Obama administration looking to help states cut Medicaid costs

WASHINGTON—Facing a revolt from states facing huge
budget shortfalls and tattered health-care safety nets, the Obama
administration is intensifying a drive to help state leaders wring
savings from their Medicaid programs.

On Thursday, reflecting the changing political landscape and the still-troubled economy, Health and Human Services Secretary Kathleen Sebelius sent a letter to governors suggesting a range of cuts, including removing some people from the program.

“I know you are struggling to balance your budget
while still providing critical health-care services to those who need
it most,” Sebelius said.

“In light of difficult budget circumstances, we are stepping up our efforts to help you identify cost drivers in the Medicaid program and provide you with new tools and resources to achieve short-term savings and longer term sustainability.”

With near double-digit unemployment, the nation’s Medicaid
programs, which are jointly funded by federal and state governments,
have grown to cover about 53 million poor children and adults. Program
costs have risen accordingly.

At the same time, the sagging economy has significantly reduce state tax revenues.

California’s version of Medicaid, known as Medi-Cal, covers 7.7 million people and is among the most distressed programs in the nation. Gov. Jerry Brown has called for $1.7 billion
in cuts to the program, proposing new limits on prescription drugs,
in-home care and doctor visits that many health-care advocates have
said could be devastating.

Brown has also proposed making even deeper cuts in what the state pays health-care providers who care for Medi-Cal patients, at a time when many providers are closing their doors to the program.

Health Access California executive director Anthony Wright, a leading advocate for preserving Medi-Cal,
applauded the federal initiative for offering constructive suggestions.
“It would been better if the letter had a check inside,” he said. “But
that’s not the world we live in anymore.”

Over the last two years, Congress has provided more than $100 billion
in emergency aid. But now, as that special aid expires, states are
struggling to pay for their programs and deal with education and other
state priorities.

Many governors — including some Democrats — are
chafing at a requirement in the new health-care law that they maintain
coverage for many of their poorest residents.

The Obama administration is particularly concerned with maintaining state Medicaid
programs because under the new law, those government insurance plans
are expected to provide a foundation for guaranteeing coverage to all
Americans beginning in 2014.

In her letter, Sebelius reminded governors, many in
their first months in office, that they have several options to trim
costs their programs now.

She offered help from Washington to develop ways to streamline care, cut prescription-drug costs and modernize their programs.

“Medicaid really is an extraordinarily flexible program,” Cindy Mann, who heads the Center for Medicaid and State Operations at the Department of Health and Human Services, said in an interview.

It remains unclear how much relief the administration’s proposal will provide to state governments, however.

The Republican Governors Association, whose members have asked the administration for greater authority to cut their rolls, dismissed Sebelius’ letter Thursday.

“The policies adopted since the beginning of the
president’s administration have restricted state flexibility, and
governors are well aware of the current options available to them,”
said association spokesman Mike Schrimpf.

The Obama administration is suggesting that governors could cut optional health benefits that many Medicaid programs offer, such as physical therapy, dental care, eyeglasses and some prescription drugs.

State could also require beneficiaries to pay more for some of the services.

Although the federal government requires that state Medicaid
programs provide a basic set of benefits, states have historically
added benefits, leading to great variety in programs nationwide.

Optional benefits currently consume 40 percent of spending on benefits, according to the administration.

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(c) 2011, Tribune Co.

Distributed by McClatchy-Tribune Information Services.