Introduction

As states continue to struggle with budget deficits and skyrocketing Medicaid utilization and costs, state lawmakers have appealed for more federal help. There have been a number of proposals at the federal level to address the states' requests. One such proposal was introduced in January 2003 when Health and Human Services Secretary Tommy Thompson announced President Bush's plan to radically alter the Medicaid program.

New Bush proposal

Under the proposed plan:

• States would receive $3.25 billion in extra federal funding for Medicaid in fiscal year 2004,

• Federal Medicaid spending would increase by $12.7 billion over the next seven years, then

• The federal share of Medicaid would be reduced so that, over a full ten years, the plan would be "budget neutral."

• States would receive the funds in two annual allotments that would be based on their own level of spending in 2002,

• These amounts would then be increased each year based on a formula.

The idea of the proposal is that states would continue to provide benefits for mandatory groups and gain more control in deciding what level of coverage to provide for optional recipients and services. For instance, states would have the ability to prescription drug coverage from some Medicaid recipient groups.

States that opt out of the new program would continue to administer their Medicaid programs under existing rules.

Our position on the Bush proposal

The Alzheimer's Association opposes the President's proposal for the following reasons:

• The additional money for the first seven years is only a loan that states would be required to pay back in the last three years of the ten-year period as part of the plans "budget neutrality."

• States would be agreeing to accept a capped amount of money and could not count on receiving more federal dollars if their program costs increased as a result of increased health care needs due to the aging of the baby boomers, the availability of improved but more expensive medical technology, further downturns in the state's economy or an unexpected growth in the states' elderly and low-income population.

• 85 to 90 percent of nursing home residents, including those with Alzheimer's disease, fall into the "optional" category. The Bush plan eliminates the current Medicaid entitlement for this population. States would be allowed to eliminate all current Medicaid protections for optional groups under the guise of "flexibility." For instance, states could eliminate current spousal income and asset protections, eliminate the prohibition against charging beneficiaries more than nominal co-payments and protections that require all nursing homes receiving Medicaid money to adhere to federal standards and ensure certain resident rights.

• Many of the benefits needed by persons with Alzheimer's disease such as home health care, personal care, prescription drugs, eyeglasses and dental care are currently optional. These are some of the valuable services states may decide are too costly to continue providing and may be eliminated under the proposed plan. In addition, if states decide that Medicaid services are too costly to provide in certain areas of the state, they could discontinue service in those areas.