Senate FY 05 Budget Mark
Proposes Cuts to Medicaid
MArch 5, 2004 - Senate Budget Committee Chairman Don
Nickles' (R-Okla.) mark for the Senate FY 2005 budget resolution
assumes significant Medicaid cuts as part of the $4.6 billion
in net reductions to mandatory spending programs over five
years (excluding net interest and Social Security). The mark
also includes cuts to Medicaid and Medicare discretionary
spending.
Specifically, the mark instructs the Senate Finance Committee
to reduce net mandatory spending by at least $3 billion FY
2005-2009. The Chairman's mark assumes the Senate Finance
Committee will cut mandatory Medicaid spending. According
to the mark's summary, Budget Committee Chairman Don Nickles
(R-Okla.) perceives "great potential for savings in the
Medicaid program due to waste and abuse in the system."
Similarly, a "Sense of the Senate" in the Chairman's
mark calls for the creation of a bipartisan committee to "combat
waste, fraud, and abuse," and "promote spending
efficiency." The new committee would provide recommendations
on how to achieve cost savings in "all discretionary
and entitlement programs." It would be authorized to
conduct audits of all federal domestic agencies and their
respective programs.
Medicaid discretionary spending is also targeted by the Chairman's
mark. The Federal Medical Assistance Percentage (FMAP) for
information systems is reduced from 90 percent to 75 percent
in FY 2005. Additionally, the mark cuts reimbursements for
Medicaid administrative costs that are now covered by the
Temporary Assistance to Needy Family (TANF) block grant. States
may not use TANF funds to cover any FY 2005 Medicaid administrative
costs.
In opposition to any proposed Medicaid cuts, the AAMC joined
the American Hospital Association, Catholic Health Association,
Federation of American Hospitals, National Association of
Children's Hospitals, and National Association of Public Hospitals
in co-signing a March
3, 2004 letter (PDF, 1 page - 8KB) to the Senate
Budget Committee. "Medicaid cuts at the federal level,"
the letter states, "will further weaken the already tenuous
foundation of safety net hospitals, which devote so much of
their care to Medicaid beneficiaries and the uninsured."
The
National Governors Association delivered a similar letter
to the committee. The March 3 letter was signed by Governors
Dirk Kempthorne (R-Idaho) and Mark Warner (D-Va.), and warned
that "Medicaid funding cuts could add millions more to
the ranks of the uninsured and would harm our nation's health
care safety net."
While the mark does not assume cuts in mandatory spending
for Medicare, the mark would not prevent the Senate Finance
Committee from proposing Medicare reductions in order to comply
with the mark's instructions for mandatory spending. The summary
of the Chairman's mark states, "the Finance Committee
may include savings from any programs within its jurisdiction."
For the discretionary portion of Medicare's budget, the mark
assumes savings of $1 billion over five years associated with
"user fees relating to claims, a change to the Medicare
secondary payer (MSP), and a change in durable medical equipment."
Such proposals were put forward by President Bush's FY 2005
budget.
To note Congress' ongoing dispute on the cost of the new
prescription drug law, the mark includes a Sense of the Senate
that the Senate Finance Committee should report a bill to
"ensure that that spending within Part D of the Medicare
Prescription Drug Benefit program in FYs 2005-2013 does not
exceed the total of $409 billion, as estimated by the Congressional
Budget Office."
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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