By Kathleen Hunter, CQ Staff

August 4, 2009 -- President Obama gave Senate Democrats a pep talk on their health care overhaul efforts Tuesday as the lawmakers prepare to counter blistering attacks from Republicans over the August recess.

"We're ready to take on the world," Majority Leader Harry Reid, D-Nev., said after Obama hosted the full Democratic Caucus at a White House lunch.

Reid said the meeting gave Democrats a chance to reflect on their accomplishments so far in 2009 and to prepare to rally support for completing a health care overhaul later this year.

"In spite of the loud, shrill voices trying to interrupt town hall meetings and just try to throw a monkey wrench into everything, we're going to continue to be positive and work hard," Reid said, referring to protests at Democratic town hall meetings on health care in Texas, Pennsylvania, and elsewhere.

At the president's invitation, Senate Democrats scrapped their usual party lunch in the Mansfield Room just off the Senate chamber to dine at the White House with the president on Obama's 48th birthday.

"It was a good spirit in there, and I don't think it was just because it's the president's birthday," White House senior adviser David Axelrod told reporters gathered outside the West Wing.

The meeting clearly was designed to get Democrats working from a common playbook over the August recess. Centrist party members in both chambers have become increasingly skittish about details of the health care bill and its price tag, as Republicans have kept up withering attacks on both.

A significant number of fiscally conservative "Blue Dog" Democrats voted against the House health care bill (HR 3200) in each of the three committees that approved it.

"There was absolute unity in the caucus," Reid said of the Senate Democrats, adding that Obama received several standing ovations. "Different ideas were expressed, but every idea was that we understand that before year's end, we're going to have comprehensive health care reform."

Still Seeking Bipartisan Bill

Reid said the White House and Senate Democrats agreed that they would pass a bipartisan bill if that were "in any way humanly possible."

"We don't want to do a partisan bill, and we hope our Republican colleagues acknowledge that," he said. "We'll continue to work with them as long as we have to. The American people want health care reform, and we're going to do health care reform."

Senate Finance Chairman Max Baucus, D-Mont., said Obama did not pressure him to move faster on getting a proposal through his committee. Baucus has been negotiating for weeks with two other Finance panel Democrats and three committee Republicans, including ranking member Charles E. Grassley of Iowa.

"In fact, he was very thankful for us working to get a bipartisan bill," Baucus said.

After returning to Capitol Hill, Baucus said, "If it gets to the point where we can't get an agreement on a bipartisan basis, then we'll have to look at other alternatives. I mean, we all agree that that's necessary. We can't keep talking forever."

He added, "We need an internal deadline and we will have one. It's not right to set hard external deadlines, but it is important to have deadlines to force results. The world is somewhat run by deadlines."

Baucus had discussed a Sept. 15 deadline for a deal with the small group of Finance Committee negotiators, but he backed off publicly after the Republican participants objected. The White House has set no hard deadlines.

"Sometime around the middle of September, we may have to have some serious discussions of what's next," Baucus said.

Reconciliation a Last Resort

Majority Whip Richard J. Durbin, D-Ill., said use of the budget reconciliation process to get a health care bill through the Senate was discussed only as a last resort.

"It is an option, but it's not a first option," Durbin said. "We want to try bipartisanship, but we're not going to let this go down."

Reconciliation bills can pass the Senate with a simple majority instead of the 60 votes needed to thwart blocking tactics by the opposition.

Democrats theoretically control 60 votes in the Senate, but the absence of Edward M. Kennedy, D-Mass., and Robert C. Byrd, D-W.Va., leaves them short of that number as a practical matter.

Christopher J. Dodd, D-Conn., who has led the Health, Education, Labor, and Pensions Committee's health bill efforts in Kennedy's absence, said his committee members were "ready and willing, of course, to sit down and meld our legislation" with whatever bill Baucus' panel finally produces, and then to "begin to work with the House" on a final product.

Baucus said Obama motivated Senate Democrats to sell a health care overhaul over the recess. "We're going to get health care reform passed this year, working together," he insisted.

Meanwhile, Minority Leader Mitch McConnell, R-Ky., said he welcomed the forced delay imposed by the August recess, which the Senate begins at the end of this week.

"All indications are at this point that the American people would like for us to slow down and try to get this right, because of the magnitude of it," McConnell said. "So August will be a good opportunity for all of us, regardless of what our leanings may be on how to deal with this issue, to go home, interact with our constituents, and come back here in September with a stronger understanding of exactly where the American people might be on this most important issue."

Bart Jansen, Richard Rubin, and Adriel Bettelheim contributed to this story.

By Alex Wayne, CQ Staff

August 5, 2009 -- Senate Finance Committee negotiators are focusing this week on how to expand Medicaid as part of a health care overhaul without breaking the budgets of states that fund the costly program jointly with the federal government.

Finance Chairman Max Baucus, D-Mont., said that the three Finance Democrats and three Republicans who have been working to develop a bipartisan health care bill will confer Thursday with some of the nation's governors, possibly via a conference call. He did not identify the chief executives who are expected to participate.

Unlike the federal government, states must balance their budgets every year—and virtually all of them are struggling to do so in the midst of the ongoing deep recession. Many have been cutting, not expanding, their Medicaid rolls.

As the Finance negotiations continue in pursuit of a bipartisan bill, Senate Democrats were preparing for a closed-door party caucus Wednesday afternoon to review the details of the emerging health care proposal and to discuss their strategy for describing it during sessions with constituents back home over the August recess.

Medicaid Expansion
Democrats envision a large Medicaid expansion as part of their health care overhaul to cover millions of low-income people who do not qualify under current law and either do not have access to private insurance or cannot afford it.

Medicaid eligibility is set by states, with certain federal core requirements. But enrollment is frequently restricted to people with incomes below the poverty level—about $22,000 for a family of four in 2009. On average, parents covered by Medicaid have incomes at 68 percent of the poverty level or below, according to the Kaiser Family Foundation. Childless adults are generally ineligible—except those in nursing homes whose long-term care is paid by Medicaid once all personal resources have been exhausted.

The Finance Committee is considering expanding Medicaid to cover families earning up to 133 percent of the poverty level, or about $29,300 in 2009. It is not clear if the committee would allow more childless adults to qualify for the program.

Unless Congress funds a mandatory expansion in Medicaid eligibility exclusively with federal funds, any change that covers more people would hit state budgets hard.

Currently, the federal government picks up about 57 percent of the cost on average, although the exact amount varies from state to state. There has long been tension between states and the federal government over who should carry more of the burden. Many states complain that Medicaid is fast devouring their budgets; they spend about 15 percent of their budgets on Medicaid, on average.
"A lot of states are strapped," Baucus said Wednesday, after a meeting of the bipartisan group. "We're very sensitive to that."

Other Topics
The Finance Committee is also discussing how to structure a new independent advisory board that would recommend changes in Medicare payments to health providers. There is already such a board—the Medicare Payment Advisory Commission (MedPAC) – that recommends payment changes, but its recommendations are not binding and lawmakers frequently ignore them as affected provider groups fight to preserve their payments.

The Finance negotiators are considering a proposal to replace MedPAC with a body whose recommendations would be binding unless affirmatively rejected by Congress.

Baucus said that under his committee's bill, the entity would be called the "Medicare Preservation Commission." The White House has proposed calling it the Independent Medicare Advisory Commission, or IMAC.

Finance members also continue to discuss how they will fund their legislation, expected to cost close to $1 trillion over ten years.
"We are very close to having a package—in fact, we've got options on the table that will pay for this fully," said Senate Budget Chairman Kent Conrad, D-N.D., one of the Finance members in the negotiating group. "It's a matter of choosing which pieces and how much of each piece is selected to help pay for the package."

Conrad said committee members are also discussing how they can satisfy both anti-abortion and abortion-rights groups concerned about the legislation's effect on the availability of abortions and insurance coverage for them. Anti-abortion groups charge that Democrats seek to expand abortion access by allowing the government to require insurers to cover the procedure. Abortion-rights groups are pressuring Democrats to resist calls to add language to the bill that would restrict access to abortion.

"There are ongoing discussions with pro-life and pro-choice groups, getting their input," Conrad said.

By Jane Norman, CQ HealthBeat Associate Editor

August 5, 2009 -- Count in the Senate Finance Committee negotiators when it comes to support of an independent body enforcing Medicare policy — but just don't call it "MedPAC on steroids."

Finance Committee Chairman Max Baucus, D-Mont., said on Wednesday that the group of six bipartisan senators attempting to shape the committee version of a health overhaul agree that they like the idea of beefing up the current Medicare Payment Advisory Commission (MedPAC).

Baucus, whose remarks came after a morning meeting of the group of six senators, said the Finance version would be called the Medicare Preservation Commission.

"That's basically the old MedPAC on steroids," said Baucus. "We don't like the name MedPAC on steroids because it has too many unnecessary implications, so we named it the Medicare Preservation Commission."

Baucus also suggested there might be more group meetings even after the Senate adjourns on Friday for its summer recess, though it wasn't clear if he meant in Washington or possibly locations outside the Beltway.

"We're going to be definitely working over the recess. In fact, we've got some ideas where we might meet over the recess. And some of that is going to be pretty exciting," he said, without elaborating.

An enormous amount of media attention already has settled on the six senators conducting the health talks because overhaul legislation approved by another Senate committee and three committees in the House has come on party-line votes.

If they were to go on the road in the members' home states, it could be quite a far-flung adventure. The "gang of six" is made up of Democrats Baucus of Montana, Kent Conrad of North Dakota, and Jeff Bingaman of New Mexico, and Republicans Charles E. Grassley of Iowa, Olympia J. Snowe of Maine and Michael B. Enzi of Wyoming.

Finance Committee aides also confirmed late Wednesday that the "group of six" will meet with President Obama on Thursday in what's bound to be a high-profile event. The time or location of the meeting is not clear.

MedPAC was established under the 1997 Balanced Budget Act to advise lawmakers on issues surrounding Medicare, the biggest driver in the health care system because it spends so much money and sets fee schedules. MedPAC's meetings and recommendations are closely watched, and it employs staff members who conduct detailed reports and research. But the commission has no ability to order changes in the system.

President Obama has proposed such a MedPAC-like panel with much greater powers, dubbing it the Independent Medicare Advisory Commission (IMAC). Some House members have picked up on the idea though others don't care to give up the clout they have to affect Medicare rates and policies.

Sen. John D. Rockefeller IV, D-W.Va., has introduced legislation (S 1110) that would expand the powers of MedPAC to make it into an executive agency resembling the Federal Reserve. Rockefeller's argument is that members of Congress don't have the political will to resist lobbyists for special health interests who plead for a break on Medicare decisions that don't go in their favor. Rockefeller would rename MedPAC the Medicare Payment and Access Commission.

While not providing a lot of specifics on how Finance negotiators would like to see the commission structured, Baucus said the senators "spent a lot of time dotting the "i"s and crossing the "t"s" on their proposal.

"The goal clearly is twofold: to let an independent organization make professional judgements about Medicare payments and Medicare procedures," said Baucus.

"The second is appropriate congressional involvement. It's kind of a balancing act we have to undertake here."

Baucus said the commission must have "sufficient authority to make decisions, in order to get their job done," and bend the cost curve of Medicare spending.

That's also so that the proposal would get a "positive score from CBO," he said. The Congressional Budget Office (CBO) has said that the president's version of an independent commission would save just $2 billion over a 10-year period, though Office of Management and Budget Director Peter Orszag has sharply criticized that analysis.

Baucus said that lawmakers "want to make sure there's enough congressional involvement so Congress can play a role here, but not so much of a congressional role that it renders the independent organization's recommendations irrelevant or at least not very valuable because Congress could overturn them too easily."

The commission would make recommendations and unless Congress voted to halt them, "the recommendations automatically go into effect," he said.

He added: "So we're trying to spend time striking that right balance and we did. I think we came up with a pretty good resolution."
The negotiators also examined the question of Medicaid expansion, which is worrying states who say budgets hit by the economic downturn can't handle more spending on the program for low-income people. Baucus said each state covers different populations differently, which makes national policy difficult to set.

"A lot of states are strapped and we're very sensitive to that, don't want to put unnecessary burdens on state budgets," he said. But lawmakers do want 95 percent of Americans to be covered by insurance, he said. Baucus said he plans to meet with state governors although a date or time has not yet been set.

The Senate negotiators plan to return to work Thursday. By week's end, when the Senate adjourns for the summer recess, they will be "further than we are today," Baucus said.

Conrad said the Medicare commission, Medicaid expansion and affordability are three large issues left, and Thursday senators will focus on affordability.

He also said that discussions on how abortion should be treated in the overhaul bill continue and committee members are reaching out to both sides involved in the debate. "There are ongoing discussions with pro-life and pro-choice groups, getting their input," said Conrad. "So we're not prepared to reach a conclusion, but there are active discussions underway and with all sides to try to get something together that will be acceptable."

By John Reichard, CQ HealthBeat Editor

August 5, 2009 -- What's the liberal strategy going into the August recess for getting a health overhaul across the congressional finish line?

Judging from a press briefing Wednesday by a trio of Senate liberals, the answer seems to be: emphasize the continued suffering of many Americans from failing to ensure access to affordable care; put newly emboldened Republicans back on the defensive with the message that their nay-saying perpetuates that suffering; and slam, slam, slam insurers.

Fired up by comments Tuesday by President Obama urging his party to go all out during the recess in pursuit of an overhaul, West Virginia Democrat John D. Rockefeller IV expressed confidence that legislation would pass this year but chafed at efforts by Senate Finance Committee Chairman Max Baucus, D-Mont., to enlist Republican support, saying Baucus is weakening the proposal in the process.

Rockefeller in particular expressed alarm that the Finance Committee proposal would bring an end to the Children's Health Insurance Program (CHIP), a result he called "immoral" because he said that health insurance benefits that would be available to CHIP enrollees through new insurance exchanges would be watered down and wouldn't meet the needs of those with unusual health care conditions.

Rockefeller, who was joined at the briefing by Sens. Sherrod Brown of Ohio and Sheldon Whitehouse of Rhode Island, predicted that the three Republicans Baucus is hoping to attract to his bill—Charles E. Grassley of Iowa, Olympia J. Snowe of Maine, and Michael B. Enzi of Wyoming—won't vote for it in the end.

While Obama urged continued attempts to produce a bipartisan bill in his remarks Tuesday, the three liberals didn't play up that possibility in their remarks and instead focused on what they said is the failure of Republicans to respond to the long unmet health care needs of millions of uninsured Americans.

Rockefeller said that "none of what I read" takes on the 37 Senate Republicans for inaction on an effective overhaul. "I think that's a pretty big story. . .it makes me very angry," he said.

"People that we represent are just struggling so much," Rockefeller said. Referring to "heartbreaking" stories he hears from his constituents and from listening to C-SPAN Radio about people who have been "miserably treated," Rockefeller said "one of the groups by which they've been miserably treated is the insurance industry." He said, for example, that Cigna and other insurers engage in "purging" small businesses whose employees file many claims and cost the insurer a lot of money.

In a letter to Cigna that Rockefeller released Wednesday, the West Virginia senator recounted the testimony of a former Cigna executive at a hearing by the Senate Commerce Committee, which Rockefeller chairs. The letter quotes the former executive, Wendell Potter, as saying: "All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year's premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether—leaving workers uninsured."

Rockefeller's letter asked for details on "purging," including how much money Cigna has saved as a result.

Rockefeller said at the press briefing that insurers are able to "get away" with such practices because the industry operates with little oversight.

"We've discovered how they play the game," he said. "It is a scandal—which the Democrats are going to stop."

Meanwhile, Rockefeller said, the Republican response on an overhaul "is just 'no.' They're against it. Anything we do, they're just against it." Rockefeller said that in contrast, he painstakingly sat through two years of meetings to negotiate an expansion of the CHIP program. Now that program is on the ropes in overhaul legislation, with enrollees supposed to go instead to new exchanges to get coverage.

"It's very hard to sit hour by hour by hour. I did during the children's health insurance bill. It took two years, sitting for hours, all week long, maybe just the four of us, senior on that [Finance] committee, trying to negotiate a really relatively simple bill, which has now been cast off into the exchange, so it's lost all its credibility. Can we get it back? I don't know. I will try my best."

Whitehouse pointed to a New York Times story from some 50 years ago on the burden on individuals of rising medical costs and said it is "astonishing" that "after all this pain and anguish" Republicans now "are ramping up the attack machine to defend the status quo."

Rockefeller said, though, that continued attempts at bipartisanship "are not a waste of time at all" but that after a certain time Democrats will have to look at other options, a reference to use of the reconciliation budget tactic that allows legislation to be passed by the Senate with a simple majority in favor.

Republicans have either supported or offered their own overhaul proposals. For example, Sens. Tom Coburn of Oklahoma and Richard M. Burr of North Carolina have announced a proposal to expand coverage through tax breaks. Some Republicans have signed onto the Healthy Americans Act introduced by Democratic Sens. Ron Wyden of Oregon and Robert F. Bennett of Utah, which would replace employer-based coverage with an individual mandate to buy coverage with subsidies funded by ending the exclusion of employer-paid premiums from taxable income.

Cigna issued a statement in response to the "purging" allegation saying that "the small percentage of our business that is 'risk-based' works as traditional insurance in that our customers' premium rates are based on their claims experience. We work with companies so that employers can effectively manage their medical costs. If together we are not able to work out a solution, at the end of their contract period we will offer rates that are based on the underlying costs of the overall program and are reflective of the competitive group health insurance market."

A committee aide didn't respond directly when asked whether the Finance overhaul would end the CHIP program. "Health reform would strengthen and reform CHIP the same way it will improve quality and affordability in the rest of the health care system," the aide said. "In fact, the committee is considering options that would ensure children currently enrolled in CHIP have the same, or in many cases more benefits under health reform than they do today."

Separately, First Focus, a children's advocacy group, released a letter Wednesday signed by some 150 groups calling for the protection of comprehensive coverage for children in any health overhaul.

"Movement of children out of the Children's Health Insurance Program and into the Health Insurance Exchange could potentially leave 9 million children worse off by providing fewer benefits and higher cost sharing than they currently have through CHIP," said First Focus president Bruce Lesley. "We strongly support last week's action by the Energy and Commerce Committee, which approved an amendment by Rep. Diana DeGette that ensured children receive comparable coverage. We urge the House to retain these provisions in the final version, and the Senate must act in a similar manner for health reform to be a success for kids."

Bart Jansen contributed to this report.

By Drew Armstrong, CQ Staff

August 6, 2009 -- Senate Democrats got a third and final presentation Thursday on how to sell health care overhaul to their constituents over the August recess, this time from White House senior adviser David Axelrod.

Axelrod and Jim Messina, the White House deputy chief of staff, also advised the senators in the closed-door session on how to deal with the protesters and activists who seek to disrupt town hall-style meetings on health care during the recess. In recent weeks, protesters have interrupted constituent sessions held by congressional Democrats, shouting down members with claims about what the Democrats' health care proposals would do.

"They're just helping us understand the fringe that's trying to mess up our meetings," Senate Majority Leader Harry Reid, D-Nev., said after the presentation.

During the session, senators were shown videotapes of some of the disruptions, including one clip of a town hall hosted by Rep. Lloyd Doggett, D-Texas, where the congressman was heckled by chanting protesters.

"We cannot allow a vocal, well-organized minority to drown out our message," said Sen. Bob Casey, D-Pa., of the protests.

Axelrod said that Democrats would just have to keep talking about what is in the bill and what they believe the benefits are for Americans.

"There's obviously some evidence that there are some groups that are out promoting this, but I'm not going to disparage people," said Axelrod. "Look, I believe in freedom of speech. I just think everybody ought to be able to talk."

Senators after the meeting declined to discuss specific tactics or the advice they were given on countering the protesters.

"I feel like most members have a pretty good idea how to handle it," said Christopher J. Dodd, D-Conn., who led the Senate Health, Education, Labor, and Pensions (HELP) Committee during its recent consideration, and approval, of a health care overhaul bill.

Ron Wyden, D-Ore., said he was prepared as well. "I've had more than 500 town hall meetings. I've heard just about everything. Our rule has always been that as long as you're respectful of your neighbor, it's part of the democratic process," he said.

Message at Home
Lawmakers will need to make the case for the overhaul with voters who have the most to lose — people who already health care coverage they like, senators said.

"To me, the next five weeks are about closing the sale with the insured population," said Wyden.

President Obama has repeatedly promised voters that they will be able to keep their health insurance if they like it.

"One number that I heard months and months ago was that more than 90 percent of the people who voted in last year's election have health care," Casey said. "Obviously we have to speak to them."

Dodd said Democrats have to make the case that the current state of health care is unsustainable, even for people with insurance, with the risk that a medical crisis could wipe out their savings, or a job loss could leave them uncovered.

"I think the insured and the underinsured" are the people Democrats need to sell on their plans, Dodd said. "People, by and large, want to know that what they've got is going to be there."

Senators will also have to deal with inaccurate information coming from those who oppose an overhaul, Wyden said. "Suffice it to say there is a torrent of information out there. A substantial amount of it is untethered to reality, and it's going to be important to show, especially the insured population, how reform is going to affect them," he said.

"It's a challenge, no question about it," said Dodd. "You gotta get out there and make the case. This is not the time for the faint-hearted."

Senate Democrats also will focus on the bill already approved by a party-line vote of the HELP Committee last month, which contains a number of changes to public health programs as well as insurance market reforms.

"In our committee we had a vote," said Casey, a HELP Committee member. "And 10 Republicans voted against those insurance reforms, every single one of them. And not many people know that, but if I have anything to do with it, they're gonna know it."

"When a Republican member of the Senate who was on that committee stands and says 'I want insurance reform,' we gotta turn to the pages in the bill and say, 'Why'd you vote against all these provisions?'" Casey said.

By Jane Norman, CQ HealthBeat Associate Editor

August 3, 2009 -- State officials continue to be deeply concerned about the impact of provisions in the health overhaul bills under development in Congress, including an expansion of Medicaid coverage in states struggling to provide—and in some cases, cutting back—services for current beneficiaries.

As members of Congress arrive in their states for the summer work period, they're likely to get an earful from state lawmakers who in some cases already have been called back into session to repair ailing state budgets. "I don't think we have to coach anybody on the Medicaid message," said Joy Johnson Wilson, health policy director for the National Conference of State Legislatures (NCSL).

Just Friday, California Gov. Arnold Schwarzenegger sent a letter to congressional leaders warning that "we simply cannot be locked into a cost structure that is unsustainable" and lead to states experiencing chronic budget shortfalls.

Similarly both the NCSL and the National Governors Association (NGA) have issued statements and written letters to lawmakers warning that they can't foot the bill for unfunded mandates in connection with health care coverage.

"The truth of the matter is states are battling budget shortfalls and face increased demand for services," Joe Hackney, speaker of the House in North Carolina and immediate past president of the NCSL, said in a statement. "We just can't enroll more people on Medicaid when we can't pay for the ones we currently have."

Some 15 percent of state general budgets goes toward states' share of Medicaid, and costs are going up as the unemployment rate rises. In some states unemployment is not expected to peak until later this year.

Additional alarm bells went off when the House Energy and Commerce Committee while marking up its version of the bill late last week included a provision that shifts a portion of the costs of a proposed Medicaid expansion on to states, rather than having the federal government foot the entire bill.

Wilson said states are worried this is just the beginning of a trend in which Congress will look to states to pick up more of the cost of proposals extending Medicaid to childless adults and parents. "That's not the right signal, especially when there's no talk of extending the stimulus to get us through the recession," said Wilson.

While $87 billion that was included in the stimulus bill to help states with Medicaid costs already is flowing out, states are still in trouble, she said. In California, Schwarzenegger has signed a bill that cuts the state's Medicaid program by $1.4 billion.

The governor told Congress that California administers one of the most efficient Medicaid programs in the nation but it's still too costly. The House originally said its overhaul bill would fully fund Medicaid but now has shifted a portion to states, he noted.

"I will be clear on this particular proposal: if Congress thinks the Medicaid expansion is too expensive for the federal government, it is absolutely unaffordable for states," the governor wrote congressional leaders.

Proposals in the Senate envision passing on more than $8 billion in new costs to California annually—crowding out other priority or constitutionally required state spending and presenting a false choice for all of us. I cannot and will not support federal health care reform proposals that impose billions of dollars in new costs on California each year."

The chairmen of the NGA's Health and Human Services Committee also have written the chairman and top Republican on the Senate Finance Committee warning that governors are "steadfastly opposed to unfunded federal mandates and reforms that simply shift costs to the states."

Vermont Gov. James H. Douglas and West Virginia Gov. Joe Manchin II urged that the Senate provide permanent full funding for the cost of expanding Medicaid. "Any unfunded expansions would be particularly troubling given that states face budget shortfalls of over $200 billion over the next three years," they wrote.

Lawmakers are well aware of the concerns. Sen. Kent Conrad, D-N.D., a key negotiator in the Senate Finance Committee, has said the panel wants governors to be "comfortable" with what the committee is doing in terms of Medicaid. Finance Committee Chairman Max Baucus, D-Mont., has pointed to the expansion and strengthening of Medicaid as a key goal for the health overhaul.

But lawmakers also are dealing with the reality that costs can only climb so high. Baucus last week announced that the Congressional Budget Office reported that a draft Finance bill would total $900 billion over 10 years and cover 95 percent of Americans. No final details have been announced about how Medicaid would be treated though the committee earlier was thought to be considering full funding for newly eligible beneficiaries through 2015, with a 20 percent reduction thereafter.

"They're not saying very much about what they're doing but we have to assume some savings have to be Medicaid," Wilson said of the Senate negotiations. The committee has set a deadline of Sept. 15 for a markup of its bill but six senior members continue to meet this week prior to leaving town Friday.

State lawmakers also are tracking how insurance regulation will be structured in the overhaul, she said. "We're not quite sure how the exchange thing is going to work," said Wilson, and states want to retain the regulatory structures they already have put in place.

Another concern is how states will gear up fast enough to provide the infrastructure to cover more eligible Medicaid beneficiaries. It's already difficult to find enough doctors who will accept Medicaid patients, said Wilson.

A health policy statement adopted by the NCSL at a meeting in Philadelphia in late July called on Congress to avoid unfunded mandates that would shift costs to states, preserve state regulation of insurance, avoid expanded mandatory benefits unless they are fully funded by the federal government, protect states that already have enacted health system changes and provide a trigger in legislation that would guarantee enhanced federal Medicaid funding when economic indicators decline.