Governors Give Thumbs Up to Medicaid Reform

The National Governors Association (NGA) on February 27 approved a groundbreaking Medicaid reform policy that may alter a program that's been in place since 1965. Forty-eight governors reached a clear consensus on the proposal while in Washington, D.C. at the association's winter meeting.

Similar to what governors did with welfare reform--implementing versions long before federal lawmakers bragged about changing "welfare as we know it"--the Medicaid revisions would allow states more flexibility to established managed care networks and set quality standards for health plans. Most importantly, perhaps, the policy aims to change a Medicaid waiver system that state officials find onerous and which they say hampers innovation., which submitted its request for a similar plan last November, is awaiting approval.

Governors decided to tackle the weighty issue of Medicaid reform during a NGA workshop for new governors, held last November in Utah. Governors Howard Dean (D-Vermont) and Don Sundquist (R-Tennessee) were asked to take a lead role, since their respective health plans--the Vermont Health Access Plan and TennCare --are innovative and were launched via Medicaid waivers.

Nancy Menke, senior health policy advisor to Sundquist and former commissioner of Tennessee's Department of Health, helped craft the new Medicaid reform policy. The plan has "twin goals of allowing governors to stabilize current programs and to expand its reach to the uninsured through the public or private sector," she says. If a state wants to launch a TennCare-like system, officials also "would find the road easier to implementing such a program," Menke says.Underlying the new policy is state officials' desire to improve the state-federal relationship. "The whole kind of atmosphere that we hope to have with HCFA is one that we haven't had. We'd like to have a more collegial relationship, cut down on red tape and bureaucracy, so states are involved as true partners with HCFA. Governors approach programs with pragmatism and a background of experience that federal agencies may not always have," Menke says.

With former Wisconsin Governor Tommy Thompson heading the Department of Health and Human Services--which oversees HCFA--health officials hope strengthening the state-federal relationship will be relatively easy. "Having been ... the chief executive officer of his state for 14 years, he's certainly aware of the difficulties states have had in trying to start new programs. He's aware of waiting for waivers to be approved. Everything he's said has been very collegial in reaching out to his peers and there's every indication to governors that he wants to have a good working relationship with states," says Menke.

Indeed, Thompson promised cooperation in a February 25 speech at NGA's meeting. Already sounding like a Bush Administration insider, he said "we in Washington must learn from you at the state level, work with you on a daily basis, and we must strive to give you the flexibility you need to solve problems in your states, cities, towns and villages."

Though he didn't say that every waiver request would be approved, Thompson did make a pledge. "You will no longer have to wait months, a year or even longer to get action on a waiver request. No more frustrating delays, waiting to implement your innovative ideas. No need to badger the department. It simply won't happen," he said.

What's next for the Medicaid reform plan? NGA spokesperson Christine LaPaille says some provisions need to be tweaked, like figuring out what would happen with existing waivers. "We can then take this to Capitol Hill, and get it on the agenda. Senators and members of Congress have been calling to get copies of the policy, and we accomplished our goal of putting it on the national agenda. It gives us strong footing to go to Secretary Thompson to say this is what the governors want," LaPaille says.