Medicaid Panel Is Said to Be a Key to a Deal on Budget

04/27/2005

By ROBERT PEAR and SHERYL GAY STOLBERG
NY Times
Published: April 27, 2005

WASHINGTON, April 26 - Republicans in Congress said Tuesday that they were near agreement with the White House on a proposal to break an impasse over the federal budget by setting up a commission on the future of Medicaid and by cutting the growth of the program by $10 billion over the next five years.

Administration officials and Republican leaders in Congress said they hoped that a deal on Medicaid would clear the way for a broader agreement on the contours of the federal budget - a budget resolution, in the language of Capitol Hill. The House and Senate last month passed competing versions of a $2.57 trillion budget for 2006, but spokesmen for the budget committees in both chambers said Tuesday night that they were close to reconciling those differences.

“There is a broad outline of consensus,” Sean Spicer, spokesman for the House Budget Committee, said, adding “There are details that still have to be worked out.”

The sticking points included not only proposed cuts to Medicaid, which provides health insurance for more than 50 million low-income people, but also questions of how far to extend President Bush’s tax cuts and whether to include a provision clearing the way for oil drilling in an Alaskan wildlife refuge.

In one sign that a budget deal was near, House Republican leaders said Tuesday evening that they had selected budget negotiators, who would convene an open meeting with Senate negotiators on Wednesday.

Medicaid is the biggest point in dispute.The Bush administration first opposed the idea of a study commission, seeing it as a way to postpone decisions over how to rein in the program’s explosive growth.

Aides to Senator Gordon H. Smith, Republican of Oregon, said administration officials had agreed to accept Mr. Smith’s demand for a commission in hopes of securing support from him and other moderate Republicans for $10 billion worth of cutbacks in projected Medicaid spending over the next five years.

“It’s our understanding that the administration has agreed, in principle, to a Medicaid commission,” said Demetrios Karoutsos, a spokesman for Senator Smith.

The Senate majority leader, Bill Frist, Republican of Tennessee, said he was “cautiously optimistic” that the two chambers would reconcile their differences and adopt a budget by Friday, when the Senate is scheduled to leave for a one-week recess.

The House budget committee chairman, Jim Nussle, Republican of Iowa, said the emerging agreement could be a vehicle to reorganize Medicaid. The program “needs reformation,” he said, and “we need to come together as Republicans and Democrats to fix” it.

Democrats denounced the proposed cutbacks. “The Republican leadership knew they could not defeat a motion to protect Medicaid,” said Representative Nancy Pelosi of California, the Democratic leader. “They negotiated behind closed doors to include Medicaid cuts in the final budget report, regardless of how the majority in both houses vote.”

The budget blueprint would not itself become law. But it would provide a framework for legislation to be passed by Congress later this year.

The House and the Senate approved competing versions of a budget blueprint on March 17. Seven Republican senators, including Mr. Smith, defied party leaders and the White House and joined Democrats in a successful effort to strip the budget of Medicaid cutbacks.

Federal and state spending on Medicaid, the nation’s largest health insurance program, has grown an average of 10 percent a year over the last five years and now totals more than $300 billion annually.

Michael O. Leavitt, the secretary of health and human services, has been negotiating with Mr. Smith for two weeks. Under the deal proposed by the administration, President Bush would accept a commission and Mr. Smith would agree to cut $10 billion from projected Medicaid spending over five years.

Mr. Bush proposed $13 billion in Medicaid savings over five years. The House version of the budget envisioned Medicaid savings of $15 billion to $20 billion.

The agreement is still tentative. The Bush administration wants to appoint most of the commission members, with a preliminary report due in September.

By contrast, Mr. Smith and Senator Jeff Bingaman, Democrat of New Mexico, have introduced a bill that would establish a bipartisan commission with 23 members, including just one administration appointee. The panel would also include several members of Congress, at least four advocates for Medicaid recipients, two governors, two state legislators and four health care providers.

About half of Medicaid recipients are children. Peters D. Willson of the National Association of Children’s Hospitals said, “It’s hard to see how states could absorb $10 billion in federal Medicaid cuts without reducing services for children.”