Federal Government Turns Down Key Component of Medicaid Reform Plan

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(Host) The federal government has turned down a key component of the Douglas Administration Medicaid reform plan. Now key lawmakers are concerned that any financial help from the federal government will not come in time to resolve an eighty-million dollar Medicaid deficit.

VPR’s John Dillon reports.

(Dillon) Medicaid is a combined state and federal program that serves as health insurance for low-income and disabled people. The state faces an 80 million dollar shortfall in Medicaid funds for the next budget year. The Douglas Administration had asked for a block grant. Officials called it a “global commitment” – that would give the state more flexibility in how it uses the money.

The federal Centers for Medicaid and Medicare Services has backed off from the block grant idea. But the federal agency has promised to work with the state in developing a more flexible program. That could allow the state to use the federal match to pay for additional services. Governor Douglas says he’s hopeful that the state’s request will be approved.

(Douglas) “It’s not the specific direction that we had proposed in terms of the financing mechanism but it still a very positive response from CMS in terms of the flexibility we seek.”

(Dillon) But any change in the way Medicaid is funded won’t happen soon. Essentially, the state this week got the go-ahead to apply for a federal waiver to be used in a more flexible manner. But there are no guarantees. The message from the feds said – quote – “Of course, this letter can in no way be interpreted as an approval of the waiver.”

The uncertainty leaves Vermont lawmakers in a bind. House Speaker, Gaye Symington, met with administration officials on Thursday. She says it now appears that any help from the federal government won’t come in time to erase the red ink in the next fiscal year.

(Symington) “One of the conclusions we took away from yesterday I think is that it may be that we can’t rely on this proposal to fill a hole in the ’06 budget.”

(Dillon) In the Senate, Health Conmmitte Chairman Jim Leddy, a Chittenden County Democrat, was skeptical of the Douglas Administration’s Medicaid plan. He’s concerned that the state is too eager to change Medicaid from an entitlement insurance program that has always taken care of poor and disabled people.

(Leddy) “And we’re talking about moving to a very different way of it being funded. And I’m deeply concerned about that, and it’s impact on those services and on those very vulnerable people. And so without a little more clarity, I’m very uncertain and unclear why the state of Vermont, given where the federal government is, what the President of the United States wishes to do with Medicaid, why we wish to be the first to go over the waterfall.”

(Dillon) There’s another looming issue with Medicaid that will affect how much money the state gets. The federal government has provided about 60 percent of the costs, with the state picking up the rest. But the fed’s share is going down, because it says Vermont’s economy has improved and therefore the state doesn’t need as much money. That could mean the state gets millions of dollars less from the federal government in the years ahead.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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