Mark Warner of Virginia, a Democrat, told reporters before he and Gov. Mike Huckabee of Arkansas, a Republican, formally presented the plan to Senate and House committees.

The proposal has "the support of the governors of America, no matter what state they live in or what party they're from," Huckabee said.

The show of unity puts the Bush administration in an awkward political position. Cuts in Medicaid are an integral part of the president's plan for lowering the deficit by reducing spending, while making his first-term tax cuts permanent.

Congress has reduced Bush's initial proposal for Medicaid cuts from $60 billion over five years to $10 billion. Lawmakers should focus on modernizing Medicaid to make it more cost-efficient, potentially saving more in the long run, Warner said.

Medicaid is a $329 billion-a-year program, jointly funded by federal and state governments. It serves a broader range of people than any other public or private health program.

Expansions in coverage and a soft economy have turned it into the fastest growing component of state budgets. At the same time, a maze of federal and state laws and regulations - some dating back 40 years - makes it difficult to change the program.

The governors' proposal has several major parts:

An arcane formula used to determine what Medicaid pays for medications would be changed to leverage the program's purchasing power and force deeper discounts from drug makers. (The Bush administration has mainly been pressing for discounts from pharmacists.) That change alone could save "multiple billions," said Warner.

Eligibility rules for nursing home coverage would be tightened to prevent families from shifting the assets of elderly relatives so they can qualify for Medicaid coverage. At the same time, the governors said, Congress should promote the purchase of long-term care insurance, encourage the use of home equity to pay for long term care, and set threshold amounts that seniors can pass on while still qualifying for Medicaid.

States would be allowed to charge higher co-payments for Medicaid prescriptions and other medical services.

States would be given more flexibility to design benefits, the government would make it easier for states to obtain exceptions to federal rules, and federal officials would have to agree to defend such exceptions in court if states are sued.

The Los Angeles Times is a Tribune Publishing newspaper.

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