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Senate Health Talks Turn to Medicaid

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.

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