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A miracle on Capitol Hill

Just when we thought the holiday season was over, the CMS Actuaries gave their biggest gift of the year to the White House, Senate, and House – an accounting change that reduced Medicaid expenses by $73 billion over the next ten years.
To be fair, and who doesn’t want to be fair when dealing with the Feds, the change was triggered when CMS determined that inflation in Medicaid for 2004 was 9%, not the 11% originally forecast. But let’s focus on the implications.
Recall that new HHS Sec. Leavitt was seeking to reduce Medicaid by some $60 billion by eliminating “accounting gimmicks” that states were using to get as much Federal money as possible to fund Medicaid (which is, by the way, a funding requirement placed on the states by the Feds…). The new numbers may make it a little tougher for the Administration to push through drastic changes to Medicaid.
CMS is downplaying the change, noting that “the revision would not affect administration plans to reform Medicaid in the fiscal year 2006 budget proposal that President Bush is set to release on Monday.”
So, any euphoria over the new found savings may well be short-lived. If nothing else, it will make for entertaining Hill-watching, as Governors, battling low state revenues and rapidly rising Medicaid costs, seek to maintain Federal funding. According to California HealthLine reporting on Congressional Quarterly’s story,
“Virginia Gov. Mark Warner (D), chair of NGA, said, “The cuts cause grave concern because the states are still reeling from the budget woes of the last five to six years. To have a major cost shift that simply passes costs from the federal government to the states will really slow the recovery that most states have started to experience” (Adams, CQ Weekly, 2/7).
And it’s not just Democrats…
“Sen. George Voinovich (R-Ohio), a former mayor of Cleveland, is leading a coalition of Republican former governors and local officials in Congress who are prepared to contest Bush’s Medicaid proposals. “We’re going to look at what he proposes. But we are not going to just slash funding for states. We’re not going to rip up the safety net,” Voinovich said. ”

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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