Medicaid/SCHIP Budget Highlights
Program Reforms and Tighter Management
February 13, 2004 - President Bush's FY 2005 budget
proposal continues proposals to reform Medicaid and the State
Children Health Insurance Program (SCHIP) as well as bolster
efforts to ensure Medicaid and SCHIP program integrity. The
budget estimates that total spending in FY 2005 on Medicaid
will be $322 billion, of which $182 billion is the federal
share.
While the budget blueprint does not provide as much detail
as last year's budget proposal to reform Medicaid and SCHIP,
"the Administration remains committed to enacting legislation,
which will reform Medicaid and SCHIP to give States as much
flexibility as possible with predictable financing."
The proposal states "Building on the foundation of last
year's Medicaid and SCHIP modernization proposal, the Secretary
will work with Congress to pass an option for states to receive
Medicaid and SCHIP funds in the form of flexible allotments.
This strategy will provide states with the greatest potential
for innovation and stability of funding." No additional
information is detailed. In last year's budget submission,
the Administration proposed reforming Medicaid and SCHIP by
creating "State Health Care Partnership Allotments,"
allowing states the option to combine Medicaid (including
disproportionate share hospital payments) and SCHIP funding
and divide the funding into two broad allotment categories:
acute care and long-term care.
Additionally, the budget continues the Administration's priority
to ensure the fiscal integrity of Medicaid and SCHIP. HHS
will continue to "devote more resources to Medicaid and
SCHIP financial management" including $20 million in
FY 2005 (the same amount as last year) to increase audits
and evaluate state programs and payments. The budget also
proposes to restrict the use of intergovernmental transfers
"that are in place solely to avoid the legally-determined
State financing." Finally, the budget proposes to "cap
Medicaid payments to individual government providers to no
more than the cost of providing services to Medicaid beneficiaries."
While the proposal would limit the federal government's reimbursements,
it would "still preserve a State's ability to pay reasonable
rates" to providers. Through these measures, the Administration
hopes to save $1.5 billion in FY 2005 and $9.6 billion over
five years.
Despite the new funding proposed for Medicaid demonstrations
relating to respite care, home and community-based care, the
savings proposed through Medicaid and SCHIP Program Integrity
would more than offset any new spending. Additionally, the
budget proposes to make it "easier for Medicaid and State
Children's Health Insurance Program beneficiaries to enroll
in private health insurance by making eligibility for Medicaid
and SCHIP a trigger for private health insurance outside the
plan's open season. This proposal would help states implement
premium assistance programs for Medicaid and SCHIP."
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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