AcademyHealth Stateside - 05/11/2005 (Plain Text Version)In this issue: Congress Passes Federal Budget Resolution with $10 Billion in Cuts to Medicaid
In an attempt to address the growing costs of government benefit programs, both houses of Congress voted to approve a FY2006 federal budget that calls for $10 billion reduction in federal Medicaid funding over five years. The cuts are a part of a $2.6 trillion fiscal year 2006 budget resolution that includes a provision to establish a bipartisan presidential commission that would examine proposals to eliminate fraud and abuse in the state reimbursement part of Medicaid. The commission members will be appointed by President Bush and are expected to deliver a report in December 2006 before any cuts are made. In total, the budget resolution eliminates $35 billion in growth from entitlement programs, including Medicaid. The resolution passed by a three vote margin (214-211) in the House and a five vote margin in the Senate (52-47). Although the budget resolution is non-binding, it sets clear priorities and guidelines for Congress as they begin to make funding decisions. The Congress will make final decisions on the budget by specifying policy requirements for achieving the cuts outlined in the budget resolution. Virginia Gov. Mark Warner (D), chair of the National Governors Association, distributed a memo prior to the vote to House Budget Committee Chair Jim Nussle (R-Iowa), which recommended proposals for $5.2 billion in savings from altering the way pharmacies are reimbursed for drugs, $1.4 billion by restricting the transfer of assets to qualify for Medicaid, and $2 billion by allowing states to charge higher co-payments for some services.
President Bush’s initial budget proposal suggested changes to the Medicaid program that were estimated to save $60 billion over 10 years and $14 billion over five years. Once the proposal went to both chambers, the House approved a budget resolution with Medicaid savings of $15 billion to $20 billion and the Senate budget resolution included no cuts to Medicaid. President Bush praised the final budget resolution as “a responsible budget that reins in spending to limits not seen in years.”
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