Bush plan slows Medicaid, research funding

The budget could reduce coverage for Medicaid recipients and hurt the country's reputation as a research leader, groups say. Others applaud efforts for the uninsured.

By Joel B. Finkelstein, AMNews staff. Feb. 28, 2005.

Washington -- President Bush's proposed budget for fiscal year 2006 delivers tough economic discipline for several health programs and departments, including Medicaid and the National Institutes of Health. But the president would give a financial boost to some of his priorities, such as health centers and health savings accounts.

The proposed budget is nonbinding but helps guide Congress in developing a budget that the president would be willing to sign. It also provides the public with an outline of the administration's legislative goals.

Bush has proposed Medicaid reforms designed to shave at least $60 billion from expected funding over the next 10 years. Medicaid is projected to cost the federal government $193 billion in 2006.

As part of this effort, the president has asked Congress to take another look at how Medicaid funds are shuttled between state and local governments. The administration and some lawmakers have complained that the current rules governing the movement of these dollars have allowed some states to increase the amount of federal matching funds they receive.

"State officials have resorted to a variety of loopholes and accounting gimmicks that shift the costs they claim to pay to the taxpayers of other states," Health and Human Services Secretary Mike Leavitt said during a recent speech. "If we don't close these loopholes, we project that over the next 10 years they will shift $40 billion through various means."