October 14, 2005


By Victoria Wachino, Leighton Ku, Edwin Park and Judith Solomon

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Health Policy

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Executive Summary

On August 29, the National Governors Association released “Medicaid Reform:  A Preliminary Report,” a set of recommendations for Congress as it develops budget legislation this fall to reduce projected federal Medicaid expenditures.  These NGA proposals are intended to build on longer-term Medicaid recommendations the governors made in June.

Congress is likely to give these NGA proposals serious consideration.  The Medicaid Commission that the Administration established this summer included several NGA proposals in recommendations it made to Congress on September 1 for achieving Medicaid reductions of $10 billion over five years.  In this paper, we analyze the major NGA proposals.  We evaluate whether the proposals would reduce expenditures without harming the low-income children, families, senior citizens, and people with disabilities whom Medicaid serves. 

The NGA proposals include constructive suggestions to reduce Medicaid expenditures for prescription drugs.  Those proposals would produce significant savings, enabling Congress to achieve nearly all of its requirement to cut health-care entitlement expenditures by $10 billion over the next five years, and would do so in ways that would not adversely affect low-income patients.  Many NGA proposals in other areas, however, risk reducing access to needed health services for vulnerable low-income beneficiaries.  Particularly problematic are NGA’s proposals to allow substantial increases in the co-payments and premiums that Medicaid beneficiaries could be charged and to allow covered health care services to be scaled back significantly for many beneficiaries.  Also troubling is an NGA proposal to count the value of an individual’s home as an asset in determining eligibility for Medicaid coverage for long-term care.

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