Stateline Story

Bush Urges Governors to Come Up with Medicaid Plan

  • March 01, 2005
  • By Pamela Prah
While President Bush pledged Monday (Feb. 28) to work with the nation's governors on Medicaid, he stood firm on his plans to cut $40 billion in federal funds over the next 10 years for the government-financed health care program that is fast eating up states' budgets.

"We want Medicaid to work," Bush told governors before a private White House meeting with members of the National Governors Association (NGA).

Governors of both parties stressed they were encouraged by the president's willingness to consider changing Medicaid, the state-federal health care program for 52 million poor and disabled Americans. "The president expressed an interest in seeing meaningful Medicaid reform," Virginia Gov. Mark Warner (D), NGA chairman, told reporters after the White House meeting.

But the onus is on governors to come up with ideas to save money for both states and the federal government.

The president devoted much of his discussion with NGA members on the administration's top priorities: Social Security and tax reforms. But Medicaid was the top priority for the governors.

"The governors are in agreement, regardless of party, that Medicaid is an issue that we have to deal with," said Arkansas Gov. Mike Huckabee (R), NGA vice-chairman. Governors remain united that states need more flexibility, not less federal funds, to help run Medicaid.

"Medicaid is the PacMan of state budgets," Massachusetts Gov. Mitt Romney (R) said, referring to the popular video game character that gobbles up everything in its path.

U.S. Health and Human Services Secretary Michael Leavitt, a former governor himself, urged the parties to come up with a package of reforms to take to Capitol Hill, where lawmakers have not shown much interest in restructuring Medicaid.

Bush spoke briefly about one of the most controversial aspects of his budget proposal for fiscal 2006: saving $40 billion in Medicaid, in part, by closing loopholes that states exploit to get more federal matching funds for the program. "We put that on the table for discussion, so that the system works the way it's supposed to work," Bush said. The administration is looking for ways to plug an estimated $427 billion federal deficit

Most Democratic governors, while careful not to bash the president, were more vocal in their concern that the administration was more interested in cutting the federal budget deficit by $40 billion than fixing complex problems in the country's health safety net for pregnant women, children, the disabled, poor elderly and uninsured. "Governors are concerned that budget numbers should not drive reform," Iowa Gov. Tom Vilsack (D) said.

Since January, the governors have been working behind the scenes on ideas for reforming Medicaid, hoping to come up with bipartisan proposals on which Congress and the White House can agree. Leavitt prodded the governors to act quickly, but several governors stressed the problems with Medicaid require a long-term solution, not a quick fix.

Romney said the governors still are debating among themselves a number of issues, including whether to float a package of short-term cost containment fixes in the next couple of weeks or to press instead for long-term structural changes to fix a program that chief executives of both parties say is unsustainably expensive. "We're still trying to figure out the right strategy, legislatively," Romney said.

Vilsack said he hoped the administration would give states the freedom to try different ideas on Medicaid until a successful approach is identified that could be used nationwide, just as states did in leading the way on welfare reform.

New Mexico Gov. Bill Richardson, who heads the Democratic Governors' Association, said that Democrats will fight against cuts in federal contributions to Medicaid but that he doesn't expect to win that fight in Congress. "We want to reform Medicaid, not starve it."

Stateline.org's Kathleen Hunter contributed to this report.