A June 16 article about governors' proposals to slow Medicaid spending misstated the year the program was established. It was created in 1965, not 1964. (Published 6/25/05)

A bipartisan pair of governors urged Congress yesterday to give states the authority to charge co-payments, reshape benefits and tighten loopholes on property transfers from elderly parents to children as part of a broad attempt to slow spending in the Medicaid health program for the poor.

Spurred by a congressional budget that trims $10 billion from Medicaid over the next five years, the governors presented a blueprint that they said would modernize the 40-year-old program and protect America's neediest while curtailing overuse and abuse.

In addition to asking the poor to contribute more for their health care, the governors want the federal government to increase its contribution and prescription drugmakers to provide steeper discounts to states.

"We may be the only bipartisan game in town," said Gov. Mark R. Warner (D-Va.), chairman of the National Governors Association.

When Medicaid was created in 1964, the Beatles' "Help" was topping the charts, a loaf of bread cost 21 cents and "I Love Lucy" was a television hit, said Gov. Mike Huckabee (R-Ark.), vice chairman of the governors' association. "Medicaid is a 45 rpm program in an MP3 world," he told the Senate Finance Committee.

The duo, saying they were speaking for at least 35 governors, did not provide estimates on how much money the proposals would save. But in three appearances yesterday, Warner and Huckabee pointed to several billion dollars in likely reductions.

A past proposal by President Bush to increase rebates to states on Medicaid prescription drugs from 15 percent to 20 percent was estimated to save "multiple billions of dollars," Warner said.

Another idea supported by the governors is to collect more of those rebates earlier in the process, a change that could save the federal government $1.1 billion and states $1 billion, Huckabee said.

Despite increasing state tax revenue, governors say Medicaid cannot be sustained. The popular health program now consumes 22 percent of the average state budget and in many states is a larger share of spending than elementary and secondary education.

"We have created a situation where we are literally pitting the needs of grandma against the needs of grandkids," Warner said.

Even as Bush has put Social Security on the top of his agenda, a growing number of officials in both parties are pressing for changes in Medicaid, the federal-state program that serves 53 million people at a cost of about $329 billion.

Medicaid spending has soared in recent years for several reasons: Drug prices have increased rapidly, more senior citizens are in need of expensive long-term care, and millions of Americans lost private coverage and moved into the government program.

"We have reached a point where there just are not enough taxes or taxpayer money to keep Medicaid going," said House Energy and Commerce Committee Chairman Joe Barton (R-Tex.). "In as few as 20 years, Medicaid will consume 80 to 100 percent of all state dollars. . . . Medicaid eventually will bankrupt every state in the nation."

Lawmakers from both parties, however, expressed reservations about some of the governors' ideas, particularly one allowing states to charge co-payments of as much as 5 percent of an individual's income.

In 2003, Oregon raised premiums and co-payments for Medicaid recipients and found that "thousands lost access to care," hospital admissions rose by 17 percent and many more people with mental illness were treated in state jails and hospitals, Sen. Gordon Smith (R-Ore.) said. "In the end, people got the care -- they just didn't get it in a very efficient way."

Although it initially seemed controversial, Huckabee said, governors quickly united around the idea of charging modest co-payments so beneficiaries would have "some skin in the game" and think twice before choosing the most expensive tests and therapies.