Republicans governors and members of Congress are finding that it may be more difficult than they expected to make substantial reductions in the growth of Medicaid spending because the effects of proposed cuts fluctuate widely from state to state.
A plan to reduce Medicaid spending growth from current projected levels of nearly 10% annually to 4% per year was released recently by the Senate Republican task force on entitlements. The Congressional Budget Office projects 1996 federal Medicaid spending will be about $100 billion.
According to a recently released report by the Kaiser Commission on the Future of Medicaid, reducing the growth rate to 5% would result in nearly $85 billion in reduced federal Medicaid spending over a five-year period. However, reductions would vary widely depending on the state. For example, a 5% cap would result in a 2.7% reduction in Medicaid spending in New Hampshire but a 27% cut in West Virginia. In absolute dollars, New York would lose the most ($8.9 billion over five years), followed by California ($6.9 billion), Texas ($5.5 billion) and Florida ($5 billion).
At a recent press conference, Wisconsin Gov. Tommy Thompson, a Republican, said that if Congress tried to move immediately to a 4% Medicaid growth rate, it would be a hardship for many states.
Because of the effects such a reduction would have on some states, Thompson said Republican governors are now pushing to phase in the growth cap, with an initial rate of 8% to 9% declining over a number of years to 4%.
However, according to several Capitol Hill aides, congressional Republicans are balking at a higher rate because it significantly reduces the savings in the federal budget.
The disagreement means Medicaid reform, which House GOP leaders had hoped to move on a parallel track with welfare reform, probably will not be addressed until the Republican budget committees release their spending blueprints in May.