Tell Congress to Reject Bush Medicaid Budget Cuts

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NASW Government Relations Action Alert

Tell Congress to Reject Bush Medicaid Budget Cuts

February 8 , 2005

Issue

Socials workers strongly support the maintenance of a strong health insurance safety net for vulnerable populations, and s tate Medicaid programs provide the most critical safety net for low-income Americans in need of health care services. Currently, Medicaid provides coverage to 47 million Americans including one-in four U.S. children, 4.1 million elderly, and seven million blind and disabled individuals.

The President's budget request for fiscal year 2006 released yesterday proposes $60 billion in cuts to Medicaid over 10 years. If enacted, these cuts will make deep reductions in provider payments and reduce coverage for millions of recipients. Among the services most hurt by the changes would be case management services, which were singled out for heavy reductions ($11.7 billion over 10 years). The President also proposed over $15 billion in new Medicaid spending, so that the net spending cut in the program equals $45 billion over 10 years.

The Medicaid changes recycle budget cuts proposed by the Administration during its first term, which could make them harder to sell to Congress this year. The budget cuts are generally limited to reductions in payments to providers and states and they avoid a block grant most feared by advocates of the program. Beyond the cuts in case management services, Health and Human Services Secretary Mike Leavitt described the cuts as closing "loopholes" that allow middle-class seniors to receive benefits, prohibiting what he called "accounting gimmicks" used by states to receive more federal matching funds and eliminating excessive spending on items such as prescription drugs.

Background

Bush's Medicaid budget proposals are expected to receive broad support from fiscal conservatives in Congress, but many governors and advocates are actively opposing deep reductions in the program. Bush's plan for Medicaid this year is intended to limit the increase in Medicaid spending over the next decade to an average of 7.3 percent annually, compared to a projected growth rate of 7.8 percent if cuts are not made. Families USA estimates the net cut of $45 billion would equal the elimination of 1.76 million children from current program eligibility by 2010.

The budget proposes two changes to Medicaid reimbursement policy for case management services. First, the budget proposes to clarify which services may be claimed under targeted case management (TCM). Secondly, the Administration seeks lower reimbursement for TCM services to the administrative matching rate of 50 percent. The Administration argues that currently states are shifting costs into Medicaid case management that are the obligation of other programs and are using expanded definitions of allowable services. These two proposals would save $129 million in FY 2006 and $3.1 billion over five years and 11.7 billion over 10 years. T he President's total plan for $60 billion in cuts over ten years, includes the following reductions:

$15.0 billion in payment cuts to pharmacies
$4.5 billion closing loopholes on asset transfers from the elderly
$11.9 billion from closing provider payment �schemes� (intergovernmental transfers)
$3.3 billion from mandatory cost-based limits on providers
$6.2 billion by phasing down of �safe harbor� for state taxes on providers
$1.4 billion in new limits on managed care provider �taxes�
$6.0 billion in caps on state administrative claiming
$4.0 billion from cut in targeted case management matching rate
$7.7 billion by avoiding federal cost shifts from targeted case management and other services

Long-term, however, the budget proposes to give states more flexibility to tailor their Medicaid programs to create a �more sustainable cost structure.� Without offering explicit details about how it might be restructured, the budget language emphasized that the Administration plans to �build on the success� of the State Children's Health Insurance Program (SCHIP) in modeling the future Medicaid program. SCHIP is funded through a per capita allotment, similar to a block grant, so states have the ability to alter coverage relatively easily. Advocates fear that the Administration could still be planning to impose such caps on funding in Medicaid.

In 2003, the administration proposed an overhaul of the Medicaid system in which states would be given more flexibility in running their programs in return for a capped allotment of funds for optional Medicaid populations, which include some nursing home patients and certain low-income pregnant women and children in families not meeting criteria for mandatory coverage. That proposal failed in Congress, but it remains a popular approach for cutting Medicaid among fiscal conservatives in Congress.

The Administration must work within the complex congressional budget process to secure passage of these changes, and the President's budget request yesterday started a process that will go on for months. Over the next few weeks, Congress will question Administration officials about the budget and develop its own spending plan called a budget resolution. The budget resolution includes a total for discretionary spending and targets for revenues and entitlement spending. Congress will consider cuts and caps on domestic discretionary and entitlement spending, including Medicaid, during this process. The budget resolution may do this in several ways: 1) by decreasing discretionary or entitlement spending on programs in the budget resolution; 2) ordering congressional committees to pass legislation called �budget reconciliation� to cut entitlements, including Medicaid, and/or taxes; and/or 3) passing a budget process bill that would cap all spending, cap entitlemen spending, cap discretionary spending and/or institute �pay-as-you-go� rules for entitlement programs only. These three separate budget bills are necessary to enact all of the budget cuts the GOP leadership has indicated it wants.

Action Requested

All Senators and Representatives must be contacted immediately to hear opposition to the Bush Medicaid budget cuts. Please call, fax, or e-mail your U.S. Representative and Senators to request their support for protecting Medicaid from devastating budget reductions. These contacts are essential over the next two weeks as these members are forming their opinions about their constituents' views of domestic spending cuts.

A sample letter opposing the Bush Medicaid budget request has been posted on NASW's Congress Web to e-mail or fax to Members of Congress. Individual telephone numbers, fax numbers, and e-mail addresses are available through NASW's Congress Web: www.socialworkers.org/advocacy/grassroots/congressweb.asp If you make a phone call, please let us know via e-mail at advocacy@naswdc.org

The Congress will be on recess the week of February 18-27 giving constituents an opportunity to personally lobby their representatives. NASW is asking its members to schedule local visits with congressional representatives during that week to discuss federal budget priorities. Within the next week, NASW will be sending further materials to support members in these visits.