Legislators Prod Congress on Medicaid, Real ID

As some states tumble into what they fear is a recession, state lawmakers from across the country are pushing Congress for relief from impending federal rules that would force states to pick up more Medicaid costs and spend billions to make drivers' licenses more secure.

A top concern for legislators, including many of the hundreds who came to Washington, D.C., for the National Conference of State Legislatures' spring meeting April 24-25, is figuring out how to balance their books as revenues collections sag and budget deficits loom in 23 states.

At the same time, states are trying to thwart seven Medicaid regulations from the Bush administration that states say would cost them $1.6 billion through next April 1, the date when the rules could finally take effect under legislation before Congress.

Many lawmakers attending the NCSL meeting descended on Capitol Hill to stress their opposition to the rules, slated to go into effect June 30, which would clamp down on Medicaid spending for school-based treatments and transportation, rehabilitative services, graduate medical education and payment to public providers.

"There is clearly a lot of concern about Medicaid," NCSL Executive Director William T. Pound told Stateline.org , referring to the state-federal program that provides health insurance for 59 million poor Americans.

Pound said states this year are cutting back, not necessarily their existing health insurance programs, but plans to expand coverage to the uninsured. "The fiscal condition just won't support it now," he said.

On April 23 the House voted - with a veto-proof margin - to block the seven Medicaid administration's regulations. But state lawmakers who lobbied their federal counterparts discovered that the bill may be a tougher sell in the upper chamber. U.S. Sen. Lamar Alexander, a Tennessee Republican and former governor, gave a rousing speech at the NCSL gathering April 24 about the importance of state autonomy, but told state lawmakers he hadn't decided whether to support the moratorium.

From the states' view, Pound said, it is "imperative" that Congress block these Medicaid regulations that "would save the federal government a good deal of money, but would either knock off populations (from the rolls) or cost the states a significant amount of money."

During an NCSL session, Kerry Weems, the federal official who heads the Centers for Medicare and Medicaid Services, defended the rules, saying that the Bush administration wants to ensure that federal money is spent on medical services, not unrelated costs. "These regulations are about policy, they're not about the money. That's why you're going to find us quite insistent on them," Weems told reporters.

Another big-ticket item that states want Congress to tackle is the Real ID Act, the sweeping law approved by Congress in 2005 to ensure that all 50 states issue more secure driver's licenses. Real ID is expected to cost states $3.9 billion over 11 years.

Governors and state lawmakers last month called on Congress and President Bush to set aside $1 billion to cover the up-front cost of Real ID, according to separate letters from the National Governors Association and NCSL. While NGA wants Congress to "fix and fund" Real ID, NCSL wants an outright repeal.

In an April 4 letter to members of the U.S. Senate, NCSL expressed support for a bill by U.S. Sens. Daniel K. Akaka (D-Hawaii) and John E. Sununu (R-N.H.) that would repeal Real ID and replace it with a new set of rules for more secure driver's licenses that would be negotiated between states and the federal government.

(Click here for NCSL's "Countdown to Real ID" web page, including a database of state legislation). During the NCSL meeting, a top official with the U.S. Department of Homeland Security expressed concerns over how quickly any new, collaborative rulemaking process between states and the federal government would be able to achieve results.

"This will take forever, and I'm not sure we will get there," Kathy Kraninger, a Homeland Security representative, told state lawmakers April 24.

Pound said Congress could further help states by enacting a second fiscal "stimulus" package that provides more federal dollars for unemployment insurance and for the nation's crumbling infrastructure and transportation systems. Some states had to put big projects on the back burner because they simply couldn't afford it.

On the law enforcement front , state lawmakers also lobbied Congress to restore $440 million in funding for a grant program for state and local agencies that seize illicit drugs and help rehabilitate juveniles commit crimes, among many other responsibilities. The program, called the Byrne Memorial Justice Assistance Grant Program, was cut last year by 67 percent - from $520 million in fiscal 2007 to $170 million in fiscal 2008 - causing law enforcement officials nationwide to consider layoffs and other emergency cost-saving measures.

"I'm very hopeful funding will be restored, because Congress will see how vital (the grant program) is," said South Dakota state Rep. Joni Cutler (R), who has spearheaded the state lawmakers' lobbying efforts in Washington on the issue.

Other national organizations, including the National Governors Association, the National Association of Attorneys General and the National Association of Counties, also have pressed Congress to restore funding for the grants. The state attorneys general last month met with President Bush and U.S. Attorney General Michael B. Mukasey to discuss the grants.

Stateline.org reporters John Gramlich and Daniel C. Vock contributed to this report.