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Home :  Federal Budget & Tax : 
Federal Budget & Tax:      News     Blog     Background    



Tuesday, November 28, 2006

Medicaid Costs Stablizing

USA Today reported yesterday that Medicaid costs have been decreasing over the last year, and editorializes (opinionates?) on the subject today.

Like other social welfare programs, Medicaid has been a victim of its own success. It will cost taxpayers $300 billion this year (about 70% of the Pentagon's budget) and serves 56 million poor Americans. It has been the fastest-growing expense for states over the past decade, threatening to break budgets and force service cuts.

Until now.

For the first time, Medicaid spending has declined — by 1.4% in the first nine months of the year, USA TODAY's Dennis Cauchon reported Monday. That frees up billions of dollars in state budgets. Indeed, more than half of the states intend to restore previous cuts, according to an October study by the Kaiser Commission on Medicaid and the Uninsured.

There are many reasons for the decline, some of which may be temporary, and some advocates worry that people may have lost needed coverage. But everyone should agree that Medicaid expenses are no longer an urgent problem that requires a comprehensive policy change. So the next time we talk about "entitlement reform," can we at least leave Medicaid out?



Posted by Matt Lewis, 02:54:00 PM



Friday, November 17, 2006

Children's Health Imperiled by Funding Shortfall

If Congress does not take action soon, nearly 630,000 children may lose their health care. Why? A funding shortfall in a quirky health care program called the State Children's Health Insurance Program (SCHIP).

SCHIP was created in 1997 to shore up Medicaid. It covers children whose families have incomes that exceed Medicaid eligibility levels, but are still struggling to get by. This design has been remarkably successful- the share of low-income children who are uninsured has fallen by one fourth since 1997, despite a decline in employer-provided benefits.

Hundreds of thousands of enrolled children may get cut off the program now, though, for two reasons:



Continue Reading...

Posted by Matt Lewis, 10:59:52 AM



Thursday, November 16, 2006

State Medicaid Directors Balk at Backdoor Cuts to Program

State Medicaid directors from around the country gathered this week in Washington, D.C. for their annual meeting and continued to express frustration and displeasure with the Bush administration's plans to continue to stick it to the states through the Medicaid program.

In short, Bush plans to create regulations that would force states to lower taxes on health care providers and other administrative changes that would limit the federal matching grant states are entitled to under the Medicaid program. The taxes help states pay for health care services covered under Medicaid, and result in higher matching grants from the federal government. Administration officials believe the changes will save $12.2 billion over the next five years. But state officials have repeatedly complained they've been left out of the conversation since the administration announced its plans in February, according to Stateline.org.

With the switch in control in Congress after the recent elections, we may begin to see the administration resort to these types of administrative changes more and more in order to cut program budgets rather than trying to ram their agenda through a hostile legislative branch. Unfortunately, such changes are much more difficult for the public to learn about and scrutinize and are often announced in the dead of night before a major holiday to intentionally obscure their impact.

See the below article for a great summary of the administrative changes and the ensuing political fallout.

Stateline.org: Medicaid directors frustrated by feds

Posted by Adam Hughes, 04:53:49 PM



Monday, November 06, 2006

Big Profits for Big Pharma

Recently, defense contractor Lockheed Martin reported that it was making handsome profits at taxpayer's expense. In similar spirit, several pharmaceutical companies have reported huge profits as well, in part due to new business from the federal government. The now-online Medicare drug benefit, which does not let the federal government negotiate prices with drug companies, has provided much of the boost.

Pfizer, the world’s largest drug maker, said its sales soared 14 percent in the United States in the third quarter, while rising only 3 percent internationally. Over all, Pfizer said its profits more than doubled, to $3.4 billion from $1.6 billion, though part of the difference came from high one-time charges last year.

Pfizer did not disclose how much of the sales growth came from price increases and how much from new prescriptions, but earlier this year Pfizer raised the list prices of some of its biggest drugs by 5.5 percent or more, well above the inflation rate.

Sounds like these companies could afford it if the government came to the negotiating table. Indeed, Democrats have proposed a rule allowing the federal government to try to lower drug prices, as it does through the Veteran's Administration's drug plan. Too bad the White House will likely side with the drug companies.

Tony Butler, an analyst at Lehman Brothers, said both volume growth and price increases had driven the industry’s rising profits. But he said he did not expect major changes in the Part D plan even if the Democrats took over Congress, since President Bush would probably not sign any legislation that would allow Medicare to negotiate prices directly.

“It’s our belief that the White House will veto it,” he said.



Posted by Matt Lewis, 05:33:44 PM



Time for Miracles?

In an op-ed today in the San Fransico Chronicle, Bill Frenzel and Leon Panetta call for a "Budget Summit" to hash out the difficult budget issues:

What is needed now is for members of both houses, both parties, and the president to roll up their sleeves and grapple with these issues. No more denial. No more happy talk. No more delay. An equal number of Republicans and Democrats, along with the president, should participate, no matter how Congress is divided following the election, no matter which party is the majority, so that no single party will dominate the discussions or bear sole accountability for the choices.

Republicans (excepting the 2 years when the Senate was split) have controlled the Executive Branch and both houses of Congress for the past six years, and instead of "rolling up their sleeves" to make tough decisions, they instead chose to break the bank an make a run at ending Social Security.

Frenzel and Panetta continue...

While disappointing, it is not surprising that there has been bipartisan foot-dragging in confronting the realistic solutions to the nation's budget problems -- the fixes are difficult. Even the suggestion of the real choices -- increasing taxes and cutting spending -- is met with outrage, accusations and political attack ads.

This may be too rosy a bipartisan picture to paint, even for Frenzel and Panetta. While they are probably referring to Democrats rejection of Bush's Social Security overhaul proposals to complete their "bipartisan foot-dragging," it's certainly hard to drag your feet and have it make much of a difference when you are not in the majority. Particularly, I'm wondering if they missed the past few months of legislative action in which Republicans held hostage a popular package of tax cuts that enjoyed bi-partisan support in an attempt to push through a $750 billion dynasty tax cut?

While it would be nice if we could somehow get the relevant powers-that-be together in a room and force them into a compromise that everyone is happy with, we might as well wish for a few ponies as well, because balancing the budget to meet short- and long-term fiscal health will not happen as long as either side continues their no-exceptions ultimatums about possible solutions (i.e., no changes to Social Security, no tax increases at all). Republicans and Bush in particular are resolute about not rolling back the tax cuts, and as long as tax cuts are off table, there’s just not much point in attempting a compromise because it simply will fall short in the long run.

Until our elected leaders are willing and ready to make difficult policy decisions and devise a comprehensive solution that is focused on the long-term fiscal health of the nation, we will face an ever-narrowing range of options available for debate. Wishing upon a star is just not warranted.



Posted by Craig Jennings, 04:34:55 PM




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