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Parties Still at Odds Over Proposed Cuts to Program

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GOP Aide: Medicaid Caps Unlikely

Feb. 3, 2005 -- Attempts to limit spending in the Medicaid program are a near certainty on Capitol Hill this year.

Federally ordered caps on benefits or the program's budget, however, appear unlikely to be part of the changes, key congressional aides say.

Congress is likely to pursue tax credits designed to help lower-income families buy private health insurance. They are also likely to face a fight on embryonic stem cell research.

President Bush is expected to propose Medicaid cuts in his federal budget, due out next week. Bush pledged in his State of the Union speech Wednesday night to introduce a budget that limits spending in an effort to lower the federal deficit.

Lawmakers are waiting to see the White House's proposals before they introduce any cuts to Medicaid, which serves 48 million low-income Americans and is expected to grow at 7% per year over the next decade.

But the option of freezing Medicaid spending, floated in the past few weeks as a way to curb the program, is unlikely to pass in Congress, a senior Senate Republican aide on health issues says.

"I don't think there's an appetite, at least in the Senate, to pass a draconian cap on the programs that just shifts costs to the states," the aide says, speaking at the National Healthcare Policy Conference in Washington.

Cutting Fraud Instead of Benefits?

Instead, lawmakers are likely to turn to a proposal outlined by Michael O. Leavitt in his first public remarks as Secretary of Health and Human Services earlier this week. Leavitt said that Medicaid could save $60 billion over the next decade by tackling fraud and abuse and limiting the way the program pays for nursing home care.

Leavitt has also called for new laws to increase the ability of states to choose which benefits they will cover for low-income residents. A former governor of Utah, Leavitt is known for policies that pared benefits in order to spread basic health coverage to thousands of uninsured people in the state.

One GOP aide calculates that $60 billion is just 2% of Medicaid's projected $2.8 trillion 10-year budget and that the program can save the money through areas other than benefit cuts.

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