The latest Republican Medicaid reform plan began to wind its way through the congressional maze last week, but threat of a White House veto and provider opposition dimmed prospects for its enactment.
By a vote of 26-14, with Rep. Ralph Hall (D-Texas) joining 25 panel Republicans, the House Commerce Committee approved a GOP plan that would reduce projected Medicaid spending by $72 billion over six years by eliminating the federal entitlement and giving more control to states.
The latest GOP plan loosely follows the proposal released in February by the National Governors' Association. Like the governors' plan, the GOP bill gives states much of the flexibility they have sought. States would be required to provide nearly all current benefits but could determine the amount and duration.
Both plans reduce the maximum amount states must contribute to Medicaid to 80 cents for every federal dollar from the current rate of $1 of state funds per federal dollar. Like the governors' proposal, the GOP plan also eliminates the requirement that states reimburse providers for all reasonable costs.
Provider groups have opposed both provisions, saying they will lead to lower overall Medicaid spending and reduced provider reimbursements.
One change made to the plan last week extended for two years current rules that govern how states raise the state portion of Medicaid funding. The governors' plan eliminated the rules completely, but an amendment passed last week in the Commerce Committee extended the rules to give the federal government time to assess the effects the change would have.
White House officials say the GOP plan varies from the governors' bill in several important ways. At a Capitol Hill hearing last week HHS Secretary Donna Shalala said the GOP plan's guarantee of coverage was "neither real nor enforceable" and complained that the plan was "simply the...block grant dressed up with a tiny embellishment to pay lip service to the governors' principle that funding must automatically adjust for (changes in Medicaid) enrollment." Shalala said that under the plan states that experience significant increases in beneficiaries would be forced to reduce benefits or cut eligibility.
A coalition of hospital groups voiced similar concerns in a letter to lawmakers urging them to vote against the Republican bill.
"We oppose excessive reduction in funding and radical restructuring of the program that could jeopardize people's access to needed care and our ability to provide it," the hospital groups wrote..