Governors Get Advice From Obama Administration For Medicaid Cost Savings
U.S. Secretary of Health Kathleen Sebelius
Alex Wong/Getty Images
U.S. Secretary of Health and Human Services Kathleen Sebelius.
U.S. Secretary of Health and Human Services Kathleen Sebelius. Photographer: Alex Wong/Getty Images
The Obama administration is encouraging U.S. states to reduce health benefits to the poor instead of trimming eligibility for Medicaid, according to a letter to governors sent today.
The administration’s message is an attempt to preserve access to Medicaid, the federal-state health program for the poor, while balancing states’ financial concerns, according to the letter sent by Health and Human Services Secretary Kathleen Sebelius.
“I know you are struggling to balance your budget while still providing critical health care services to those who need them most,” Sebelius said in a letter to state governors outlining the changes. Along with cutting benefits and increasing the share Medicaid patients have to pay to save costs, Sebelius encourages states to save money on drugs, fight fraud, and better manage the most expensive patients.
Medicaid is the largest expense on most state’s budgets, and governors have been seeking cuts to close deficits. The U.S. government and states fund and administer the program. The health-care overhaul President Barack Obama signed in March expands Medicaid by 16 million people during a decade at a cost of $434 billion, the Congressional Budget Office estimates.
Reduced Budgets
Led by Florida, some states have argued that the health law burdens their budgets unreasonably at a time of economic difficulty. States have the legal authority to make changes to their Medicaid programs, though alterations can affect the money they get from the federal government.
The administration in the letter highlighted $100 billion in “optional” spending on benefits that states may cut or change to save money. According to the government, about 40 percent of Medicaid benefit spending is for optional services and not required under the rules of the program, the majority of which goes toward long-term care.
States are forecasting budget shortfalls of $125 billion in the coming fiscal year, according to the Center on Budget and Policy Priorities.
Republican governors from Florida to Arizona say a recent court decision is grounds to stop implementing the health-care law. Florida Governor Rick Scott, a former hospital industry executive, said he’ll wait for further rulings before preparing to carry out the law aimed at creating near-universal health care.
To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net;
To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.
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