Bush vows hefty cuts, reforms in Medicaid

WASHINGTON — The Bush administration's proposal to cut some $40 billion from Medicaid would reduce access to health care for the poorest Americans, governors said Monday after meeting with the president.

"His budget would have a dramatic effect on the health care of millions of Americans," said Democrat Mark Warner of Virginia.

Added Republican Bob Taft of Ohio: "The governors are very nervous about agreeing to any spending cuts."

Some governors, however, said they realized they eventually must compromise. But their bigger desire was to win freedom to experiment in order to lower costs. Many were encouraged by parts of the administration's budget proposal that would give states more flexibility.

At the meeting, President Bush promised to work with governors to restrain soaring Medicaid costs and revamp the program. But he also indicated he would keep trying to eliminate some federal aid.

"We want Medicaid to work," Bush told the governors before an hourlong, private question-and-answer session. "The system needs to be reformed, and we want to work with governors."

But the one detail Bush emphasized was his plan to cut federal dollars in an effort to stop state Medicaid accounting practices that the administration contends cheat taxpayers.

Many state leaders say the money derived this way is essential. Federal officials say the practice artificially inflates health-care prices to bring in more federal cash, which states sometimes use for other purposes.

"We're worried" about the transfers, Bush said. "We put that on the table for discussion so that the system works the way it's supposed to work."

In Alabama, Bush's proposed cuts would cost upward of $150 million over the next six years. Meanwhile, the number of Alabama residents on Medicaid has climbed from one in 10 to nearly one in five. Cuts would leave officials with either serving fewer people or providing less benefits, Republican Bob Riley said.

Medicaid costs have soared in recent years, driven by rising health-care costs, an aging population that relies largely on Medicaid to pay for nursing homes and a recession that sent more people to state-supported health care.

This year, Medicaid will pay for care for 53 million people — women and children, poor, elderly, disabled. It will cost an estimated $329 billion. Enrollment has increased by 40 percent over the past five years.