The Senate is progressing rapidly on a plan to reduce Federal spending, with potentially significant effects on Medicare and Medicaid. Although Sen. Grassley (R-IA)’s efforts appear to be somewhat short of the support needed to pass, there is an air of expectation that compromise will result in something significant happening soon.
According to BusinessWeek, there are significant differences even among Republicans, with conservatives including Kyl (R-AZ) favoring maintaining the $7 billion funding to encourage pharmaceutical firms’ participation in the Medicare Part D program (not what one would typically think of as a fiscally conservative stance). More moderate GOP Senators led by Snowe (R -ME), appear to be more concerned with not cutting Medicaid and Medicare, which are targeted for reductions of $10 billion in the draft legislation.
Among the key provisions of the legislation as of yesterday were:
– a 1% increase in physician reimbursement (instead of the 4.3% decrease slated to go into effect on 1/1/06)
– increase in funding of $1.8 billion for Katrina-related expense for several affected states
– allow families with incomes up to 300% of the poverty level to buy into Medicaid for disabled children
The rock and hard place dilemma continues, with senators attempting to cut expenditures while funding Katrina efforts, the new Part D program and increase physician reimbursement. How that will pan out is anyone’s guess. The National Governors’ Association is working hard to prevent any cuts in Medicaid, the Senate is somewhat ambivalent, while the House Republican leadership has committed to cuts of $50 billion in the overall budget despite the reluctance of several committee heads and numerous Representatives to sign on to what could be politically dangerous.
Polls indicate respondents (by a significant majority) are not in favor of cutting governmental health programs.
Meanwhile, Florida has been issued approval by HHS to make significant changes to the State’s Medicaid program. In brief, the changes include a significantly greater role for managed care entities; authorization for participating health plans to vary the plan of benefits; and the ability for recipients to “opt out” and receive subsidies to buy insurance on their own.
Driven by annual Medicaid cost increases averaging 13% over the last six years while state revenues were growing 6%, the waiver changes the basis for funding from a “defined benefit” to a “defined contribution”. The federal government’s contributions will be based not on what is needed to cover the expenses of a pre-defined set of benefits, but on an amount agreed upon by the State and HHS.
This is a big change.
What does this mean for you?
As goes HHS, so goes the rest of the commercial world. There will be impacts on cost-shifting, provider reimbursement levels, and uninsurance rates.
Oct
20
