Dems criticize NGA's new Medicaid plan

At a Senate Finance Committee hearing yesterday, Govs. Mark Warner (D-Va.) and Mike Huckabee (R-Ark.) unveiled a proposal aimed at giving states more flexibility in administering Medicaid.

The plan attracted immediate criticism from Democrats who said the governors' recommendations were too narrow in scope and did not address fundamental flaws in the nation's healthcare system.

Warner and Huckabee, speaking on behalf of the National Governors Association (NGA), said that all of the recommendations presented had won the unanimous support of the 50 governors, who have made Medicaid reform a top priority this year.

Over the past several years, the governors have failed repeatedly to agree on one specific plan. With the GOP-led Congress and the White House eyeing major cuts to Medicaid, the NGA was able to put its differences aside and agree on a plan.

Medicaid spending accounts for an increasingly large chunk of state budgets as healthcare cost increases outpace overall inflation and fewer private employers offer health benefits.

Warner cited his home state of Virginia as an example of skyrocketing costs. He said the state will spend $5 billion this year on Medicaid, compared to $1 billion in 1990. Medicaid is jointly funded by the federal government and the states, with Washington picking up slightly more than half of the program's costs.

Warner and Huckabee, both of whom have been mentioned as potential presidential candidates in 2008, trumpeted their successes in enrolling more children into Medicaid.

The governors propose to give the states more leeway in crafting policies to increase the efficiency of the program, particularly in the areas of prescription-drug costs and long-term care, two of Medicaid's biggest expenditures. The NGA envisions expanding the use of generic drugs and making it harder for the elderly to transfer assets to their children to become eligible for long-term-care assistance.

Several committee members expressed concern about the NGA's proposal to allow states to increase the co-payments charged to Medicaid enrollees. Sen. Blanche Lincoln (D-Ark.), who introduced Huckabee and praised his leadership as governor, worried that "charging high co-pays to low-income people will mean that they don't get care."

The most contentious and partisan part of the hearing centered on what is not included in the NGA's proposal.

Led by Sen. John Kerry (D-Mass.), Democrats said that the recommendations would not fix what they see as the underlying problem - that federal and state tax cuts have dried up the revenue needed to pay for Medicaid and other health programs. Kerry touted his proposed Kids First program, which would provide healthcare to the 11 million uninsured children in America.

Kerry and Sen. Jay Rockefeller (D-W.Va.) argued that the healthcare system could be fixed for less money than President Bush proposes spending to make his 2001 tax cuts permanent.

"We wouldn't have a Medicaid problem if we didn't have the tax cuts," Rockefeller said.

Sen. Gordon Smith (R-Ore.) and other Republicans contended that raising taxes to increase healthcare spending would hurt the nation's economy. "I don't think jacking up taxes is the answer here. I don't want America to look like Western Europe," where growth rates are low, Smith said.

Warner and Huckabee declined to offer the committee advice on tax policy but agreed that ultimately Medicaid must be evaluated in a broader context.

"Medicaid cannot be an island," Warner said. "It is inextricably linked to the rest of our healthcare system."