As Congress and President Bush have sparred over Social Security and the federal judiciary this year, the top legislative priority of the nation's governors has not changed. Republican and Democratic state executives say nothing is more important to the states than restructuring Medicaid, and they worry that the federal government has not gotten the message.
Medicaid was not part of the official agenda at the National Governors Association summer meeting in Des Moines earlier this month, but it was a regular topic of discussion at the governors-only sessions.
As Mississippi Gov. Haley Barbour (R) put it, "It's a real problem, and it is a here-and-now problem. There's nothing theoretical about it. . . . It's a problem that's crushing states today."
Last month, the governors, led by Arkansas Gov. Mike Huckabee (R) and Virginia Gov. Mark R. Warner (D), the current and past chairmen of the NGA, presented Congress with a bipartisan proposal designed to give states more flexibility to administer the program and to save some money. Governors offered their proposal as a counter to more significant cuts recommended by the Bush administration.
Rising health care costs, particularly for prescription drugs and long-term care, have devastated state Medicaid budgets. Now the states face $10 billion in cuts in the federal share of the program over the next five years. In Des Moines, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) met privately with the governors and, according to several governors who were there, suggested that their proposal will be taken seriously by his committee this fall.
"We're realists, and if those cuts are going to occur, we'd like them fashioned in a way that has the least fiscal impact on us and has the least effect on the provision of benefits to individuals," said Pennsylvania Gov. Edward G. Rendell (D). "I think Senator Grassley gave us reason to be optimistic on both those."
The governors' plan includes recommendations aimed at decreasing prescription drug costs, tightening the rules on transferring assets from one generation to another to qualify for Medicaid, allowing more co-pays and other cost-sharing policies and providing greater flexibility to structure benefits packages for recipients.
The Center on Budget and Policy Priorities criticized the cost-sharing proposal, arguing that co-pays, premiums or deductibles could result in reduced care for poor women and children, for whom the program was originally designed. Most low-income recipients are now protected from such payments. "NGA's proposal appears to erase all of these longstanding protections," the group said in a critique issued several weeks ago.
Governors offered divergent views of the criticism. Iowa just introduced major changes to its program, including small premiums. Gov. Tom Vilsack (D) said the initial response has been good and that a number of Iowans have said they prefer to contribute something to their care. "Americans want to pay for health care for their kids," he said. Rendell said his state raised co-pays on prescription drugs from $6 to $8 "without a peep."
But Idaho Gov. Dirk Kempthorne (R) said his state has resisted co-pays as part of the package of changes made in recent years. Co-pays, he said, could backfire and result in higher overall costs. "If you impose a co-pay, they may choose not to go get the medication, and we think there is a far greater cost to the system if they do not get that medication," he said.
Health and Human Services Secretary Mike Leavitt, at the urging of Congress, has appointed a Medicaid commission to examine the future of the program, and although governors were to be included on the commission, they have declined for now, preferring to argue on behalf of their proposal from the outside.
During a conference call among the governors, Michigan Gov. Jennifer M. Granholm (D) offered her opinion that governors should not participate on the commission for now, and that view was backed, somewhat unexpectedly by Barbour. The action helped to solidify the bipartisan consensus among the governors on both substance and strategy.
The commission will report back Sept. 1 on how to save $10 billion over five years. By the end of the year, the commission must recommend more significant restructuring to ensure the program's long-term solvency. For that discussion, the governors are likely to be back at the table.
Tennessee Gov. Phil Bredesen (D), who has faced a storm of protests over proposals that could cut 300,000 people from his state's TennCare program, said states can weather the upcoming cuts now working their way through Congress. But he said bigger changes are needed and Washington needs to start paying attention. Pointing to the rising costs in every state, he said, "There's no state that has the revenue growth or revenue base to support that kind of thing going forward."