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Leavitt Won't Rule Out Medicaid Budget Cuts

By Ceci Connolly
Washington Post Staff Writer
Thursday, January 20, 2005; Page A23

President Bush's choice to take over the Department of Health and Human Services steadfastly refused yesterday to rule out budget cuts for Medicaid, the state-federal health program for the poor.

In two otherwise cordial confirmation hearings, Mike Leavitt, the current administrator of the Environmental Protection Agency, argued that Medicaid is "inefficient" and could serve more people with better management and some ingenuity.

HHS nominee Mike Leavitt said that Medicaid is "inefficient."

"We can expand the number of people we serve with the available resources," he said.

Lawmakers of both parties warned against any approach that would limit federal spending on Medicaid, noting that a sluggish economy has pushed millions more Americans into the program in recent years.

"I hope we don't see any proposals that go in that direction," Sen. Olympia J. Snowe (R-Maine) said. "It would be a mistake to go down that road."

Virtually every state takes advantage of an option under the Medicaid law to collect extra federal matching funds in return for extending coverage to more low-income Americans. Today, about two-thirds of the 40 million people enrolled in Medicaid are in "optional" categories.

Leavitt pledged only to oppose any change in eligibility or benefits for the remaining "mandatory" beneficiaries.

"I believe Medicaid is a vital program. I believe it is a remarkably important means by which we serve the poor in this country," he said. "But it is not meeting its potential to do good in the lives of the poor that it can."

At a time when the per-capita costs of private health insurance rose by 12.6 percent and the Medicare program for seniors increased by 7.1 percent, Medicaid rose by 4.5 percent, Sen. Jeff Bingaman (D-N.M.) said. "That does not mean to me it is inefficient," he said.

The problem, Bingaman said, is not mismanagement but a growing number of people in need of coverage and a large number of low-income seniors moving into nursing homes.

Leavitt said the "bias" he holds is that "the entire system of health care in our country is inefficient" and that "fussing around the edges" will not solve fundamental problems of cost, quality and access.

Despite the tensions over Medicaid, senators predicted Leavitt, the former Republican governor of Utah, will be confirmed quickly, perhaps as early as today. He would take over a department that has a $550 billion budget and oversees more than 300 programs, including Medicare and Medicaid.

"You've got the juice," said Sen. Max Baucus, ranking Democrat on the Finance Committee.

On several hot-button topics, Leavitt deferred to the White House, prompting expressions of exasperation from lawmakers.

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