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Congress Votes to Cut Medicaid by $10 Billion Starting in 2007

  • April 29th, 2005

The Medicaid program is to be cut by $10 billion in the four-year period beginning in 2007 under the 2006 budget resolution agreed to by the House and Senate. In addition to the Medicaid spending reduction '“ the first sustained by the program since 1997 '“ the budget resolution calls for the creation of a study commission that will recommend changes to the Medicaid program.

Medicaid was the biggest point in dispute as House and Senate conferees worked to reconcile differences in the two houses' competing approaches to the 2006 budget. The Senate proposal had included no Medicaid reductions and instead set up the study commission, while the House version called for up to $20 billion in Medicaid cuts with no advisory recommendations on where to make them.

The budget resolution contains no specifics on where the $10 billion in cuts will come from. The changes to Medicaid would not begin until 2007, after the Medicaid commission has delivered its final report, giving the commission and the nation's governors time to recommend cost-saving proposals. House Budget Committee Chair Jim Nussle (R-Iowa) distributed a memo he received from Virginia Gov. Mark Warner (D), chair of the National Governors Association, that includes proposals for $1.4 billion in savings by making it more difficult for the elderly to transfer assets to qualify for Medicaid coverage of nursing home care.

Details of the study commission are still being worked out. Some reports have commission members delivering their recommendations by September, while others say the commission will deliberate until December 2006. Although senators had wanted a bipartisan commission that would be appointed by Congress and include advocates for Medicaid recipients, panel members will reportedly be appointed by President Bush.

The budget resolution is nonbinding, but it sets broad goals for lawmakers as they hammer out the specifics of spending for the 2006 fiscal year, which begins October 1. Moreover, tax and spending legislation passed under direction of the budget resolution is immune from Senate filibusters.

The budget resolution would also cut taxes by $106 billion over five years.

The vote was 214-211 in the House and 52-47 in the Senate, with Democrats unanimously opposing the resolution.

Sen. Hillary Rodham Clinton, D-N.Y., said that as a result of the Medicaid cuts, her state alone would lose $1.37 billion in Medicaid funding. "It is unconscionable to balance the budget on the backs of our most vulnerable Americans," Sen. Clinton said.

To read an article in the Washington Post on the budget resolution, click here.

On Friday, April 22, National Public Radio's Morning Edition reported on the debate over restricting the ability of the elderly to transfer assets to qualify for Medicaid coverage of nursing home care. The segment includes comments from Donna Bashaw, vice president of the National Academy of Elder Law Attorneys. To listen to the Morning Edition segment, go to: http://www.npr.org/templates/story/story.php?storyId=4615162

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Last Modified: 04/29/2005

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