Human Services Agency says Medicare law will impact state budget

Print More

(Host) The state Agency of Human Services warns that the new federal Medicare drug law could have an enormous impact on the state budget. Democrats are using the state’s comments to criticize the Douglas administration’s support for the law. But administration officials say that they will protect Vermont seniors from any cuts in benefits.

VPR’s John Dillon reports:

(Dillon) The new federal Medicare drug law was designed to extend prescription drug coverage to the nation’s senior citizens. But in Vermont, the law could have the opposite effect by reducing pharmacy benefits for about 13,000 people.

The reason is that under the new law, the state will probably lose federal matching funds for state drug programs at the end of 2005. The state has written a letter to the federal government asking for flexibility as it implements the law. The document says that under the new law, “Vermont will now need an enormous amount of state dollars to maintain its current programs.”

Governor Jim Douglas has promised that he’ll protect Vermont seniors from any changes brought by the Medicare law. But Democrats seized on the letter as evidence that the law will harm Vermont. Mark Michaud is a spokesman for the Democratic Party.

(Michaud) “His own administration, the people who are wrestling with the implementation of the new Medicare law, are saying that this law will have dire consequences, that it will require enormous amounts of state dollars to maintain these programs and that it’s going to have an additional burden on an already stressed state budget. That’s their words.”

(Dillon) The state letter presents a stark warning about the new Medicare law. But Human Services Secretary Charles Smith says its impact is not yet clear.

(Smith) “It could be $10 million positive. It could be $10 million negative.”

(Dillon) Smith says it all depends on how the federal government writes the regulations.

(Smith) “Our own opinion is that we think that the likely outcome will be more or less cost neutral. And the basic assumption of that cost neutrality is that we think on the one hand the feds will very likely decline to participate in our pharmacy expansion programs. That is to say, we think they’ll decline to provide federal match.”

(Dillon) But Smith says it’s unlikely that the federal government will implement other regulations that could allow it to take state funds for the program. He says that overall the law will be good for the state, since it will extend drug benefits to about 90,000 people.

But Michaud of the state Democrats disagreed.

(Michaud) “The reality is the state is already facing a $50 million deficit in its health access trust fund in 2006. When the feds take away the money that is currently provided to prescription drug benefits, that’s going to be an additional $20 million that the state will lose in federal funding. And the hole will only get deeper.”

(Dillon) Officials are already drafting next year’s budget. Human Services Secretary Smith says the uncertainty surrounding the Medicare law does complicate the budget planning process.

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

Comments are closed.