Medicare Compliance & Reimbursement

Members of Congress, including many Democrats, are lending a sympathetic ear to governors who seek greater state control over Medicaid. But as fiscal realities grow starker and Republican leaders remain committed to enacting the bulk of President Bush’s proposed tax cuts, governors and health-care providers could be in for a wild ride.

House Budget Committee Chair Jim Nussle (R-IA) has become known in recent years as a staunch champion of rural providers. But with the budget resolution his panel approved on a partyline vote in the small hours of March 13, that reputation is coming in for some dings. Even as the House Energy and Commerce Health Subcommittee held its first Medicaid hearing of 2003 on March 12, the budget panel was beginning the marathon session that led to approval of Nussle’s resolution. And reports flowed from hearing room to hearing room about the budget plan’s call for massive cuts in federal mandatory spending, including an estimated $93 billion in cuts to projected Medicaid spending growth over ten years.

By comparison, the infamous 1997 Balanced Budget Act asked for only $47.6 billion in Medicaid cuts, according to Edwin Park of the leftleaning Center on Budget and Policy Priorities. In a separate budget item, Nussle sets aside $12 billion in added Medicaid funds — the same amount proposed by the president — for states that take up the White House proposal to get enhanced annual dollops of their next ten years’ allotment of Medicaid funding over the next few years while accepting trimmed growth in federal funding for the last years of the decade. States that chose the option, which requires congressional enactment, would get additional power to shape their Medicaid programs with the aim of developing more efficient care-delivery systems to reap savings down the line.

Meanwhile, Medicare Part A — which reimburses inpatient hospitals, skilled nursing facilities, and for some home-health services — would come in for around $215 billion in cuts under Nussle’s plan (see story, p. X). That’s more than twice the $103 billion Congress intended to cut from Part A in the BBA, according to Federation of American Hospitals President Chip Kahn. “It is unthinkable to propose cuts of this magnitude,” he said in a statement.

The Nussle budget reveals in stark relief the tradeoffs legislators must cope with to reconcile three competing GOP goals, each embraced with various amounts of fervor by different elements in the party: enacting the second round of large tax cuts proposed by President Bush; paying for buildups in defense and homeland-security programs and a Medicare prescription-drug benefit; and avoiding a scenario where federal deficits mushroom without end.

Even though House and Senate budgeters would slice the president’s proposed tax cut from $1.6 trillion to around $1.4 trillion, both congressional budgets contain much more negative news on federal spending — both mandatory and discretionary — than was visible in the president’s plan released in February. The main reason: Conservative Republicans and even some Democrats have pushed budgeters hard to avoid the ever-increasing deficits that critics say the White House plan would produce.

The outcome of the pending, certainly fierce budget battle is entirely unclear. To avoid serious cuts to health care, Congress must forgo either some tax cuts or a balanced budget in the foreseeable future.