For the first time, HHS Secretary Kathleen Sebelius said she lacked the statutory authority under federal law to approve waivers that would allow states to cut their Medicaid enrollments without losing federal matching funds—a so-called maintenance of effort provision.
“Our lawyers say there is no blanket authority” to grant such waivers, Sebelius told reporters after her Tuesday appearance before the Senate Finance Committee to discuss President Barack Obama's proposed fiscal 2012 budget. “Maintenance of effort is part of the law.”
So far, Arizona has specifically requested such a waiver, and 29 Republican governors have asked Sebelius to offer such waivers to help states close a combined budget shortfall estimated at $111 billion. In response, Sebelius wrote governors to suggest a series of cuts to their Medicaid programs' optional benefits that could save about $100 billion without cutting their overall enrollments.
“That letter doesn't even come close to solving the problem,” Sen. Orrin Hatch (R-Utah) said about Sebelius' response to the states.
Hatch also challenged Sebelius' assertion that she lacked the authority to grant enrollment waivers, citing a waiver-authorizing section of the relevant law.
Officials at HHS have yet to report a decision on Arizona's request, and Sebelius said her staff is focusing on discussing alternative savings that could be found in the state's Medicaid program.
In the House, the director of the White House's Office of Management and Budget and the treasury secretary defended the administration's fiscal 2012 budget before two influential committees Tuesday.
At a House Budget Committee hearing, OMB Director Jacob Lew called the president's fiscal framework for next year a "tough-love budget," to which panel member Rep. Mike Simpson (R-Idaho) replied that if his father had used the same kind of tough love when he was a child, he'd still "be a juvenile delinquent." Lew highlighted the budget's plan to stave off a steep Medicare payment cut to physicians.
"In December, there was bipartisan agreement for a doc fix," Lew said. "In this budget, we build on that and we have $62 billion in savings to pay for this fix for two years," he said, adding that this creates a window to address this issue again in the future.
Later, Treasury Secretary Timothy Geithner also emphasized the physician payment issue in his written testimony to the House Ways and Means Committee, where he spent more than two hours fielding a host of questions on corporate and estate taxes, energy, Social Security, and just a few about healthcare.
Rep. Tom Price (R-Ga.), a physician, said there is no evidence this administration has taken the lead on addressing entitlement reform, which includes Medicare and Medicaid. He also went back and forth with Geithner about the sustainable growth rate formula, after Geithner said the budget addresses the issue for the next two years. "The assumptions are Congress will take care of it?" Price asked, to which Geithner said, "Not you alone," and added that there will be discussions on the matter.
Meanwhile, as House members began debate on federal spending for the remainder of 2011—through the Republicans' Continuing Resolution bill—the White House issued a statement saying the bill proposes cuts that undermine government functions and investments essential to economic growth and job creation while also reducing Defense Department funding to a level that would leave the department without the flexibility to meet military requirements.
"If the president is presented with a bill that undermines critical priorities or national security through funding levels or restrictions, contains earmarks, or curtails the drivers of long-term economic growth and job creation while continuing to burden future generations with deficits, the president will veto the bill," said the statement from the OMB.