Prometheus 6

Medicaid cuts could target drug costs
By Daniel C. Vock, Stateline.org Staff Writer    

The pharmaceutical industry could shoulder almost half of the $10 billion in anticipated cuts to Medicaid, if Congress heeds the advice of a panel charged with finding ways to rein in spending on the joint federal-state program.

The Republican-led Congress is trying to decide by Oct. 1 how to trim the $330 billion Medicaid program, whose rising costs are a growing budget burden for states as well as the federal government.

Among the top proposals under consideration is a plan from a commission led by U.S. Health and Human Services Secretary Mike Leavitt that would achieve $6.3 billion of $11 billion in proposed cuts by changing how Medicaid purchases medicine. Both moves are supported by the nation’s governors.

Congressional Democrats, though, have seized on the catastrophe brought by Hurricane Katrina on low-income residents of New Orleans to argue that now is the wrong time to cut Medicaid, which provides health insurance to 53 million low-income and disabled Americans.

If Congress adopts the Medicaid Commission’s plans for prescription drugs, it’ll be zeroing in on the fasting increasing element of state Medicaid budgets but one that will shrink dramatically next year when new federally funded Medicare drug benefits kick in for low-income seniors.

Other proposals from Leavitt’s commission are drawing more fire on Capitol Hill, but they would save less money than reforming prescription drug reimbursements. Among the most contentious is a proposal to clamp down on elderly people who give away assets before applying to Medicaid. Another would allow states to charge some recipients higher co-payments for prescription drugs.