Update on Bush Medicaid Proposals
February, 2005

Leavitt Sees $60 Billion in Medicaid Savings
Medicaid Leavitt Outlines Program Reforms To Save Billions
White House Sets Medicaid Plan

From: Medicaid Working Group

The new Secretary of Health and Human Services gave a speech on Tuesday, February 1 confirming suspicions that in the President’s budget proposal we are likely to see cuts to Medicaid (possibly $60 billion) and reform proposals that would limit coverage for so-called Medicaid optional populations. The budget is expected to be released next Monday.

Optional populations under Medicaid include individuals granted coverage through home and community-based care waivers, individuals with disabilities with incomes over the eligibility limit for SSI, those with high medical costs who states recognize as “spending down” their income to the level at which they are eligible for Medicaid, and others (see attached chart listing optional and mandatory populations). Many of these individuals have incomes at or below the poverty level of $9,310 for individuals and $12,490 for couples. There are about 12 million optional beneficiaries currently covered by state Medicaid programs. Secretary Leavitt indicated support for modeling coverage for these “optional” beneficiaries after the State Children’s Health Insurance Program (SCHIP) under which states are given fixed allotments of funds and are authorized to provide coverage through private insurance models or Medicaid or a hybrid of both. He indicated support for continuing current Medicaid coverage unchanged for mandatory populations, but stated that optional populations are generally “healthy people who just need help paying for health insurance.”

This proposal sounds very much like this Administration’s past proposals to “reform” Medicaid that also proposed to cap payments for optional Medicaid services including prescription medication and rehabilitation services.

Secretary Leavitt starts out with many of the myths that advocates already are working to “de-myth” – that Medicaid is inflexible and outrageously costly. Go to the CCD web-page at www.c-c-d.org and click on resources for Jan. 31st. Medicaid conference call and read the first resource – a Power Point by Jeff Crowley of Georgetown Health Policy Institute, which helps de-bunk these myths.

• Leavitt says that he wants to keep faith with the people to whom the nation has made a commitment through Medicaid – including people with disabilities -- BUT his words put all those folks who are “optional” beneficiaries at risk and seem likely to put “optional” benefits (the ones that are the most important to children and adults with disabilities) also at risk.
• He calls Medicaid an inheritance protection plan – but seems to ignore the fact that there is little else in the nation to help provide for the long term care needs of people.

Secretary Leavitt also indicated support for limiting the ways individuals in need of long term care can protect assets by transferring them to family members in order to become eligible for Medicaid. And, he indicated the Administration would continue to crack down on accounting techniques used by state governments to garner higher federal matching rates for health care services and additional reimbursement for administrative functions. He also expressed concern that the reimbursement rates Medicaid pays to pharmacists for prescription medications are inflated and expressed interest in lowering those rates.

In addition, he indicated interest in providing Medicaid coverage for home and community-based care instead of institutional care and expanding access to more children through more flexible programs (which in past proposals has meant less comprehensive benefit packages and cuts in coverage for current beneficiaries).

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