The Reagan administration is working on a plan to cut $1.3 billion from projected fiscal 1989 federal outlays for Medicaid and to limit growth in a way that experts said could reduce annual federal payments to the states by billions compared to current law.
Rep. Henry A. Waxman (D-Calif.), chairman of the House subcommittee on Medicaid, the medical welfare program for 23 million low-income people, called the plan an "ill-disguised" attempt to "cap" the program and force cuts in services. He predicted congressional rejection, adding, "Whether the administration likes it or not, the federal government has a responsibility to help pay for basic health care for the poor."
Program officials were not available for comment, but an administration official who asked not to be identified argued that while the plan would restrict federal outlays, it would shift money to poorer states to help upgrade programs and give states the flexibility to reduce costs without cutting services.
The Department of Health and Human Services has sent the proposal to the Office of Management and Budget for review and approval.
Under existing law, Medicaid is an open-ended entitlement in which the federal government reimburses each state for a share of whatever the state spends to take care of certain categories of low-income people. The average federal reimbursement is 55 percent. The Congressional Budget Office has estimated 1989 federal outlays at $33 billion.
Under the proposed plan "to control federal outlays," the $33 billion would be cut by $1.3 billion across the board in 1989.
After that, reimbursement for a certain percentage of each state's costs would be ended. Instead, each state would receive an annual fixed grant based on what it received in 1989, with certain adjustments for population and other changes. The amount would be increased each year for inflation, based half on the Consumer Price Index and half on increases in medical prices.
Congressional experts on Medicaid said the formula apparently wouldn't provide increases sufficient to compensate fully for the growth in costs of caring for people over age 75, inflation or increases in intensity of care. As a result, one said, it probably would allow each state an increase of about 5 percent or 6 percent a year, while costs would be rising 9 percent to 10 percent.
According to a draft outline, the plan would:
Permit the states to make welfare clients who are entitled to Medicaid coverage by law pay a "nominal" share of the costs of their services, something that is not now permitted for low-income children, pregnant women, hospice patients and institutionalized patients. Similar charges also would be allowed for others for whom state Medicaid coverage is optional.
Permit the states to require parents and spouses of certain patients in nursing homes and other long-term care institutions to pay part of the costs of care out of their own pockets. At present, when a person is institutionalized only that person's income and assets, or legal joint income and assets, are considered available.
Permit the states "to place a lien against a person's personal or real property prior to the mandatory Medicaid recipient's death" to help repay Medicaid for the costs of caring for the person. However, the person's home or other property could not be taken away while the person, a surviving husband or
wife or a minor child was still living in it.
Permit the states to furnish sharply reduced benefit packages for various categories of low-income people that the states are not required to cover under federal law but have the option to cover. Allow the states to limit a patient's rights to choose his or her own doctor or medical institution. This is now allowed in some cases but freedom of choice is still a basic right in the program.