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Friday, February 15, 2008

Multiple Rules Work in Concert to Undermine Medicaid

The Bush administration is pursuing or has achieved several policy goals that work to cut social support services by reducing federal funding for Medicaid programs. The Center for Medicare and Medicaid Services (CMS) has released all of these policies — three proposed rules, one interim final rule, and two final rules — in the past nine months.

Two recent reports (one by the Center for Budget and Policy Priorities and one by the Kaiser Family Foundation) link the policies together to show a uniform attack by the Bush administration on federal support of state Medicaid programs. From the Kaiser report:

The Administration views these regulatory changes as promoting the purposes of Medicaid by enhancing the integrity of the program. However, states argue that many of the regulations could limit flexibility in administering the program and could impede the ability of the Medicaid program to fulfill some of its critical roles in the health care system such as providing support to safety-net providers or providing long-term care supports in the least restrictive settings.

Basically, the new rules undermine Medicaid benefits by placing an increasing burden on the states. "Each of the regulations is expected to reduce federal Medicaid spending by directly limiting the level of provider reimbursement, restricting the scope of services eligible for federal match and by limiting states' ability to finance their Medicaid programs," according to the Kaiser report. By reducing federal spending, states would be forced to either cut benefits or pick up the slack financially.

Some of these rules represent efforts by the Bush administration to circumvent Congress. For example, one of the proposed rules would limit the ability of state governments to provide rehabilitation services (such as transitions to independent housing) for people with mental illnesses or developmental disabilities. According to the Kaiser report, the Bush administration proposed this limitation as a legislative provision in 2006, but Congress rejected it.

These are exactly the kind of administrative changes we should expect the Bush administration to pursue in its waning days of power. Confronted by a Democratically-controlled Congress and election-year politics, the administration will try to accomplish administratively what it cannot accomplish legislatively.