Bush promises governors to work on Medicaid, hints at federal cuts

By ROBERT TANNERAP National Writer WASHINGTON (AP) – President Bush promised on Monday to work with governors to restrain soaring Medicaid costs and revamp the health care program for the poor, but he also indicated he would keep trying to eliminate some federal aid. Governors were optimistic that Bush was serious about changing the system, but they worried that the cuts would further strain state budgets. “All governors are very, very reluctant to see any kind of major reduction to the system,” Republican Bob Riley of Alabama said. Democrat Janet Napolitano of Arizona said the president was too focused on a specific figure that would help reduce the federal deficit. “If the president wants Medicaid reform, then he needs to have a reform discussion that’s not driven by an arbitrary budget number,” she said. After the White House meeting, most governors said they opposed Bush’s proposal to cut some $40 billion from the system, though some said they realized they must eventually compromise. They also wanted the ability to experiment in order to lower costs. Many were encouraged by parts of the administration’s budget proposal that would give states more flexibility. “We want Medicaid to work,” Bush told the governors before an hour-long, private question-and-answer session. “The system needs to be reformed and we want to work with governors.” But the one detail Bush emphasized was his plan to cut federal dollars in an effort to stop state Medicaid accounting practices that the administration contends cheat taxpayers. Many state leaders say the money derived this way is essential. Federal officials say the practice artificially inflates health care prices to bring in more federal cash, which states sometimes use for other purposes. “We’re worried” about the transfers, Bush said. “We put that on the table for discussion, so that the system works the way it’s supposed to work.” Riley said Bush’s proposed cuts would cost Alabama $600 million over the next four or five years. Meanwhile, the number of Alabama residents on Medicaid has climbed from one in 10 to nearly one in five. Cuts will mean fewer services and probably force people off the rolls, Riley said. Medicaid costs have soared in recent years, driven by rising health care costs, an aging population that relies largely on Medicaid to pay for nursing homes, and a recession that sent more people to state-supported health care. This year, Medicaid will pay for care for 53 million people _ women and children, poor, elderly, disabled. It will cost an estimated $329 billion. Enrollment has increased by 40 percent over the past five years. A group of governors has spent the past month hoping to develop a plan to present to the administration and Congress that would counter Bush’s cuts with changes that would save money without hurting state budgets. A deal, either among governors or in discussions between them and Health and Human Services Secretary Mike Leavitt, has proved elusive. Governors said Bush was encouraging; though Republicans were more welcoming of the administration’s stance than Democrats, partisan lines did not define them. There were signs that governors recognized the need for compromise. “There’s opposition to any reduction but we have to be realistic,” said Democrat Bill Richardson of New Mexico. “It’s not about this week,” said Mark Warner of Virginia, a Democrat. “Getting it right is more important than getting it quick.” Warner said the struggle over the final budget numbers will rest with Congress. Even the impact of the budget was in dispute. Governors complained of $60 billion in cuts over 10 years. But the administration, and the National Governors Association analysis, said reductions were offset by additional spending, leaving the cut at about $40 billion. Governors from all sides of the political spectrum say now is the time for a significant re-examination of Medicaid. But what that means has not become clear. Democrat Tom Vilsack of Iowa talks about preferred drug lists. Republican James Douglas of Vermont emphasizes keeping people on the Medicaid rolls, but reducing the program’s costs. Republican Mark Sanford of South Carolina wants to let patients and their families decide how to spend a set amount of health care dollars. Bush’s budget would make it more difficult for older people to transfer their assets to family members so they qualify for Medicaid coverage for nursing home care, one of the large cost-drivers of the system. The president’s spending plan for the fiscal year beginning Oct. 1 also would affect an effort to lower drug prices, which several governors said showed promise, and a change to taxes on providers, which governors said would shift costs to them.