The National Governors Association winter meeting concluded yesterday with the state leaders, President Bush and Congress far apart on how to control the rapid rise in Medicaid spending.
Despite four days of negotiations, the conference ended much as it began -- with governors of both parties willing to restructure the health program for 53 million Americans, but strongly opposed to Bush's proposed budget reductions. "We are still far apart," New Mexico Gov. Bill Richardson (D) said before he and the other governors departed Washington.
 
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White House press secretary Scott McClellan said Bush is committed to his proposal to trim $60 billion -- or about 2 percent -- from the program over the next decade. "The president has outlined a plan for moving forward on strengthening Medicaid," he said. "What it will do is save some money by shutting down the loopholes and stopping the accounting gimmicks that go on in the program."
A joint federal-state health program for the poor and disabled, Medicaid consumes more than a quarter of most state budgets. Governors say that rising health costs and the growing elderly population are making the program unsustainable. They are lobbying for enhanced authority to charge co-payments, trim benefit plans and serve more people in home- or community-based settings.
At the same time, Bush views the $324 billion program as a key target in his effort to slash the federal deficit. The single largest reduction in his proposed budget for fiscal 2006 is the $60 billion Medicaid cut. The administration would reinvest $15 billion of that in other health care initiatives such as the State Children's Health Insurance Program.
In public and private meetings, Health and Human Services Secretary Mike Leavitt said, the administration and governors found areas of agreement: Both want to lower prescription drug prices for Medicaid and both aim to tighten loopholes that allow elderly parents to pass significant assets to adult children to qualify for Medicaid nursing home care.
Leavitt, a former Utah governor, hoped those would form the basis of a quick deal. If not, he warned, "people in this country who are currently being served by Medicaid will lose their coverage."
But the governors complained that the administration did not provide enough information to thrash out an agreement. "If there was ever a case where the devil's in the details, it is the case in Medicaid because it's so complex," said Virginia Gov. Mark R. Warner (D), the NGA chairman.
Ohio Gov. Bob Taft (R) said governors are united in their opposition to the administration's cuts and in favor of wanting more flexibility to administer the program. "With respect to the budget itself, we've made it clear we oppose that and we'll see how that issue works out here in the next few weeks," he said.
Governors objected to the sense that the "budget was driving policy rather than policy driving the budget," Mississippi Gov. Haley Barbour (R) said.
"What they are saying to states is, 'We're going to cut you and give you more flexibility,' and the flexibility is you can cut people off," Wisconsin Gov. Jim Doyle (D) said. "That is not acceptable to me." Medicaid costs have exploded largely because millions more people have lost private insurance, he said.
When congressional leaders joined in the talks yesterday, the picture became even more complicated. Sens. John D. Rockefeller IV (D-W.V.) and Gordon Smith (R-Ore.) expressed skepticism about Bush's plan to slow the rate of growth in Medicaid, while House members appeared more willing to follow the Bush budget plan, Iowa Gov. Tom Vilsack (D) said. "I don't know that you're going to get a consensus in this town," he said.
"There is no place for us to go if you reduce the [federal financial] commitment, other than to kick people off the rolls," Vilsack said, "and when we do that we just simply shift the cost to the private sector."
One major sticking point revolves around Leavitt's accusation that states are using "accounting gimmicks" to extract more Medicaid money from the federal government to reduce their financial burden. Closing such loopholes could squeeze out $40 billion in savings over 10 years, he said.
But governors such as Massachusetts Republican Mitt Romney said any extra Medicaid dollars are being used to extend health care to the needy. "We think they're totally appropriate," he said.
Indiana Gov. Mitchell E. Daniels Jr. (R), who was Bush's budget director, said: "There's a lot of substantive agreement but honest tactical disagreement."
